Dive Brief:

• Amazon "may be considered" a competitor to FedEx, the 3PL reported in its 2019 10-K filing with the Securities and Exchange Commission (SEC). The language contrasts FedEx's filing from the previous year, which said high-volume package carriers such as Amazon "may become competitors."
• FedEx said Amazon's development of in-house delivery capabilities and use of independent contractors for deliveries "could in turn reduce our revenues and market share."
• FedEx acknowledged Amazon's "significant capital" investments in hubs, aircraft and vehicles. "If customers, such as Amazon.com, further develop or expand internal capabilities for the services we provide, it will reduce our revenue and could negatively impact our financial condition," the filing said.

Dive Insight:

FedEx's tune around Amazon has changed significantly over the past few months. Without explicitly naming Amazon as a competitor, FedEx's 2019 10-K hinted strongly at that possibility — a stance executives previously brushed off on earnings calls.

Amazon expressed a similar eventuality in its 10-K filed in February, which listed "companies that provide fulfillment and logistics services for themselves or for third parties, whether online or offline," as competitors, without naming any specific organizations. UPS did not mention Amazon in its latest 10-K.

FedEx's tone around Amazon's role in the logistics industry shifted most notably with its announcement last month that it would not renew its Express domestic contract with Amazon.

At the time, Morgan Stanley analysts described the breakup as a "watershed moment for the parcel industry that signals [Amazon's] emergence as a significant player in the industry" in a research note emailed to Supply Chain Dive. The analysts warned not to downplay the significance of FedEx's decision to cut ties with Amazon.

FedEx's warnings around the possibilities of reduced revenue and market share signal FedEx views Amazon emerging as a significant player.

If Amazon breaks the duopoly of the U.S. logistics market, it could introduce greater competition and force prices down. FedEx named fuel surcharges as having a "positive impact on revenues at all of our transportation segments in 2019." Yet Amazon, in a bid to win over shippers, reportedly said it would forgo fees like fuel surcharges and extra charges for home deliveries.

Analysts previously told Supply Chain Dive the emergence of Amazon in the logistics industry would help to create a more level playing field and keep prices in check.

Still, Amazon has a long way to go to match the capacity of FedEx and UPS. FedEx has 681 aircraft, 13 air Express hubs, 180,000 motorized vehicles and 39 ground hubs. Amazon, meanwhile, has 10,000 vehicles and will have 70 aircraft by 2021, according to Business Insider. A recent Goldman Sachs report cited by Business Insider found Amazon would need to invest $122 billion to catch up to UPS and FedEx.