Amazon building America’s largest private shipping network

The COVID-19 pandemic threw the world economy into turmoil. Social distancing encouraged people to stay indoors and to skip crowded places like grocery stores. Suddenly, delivery services were in high demand. Early on in the pandemic, millions of people were laid off, but Amazon made a bold move to hire some 400,000 workers in a bid to build up its logistics network.

Throughout 2020, Amazon leased a dozen 767-300 cargo aircraft and added 220 package facilities to its portfolio. Amazon has purchased over 1,300 big-rig tractors for its fleet and has built out extensive partnerships with independent trucking companies through the Amazon Freight Partners program. In total, Amazon has increased its fulfillment capacity by 50 percent.

In 2020, Amazon Logistics moved 4.2 billion parcels, up from 1.9 billion a year prior. By volume, Amazon accounted for 21 percent of parcel shipments, topping FedEx’s 16 percent and closing in on UPS’s 24 percent. The U.S. Postal Service accounted for 38 percent.

While the pandemic created headwinds for many companies, in some ways it was a boon for Amazon. Real estate property and cargo jets initially became cheaper and millions of people were looking for an income. Amazon saw the opportunity and used the early days of the pandemic to rapidly expand its logistics operations.

Why? UPS and FedEx were once key ingredients for Amazon’s success. Going back thirty years and ordering through a magazine or on the phone often meant waiting 6 to 8 weeks to get your product. These days, orders typically arrive in two or three days.

Amazon’s private shipping network encourages speed and keeps costs down. By cutting out the middlemen and using an Uber-like private delivery system whereby people can turn their humble family car into a delivery vehicle, Amazon has built a fast and affordable private shipping network. Bank of America believes that Amazon Logistics alone will be worth $230 billion by 2025.