While companies like Uber and Amazon expand their on-demand shipping offerings, traditional companies like FedEx are negatively impacted. FedEx recently cancelled their contract with Amazon to deliver packages in the U.S., which was a major partnership for the shipping giant.
Since Amazon has invested in expanding their own Amazon Prime delivery service, they want to focus less on partnerships with outside companies and focus on providing all the services for themselves. As Amazon continues to expand in this space, they may start to acquire logistics companies that would help them bring their shipping almost completely in-house.
Uber, on the other hand, exists as a treat to FedEx as they are currently using software to match trucks with people who need to move a shipment of items somewhere. While this threat may not have an immediate impact on FedEx’s business – it may pose more challenges in the future.
UberFreight focuses on shipments that are bigger than an individual package, but less than a full truckload. In Q4 of 2018, Uber’s shipping business brought in over $125 in revenue. The market itself for these type of shipments is said to be a $700 billion market that currently does not have a great business model.
The upsides of UberFreight, much like the on-demand rideshare platform, are that they provide flexibility and transparency in the pricing and visibility of shipping options. Most of the time, these logistics are coordinated via telephone and can be timely. With UberFreight, shippers can be matched with a truck / driver very easily – again, similar to Uber’s on-demand rideshares that match passenger with driver.
Right now, companies like FedEx are not immediately challenged by a service like UberFreight because in many ways they are serving different audiences and needs. As Uber continues to increase their offerings, who knows what impact it will have on FedEx and the rest of the traditional shipment market.