FedEx and UPS share of US parcels market is falling…slowly

US Parcels

Though many people think of the US parcels market as being dominated by a duopoly of the two major carriers, UPS and FedEx, there are other carriers. As a result, the big two have seen their combined share fall from 82% in 2010 to 73%.

The national postal operator, USPS, actually handles more parcels than either of the integrators – 5.7 billion in 2017, 1.2 billion more than the next largest player UPS. It has grown its volumes through competitive pricing and its Parcel Select service which provides a downstream access service to other carriers and large retailers such as Amazon.

Global rival, DHL, saw its US parcels market domestic business collapse under weight of losses in 2009. But it has remained a competitor for international volumes and has just re-entered the US domestic market with its Parcel Metro crowd-sourced delivery network.

After FedEx and UPS told Amazon that they would not scale with its growth, it took the decision to build its own delivery network. Amazon Logistics now delivers not only a large proportion of its own sales but also those of marketplace sellers which keep their items in its warehouse and, more recently, items stored elsewhere. This has enabled it to rapidly build a share which we estimate at 5%, mainly at the expense of UPS.

Regional and local carriers are also gaining share of the US parcels market, partly as a result of business from Amazon. The smaller carriers often have advantages over the major players including the later cut-off times and earlier deliveries as well as cost savings, fewer surcharges, better or no minimum charge, same day options and a larger next-delivery footprint. Interestingly, a key player here is the UK’s Royal Mail, which has recently entered the US domestic market, via its GLS parcels subsidiary, through the acquisitions of two regional carriers along the West coast.

This and other issues are discussed in our report on the US market: US Parcels Market: Market Insight Report 2018.