Last week, FedEx announced it would let its ground delivery contract with Amazon expire, building on the June announcement that FedEx would cease all domestic air-delivery services for Amazon as well. This means FedEx will no longer deliver Amazon packages; Amazon will presumably begin delivering more of its packages.
It’s worth noting that:
- Amazon only accounts for just 1.3 percent of FedEx’s total revenue, and FedEx represents a relatively small number of Amazon’s overall shipments.
- Since the 2013 holiday season that overwhelmed UPS and FedEx delivery services, Amazon has been trying to expand its own logistics operation and move its logistics in-house. This means that Amazon is increasingly delivering its own packages, and even has its own cargo planes.
- The split comes after Amazon's April announcement of free next-day shipping for Prime members and just ahead of the holiday season, meaning Amazon will continue to have to deliver packages quickly.
- Amazon still works with UPS and USPS, and will increase its work with UPS. But Amazon has also been increasing the percentage of delivers that it does itself. Amazon now delivers roughly half of its own packages.
There’s been little talk, however, about what any of this will mean for workplace conditions and Amazon’s underlying infrastructure as the company necessarily scales up its own delivery services.
Air-delivery service: FedEx has the world's largest cargo air fleet at over 650 planes and is in the midst of modernizing its "World Hub" in Memphis, Tennessee. Amazon’s cargo plane operation, called Amazon Air, leases Boeing cargo planes from carriers who are then responsible for providing pilots and ensuring flights meet Federal Aviation Administration standards. At the moment, Amazon has a 42-plane fleet and plans to add another 28, along with a $1.5 billion hub in northern Kentucky.
FedEx’s only unionized workers are its Express pilots, but they account for less than 5,000 of the company’s 450,000+ employees. Their most recent contract comes up for renewal in 2021. Amazon Air pilots are unionized and still make 33 percent less than FedEx and UPS pilots flying the same plane. Ahead of Prime Day, Amazon Air pilots were considering a strike to protest poor pay, demanding flight schedules, and unsafe working conditions. Teamsters Local No. 1224, which represents pilots for Atlas Air, Southern Air, and ABX Air, put up a website full of informational videos highlighting these workers’ grievances. Few, if any, of the demands have been met. Without FedEx, Amazon will likely have to rely more on its own air cargo services.
Ground-delivery service: FedEx has about 170,000 ground vehicles paired with a staff of tens of thousands of drivers to deliver packages. Amazon has relied on FedEx and other carriers (along with contractors through Amazon Flex) for delivery services. But it’s only during this past year that Amazon has started hiring thousands of full-time drivers to deliver packages as part of a last-mile shipping program. The program has come under fire after drivers revealed horrible working conditions and said they were overworked.
Researchers at the Institute for Local Self-Reliance, a non-profit advocacy group that advocates for local businesses, pointed out that Amazon's logistics plan would require "spreading its increasingly devalued work" while simultaneously building its own shipping network. Now that FedEx is gone, Amazon will continue to rely on USPS and UPS, both of which are unionized and introduce higher labor costs. In an attempt to cut costs, Amazon will likely keep expanding its own delivery services, and will, of course, set the schedules, productivity goals, and working conditions. It’s not clear any concrete steps have been taken to improve its treatment of delivery drivers.
Amazon’s underlying infrastructure: At the end of the day, Amazon wants to replace our economy’s infrastructure in a bid to become that infrastructure. Amazon sits at the center of US e-commerce, the world's cloud computing capacity, and it is building a logistics empire. As it integrates vertically, Amazon has pushed its own ecosystem of products and services. As it builds its own infrastructure, Amazon has also taken dystopian steps to secure that infrastructure. Amazon has, for example, spent lots of energy partnering with police departments to push Ring, its home surveillance company. It has also set up package theft “sting” operations in an attempt to prevent loss from having to replace stolen packages.
Amazon is carving out bigger parts of our social, economic, and political worlds for itself. In the process, Amazon is privatizing and vertically integrating infrastructure. The FedEx - Amazon split opens up the battle for control over the domestic e-commerce delivery and shipping market. For everyone else, it means Amazon will take another step toward becoming an inescapable delivery behemoth.