There is a reason that people are paying attention to Amazon Logistics. It's because they are already shipping more parcels than FedEx.

I recently listened to a great report by Ravi Shanker, a Director at Morgan Stanley who covers supply chain. A few points:

• It's estimated that in 2019, Amazon shipped between 2B and 2.5B parcels (I've seen up to 3B). Given that FedEx shipped about the same number of ground parcels last year, you can expect that with COVID, Amazon has already passed FedEx as a shipping carrier.

• With regards to Amazon's potential launch as an independent carrier in the US, he estimates that existing committed volumes could allow Amazon to reach 30% of non-Amazon capacity if it were to launch a new service. That is a big potential threat in the market.

To the extent that Amazon has their network lined up and is not capacity-constrained, I expect in 2021 they will say "why not now" in the US. The only negative would be if they are still working out some things after their UK launch, or they are not yet ready with all their network and air commitments to build a complete offering.

Dean McElwee noted that “they recently launched a dedicated base for Amazon Air out of Germany with planes flying between Leipzig to Barcelona, Rome, Paris, Cologne, Milan and Madrid. Their Leipzig base is where DHL also has a base and is the fifth busiest in Europe.”

Miles Thomas continued the conversation about scaling in Europe: “I wonder if Amazon would increase scale in the UK quickly and buy Yodel. Presume that German anti-trust laws would prevent a takeover of Otto (to get Hermes UK Germany and others). I also wonder when/if Amazon would start moving parcels by train from CN to UK/EU, running their own service or buying an existing one. Had a couple of ebay parcels on that route recently, changing mode in Poland/Germany/Belgium.”

Vijayender Nalla chimed in: “This is precisely where the logistics players have lost the opportunity (possibly 3-5 years too late) in figuring out a way to partner with platform marketplaces. They would need a different business model but I would guess it still is a great opportunity outside of US and Europe. Logistics continue to hurt e-commence potential for several medium to large platform players with no logistics/supply chain capabilities. When logistics service offering around the world becomes a reality for Amazon it would become the platform with strongest multisided network effects. At that point majority of local marketplaces ( especially the B2C ones most of them surviving on investor money) will struggle to exist.”

A.J. Cook posed an interesting question: “It's not insignificant that the big parcel carriers own both 'First' and 'Last Mile', having to aggregate and manage logistics from point of origin to their DC's with their networks as well as what we call delivery. Amazon currently only owns 'Last Mile' or outbound logistics from DC's - I wonder what this means for utilization of resources. Perhaps adding a full independent logistics service would allow better utilization and actually improve their margins by eliminating 'deadhead.'”

Will be very interested to see what happens - and how quickly.