CEO of Amazon Jeff Bezos told a conference in California that Amazon is delivering around half of its parcels to customers because Royal Mail cannot meet demand at peak times. This comes after Royal Mail announced that its profits fell by over 30% year on year to 2016.

Bezos said to the conference, “We have to have capacity for peak delivery times. We have had to take over a lot of the last mile delivery in the U.K. over the last several years. The Royal Mail ran out of capacity at peak.”

Amazon is known to be increasing its capacity to deliver goods to customers right across the UK, but it claims that this is because delivery companies are letting it down – not because it has a wish to undercut or replace them. It is well known that Royal Mail’s biggest single customer is Amazon and that if the US online giant pulled the plug then Royal Mail would have serious problems. Amazon is also withdrawing business from FedEx and UPS in the US for similar reasons, with the upshot that it is significantly increasing its own logistics and delivery capacity.

The UK newspaper the Telegraph went to Royal Mail for a response to Bezos comments. They said, ““We work with a wide range of retailers, including Amazon, throughout the year and especially at Christmas. This is a very large logistical exercise, and Royal Mail delivers more parcels than the rest of the industry put together to over 29 million addresses across the country.”

Royal Mail has acknowledged that it has made significant cuts to its workforce but claims that the same numbers are able to deliver the same number of letters and parcels. The CWU trade union’s view is that Amazon is cherry picking the business from its delivery partner. A spokesperson said, “Royal Mail still massively dominates the market. Amazon are not interested in serving rural areas. They only want to cherry pick profitable deliveries in towns and cities.”