DHL Challenge

Who's Afraid of Amazon?

  • Why it matters

    Why it matters

    While there may be capacity, Amazon could become a problem for global leader Deutsche Post DHL and competitors if it pushes prices down too far.

  • Facts

    Facts

    • Amazon spent $16.2 billion on logistics in 2016, six times more than Lufthansa Cargo’s annual revenue.
    • Amazon is expected to ship 12.6 billion packages a year by 2020. In 2015, the number was 5.6 billion
    • UPS says no customer, not even Amazon, contributes more than 10 percent of its total revenue
  • Audio

    Audio

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Amazon-Zentrum Leipzig
Can the market handle two? Picture source: DPA

Online retail giant Amazon is looking to disrupt yet another industry. Once a boon for the logistics sector, providing a fresh wave of packages to be delivered around the world, the Seattle-based company is now spending tens of billions to cut out the middle-man, essentially starting its own logistics operation. It’s taking on the existing behemoths of the trade – industry leader Deutsche Post DHL and rival US firms UPS and FedEx – to do it.

Yet so far, these more established rivals are taking the move in their stride. That’s partly because business is booming and there’s plenty of capacity to go around. “I don’t worry,” UPS Chairman and CEO David Abney told Handelsblatt in an exclusive interview this week. “The conversations that I have with them is they look at adding supplemental capacity.”

Deutsche Post DHL is also more worried these days about UPS and FedEx than it is about Amazon, with which it actually reached a deal earlier this year to take over fresh grocery deliveries. The head of Deutsche Post’s own parcel service, Jürgen Gerdes, last year in an interview predicted a “long, successful, shared path” between the two companies.

That may be true, but there are still plenty of ways that Amazon can become a headache for the big three. Even if there is enough demand for logistics to go around, Amazon could push down prices by developing more tech-savvy ways of sending packages around the world. That in turn could cut into profits at its rivals.

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