For decades, Amazon.com gave shipping carriers nothing but good news. Volumes rose and rose, meaning Amazon’s contracts with carriers got bigger and bigger. In return, carriers added capacity, allowing them to take on more and more clients of their own.

But now, Amazon is starting to look to shipping carriers the way it has to so many other industries: like a threat.

Amazon has been reformatting the e-commerce market, laying the groundwork for a delivery service for years. First, it seemed merely to be toying with last-mile innovations like drones and delivery lockers. Then it began patenting door-to-door delivery robots — a strategic decision to pave the way for further delivery services. And then it started acquiring an air fleet.

Amazon thinks of itself as a transportation and logistics company now, the company’s filings show. But FedEx isn’t going down without a fight.

Amazon vs. FedEx — So Far

Amazon is altering the future of e-commerce, working toward its own delivery service for years now. But in its annual filing with the Securities and Exchange Commission in early 2019, company executives included “transportation and logistics services” on a list of industries Amazon competes in. That made it official for the delivery industry: Amazon plans to compete with them.

That’s a departure from the last two decades, during which Amazon has described itself as a partner to UPS, FedEx, and the USPS. Nearly half of online purchases are made through Amazon, making the online retailer every shipping carrier’s biggest customer. Amazon’s demand has forced these companies to restructure their offerings time and time again to facilitate more and more residential deliveries, two-day deliveries, and more.

In June, FedEx hit back, choosing not to renew its Express domestic contract with Amazon. Express is FedEx’s air delivery service, which means ground trucks can still carry Amazon’s packages — but the elimination of air service effectively means Amazon cannot ship Prime orders with FedEx.

In August, FedEx hit back harder, choosing not to renew its Ground contract with Amazon. With this move, the parcel carrier basically severed all ties with the giant. Amazon’s contract with FedEx ends at the end of August, leaving a narrow window for the carrier to prepare for the busy holiday season.

What’s more, Amazon has recently been pushing to standardize not just two-day but next-day package delivery for Prime customers in some markets. FedEx likely threw a wrench in that plan, though Amazon has been quiet on the subject, as usual.

FedEx says the contract it declined to renew accounted for about 1.3% of company revenues. Further, FedEx added Sunday delivery in May, before announcing its decision to cut Express ties with Amazon. That suggests that even without Amazon on Express, FedEx expects to move more and more volume.

Read More: How “The Amazon Effect” and Changing Customer Behavior are Shaping the Parcel Landscape

FedEx’s Rationale

Traditionally, FedEx’s only true competitor in the U.S. has been UPS. For now, that’s still the case. Although Amazon is moving fast, it’s a long way away from having a fully built-out delivery infrastructure that would allow it to stop using FedEx altogether.

FedEx and UPS offer very similar services and pricing. FedEx recently added standard Sunday delivery to give itself a small advantage — and then UPS announced in July that it would add Sunday delivery beginning in 2020. This one-upmanship is standard practice for the U.S.’s two delivery giants.

Both companies are investing in technological innovation, too. A coalition that includes UPS recently completed the U.S.’s first successful commercial drone flight; FedEx is developing drone delivery in a partnership under the same Department of Transportation program.

But neither company can really compete with Amazon in the technological space. Amazon is envisioning a wholly new delivery ecosystem, one full of artificial intelligence and managed largely by algorithms. Whether FedEx and UPS will be able to compete in those spaces remains to be seen.

Although UPS has not yet taken action to protect its business from Amazon, another competitor has: The U.S Postal Service. In 2018, the Trump administration ordered a review of USPS pricing, suggesting that Amazon was paying far less than it should for the service USPS provides — especially to its rural customers. A task force convened by the president ultimately recommended that USPS raise its prices and revisit its promise to deliver packages sent by commercial customers — like Amazon — to every address in the U.S. USPS announced price increases for all customers earlier in 2019. 

Amazon’s Threat

So far, most of Amazon’s advances in the delivery space have been aimed at completing same-day and next-day deliveries. Amazon is investing in last-mile delivery in the form of a third-party courier service, vans, drones, and delivery robots. They’re also building an air delivery fleet and network of hubs near major airports. There is no evidence that Amazon is investing in trucking, even though trucking costs are poised to stabilize or even fall when self-driving technology goes mainstream.

This suggests that Amazon sees itself, eventually, as a logistics company solely focused on delivery time: same-day, next-day, and two-day delivery. That’s the service that Amazon’s 100 million Prime members expect.

Amazon is notoriously secretive about its user numbers, but there are millions upon millions of people using the service who are not Prime members. Those customers are not promised two-day delivery, and certainly not free delivery. Amazon’s delivery network is not designed to serve those customers in a cost-effective way.

That could mean that Amazon expects Prime to grow so much more, or for quick delivery to become more and more the norm, that the company believes shipping carriers will eventually stop using trucks. It could also mean that Amazon is just content to pay someone else to perform those services. In this case, that “someone else” is FedEx or UPS.

For now, Amazon will have to rely on UPS and other third-party shipping carriers to complete their operations and get parcels to customers. But every year, Amazon needs these carriers less for fulfillment. If they want to survive that disruption, carriers ought to start looking for ways to need Amazon less, too.

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