You’d think Amazon’s surging sales would be a boost for UPS. But no.
Amazon packages used to be delivered to our place in San Francisco by UPS or the United States Postal Service. But for some time now, our Amazon packages have been delivered by some men and women in regular clothes. Most of them came in unmarked vehicles, sometimes cars, sometimes small vans. One of them wore a vest with an Amazon logo. He’d pulled up in a small white van marked with an Amazon logo.
I asked him if he worked for Amazon. He said he worked for a delivery company with about 20 vans.
Now jump to the brown vans that don’t bring our Amazon packages anymore. UPS announces rate increases every year. Here’s the last batch:
- Effective December 30, 2013: average increase of 4.9% for UPS Ground, Air, and International.
- Effective December 29, 2014: average increase of 4.9% for UPS Ground, Air, and International.
- Effective December 28, 2015: average increase of 4.9% for UPS Ground; average increase of 5.2% for UPS Air and International services.
- Effective December 26, 2016: average increase of 4.9% for, the UPS Ground, Air, and International.
UPS’s “average increases” can understate the actual increases. For example, the rate increases for UPS Ground are generally higher at the lighter weights and less at heavier weights. This might range from a 4.1% rate increase for 76-150 pounds Ground to a 6.8% rate increase for the Ground Minimum charge. So the many light parcels of the internet economy would get the higher annual rate increases.
UPS also just announced that it will add surcharges for online orders shipped to residences around Thanksgiving and the week before Christmas, as it “must flex its delivery network to meet increased demand,” it says.
Sure, Amazon has worked out deals with all its carriers. But the principle is the same even if Amazon gets a better deal: It’s expensive, and it gets more expensive every year by a rate double or triple the rate of inflation, and it gets a lot more expensive for lighter packages that form the core of online retail, and it gets even more expensive just when you need to ship the most.
But UPS – despite these rate increases, and despite growing international revenues – has experienced essentially 0% revenue growth in 2015 and only 4.3% revenue growth in 2016 (to $60.9 billion).
Amazon’s revenues grew 20% in 2015 and 27% in 2016. E-commerce in the US is growing at a rate of about 15% a year. Clearly, UPS is not benefiting from the surge in online sales. So how is Amazon getting its merchandise — from specialty clothing and accessories to electronics — to its customers?
In the “Greater San Francisco Area,” as Amazon calls it, Amazon has been leasing all kinds of warehouse space over the past few years as part of its distribution network. The new “fulfillment centers” it leased in 2016 include a 224,154-square-foot warehouse in Richmond, and a 1 million square-foot warehouse in Tracy, at the edge of the Bay Area, near I-5, the main north-south Interstate in California. In 2014, it leased a 574,000-square-foot warehouse in Newark, Alameda County, in the East Bay. It has other warehouse operations scattered the Bay Area, including in South San Francisco.
But it’s not UPS or the Postal Service that is delivering from these warehouses to the customer. Amazon has set up two ways to get the merchandise delivered. Same-day delivery is possible. And none of it involves drones.
“Amazon Flex” is not in every city yet, but it’s in “more than 30 cities” in the US, Amazon says. “And we’re adding new ones all the time.” It’s a way to “make $18-$25/hour delivering packages with Amazon.” It’s an app that allows you to choose a time block in which to pick up and deliver packages. Your pick-up location may be an Amazon facility or “a store or even a restaurant.” You can use your car, bicycle, or whatever to deliver the packages. “Be your own boss, set your own schedule, and have more time to pursue your goals and dreams,” it says. It’s part of the gig economy.
And there are “Amazon Delivery Providers.” OK, the name isn’t fancy, but it works. “You choose the cities where you’d like to deliver. Whether you have one van or a fleet, our volume and your business could be a great match,” Amazon says. “All deliveries are within a specific service area and delivery services vary by location.”
You pick up at “a local facility.” You use “Amazon’s routing technology,” which “helps you navigate efficiently.” You “earn money by delivering packages to Amazon customers.”
The drivers in these two systems are not highly paid UPS drivers. Amazon Flex drivers are contractors for Amazon, working for $18-$25 per hour (less if costs of the vehicle are included). Drivers working for “Amazon Delivery Providers” make whatever their arrangements are with their bosses. And if the Amazon Delivery Provider is a one-person-one-van show, and you own it, you make whatever Amazon pays you per delivery minus your costs.
This is a huge change in the US logistics landscape. Amazon has gotten big enough to where it is now building out a nationwide delivery network that includes the last mile in competition with UPS, FedEx, and the Postal Service. And it relies on the gig economy to deliver the last mile. It’s upending decades of established systems and companies. I don’t know if this is cost-effective for Amazon, but it is certainly trampling on the entrenched logistics sector that is hooked on annual rate increases as sole source of revenue growth.
Here’s something Wal-Mart could do to Amazon, just to be nasty. Read… Amazon to Slash Jobs at Whole Foods, Dump Cashiers, Switch to Cheaper Products in Price War with Wal-Mart
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Amazing Wolf…change is ‘in the air’…just like in the ’60’s!!!
Plus, US to produce 10 million barrels per day in 2018, according to EIA…unseen since 1970…PJS
Very informative. I believe Walmart uses a similar system.
great post, Wolf!
Walmart doesn’t rely on that system. It’s just there to toy with Amazon BS.
My first thought is liability for all of these drivers? Who is insuring these people? AMZN has some very deep pockets, which will make the plaintiff’s bar lick their chops…
Most likely, they (Amazon) would have this “delivery optimization and routing service” established as a separate company under the Amazon umbrella. Since the drivers are not going to be employees of Amazon or their delivery service, they would be stupid if they didn’t require the individual drivers to insure their own vehicles, with Amazon mentioned as a secondary insured. This is the way any of these companies that has independent drivers operates. And by making this requirement, they would have proof of the driver’s insurance policy, just in case of an accident.
Oh…the driver would have to get a commercial insurance endorsement, and the minimum insurance would be the typical policy maximum for the area they operate–probably a 100/300/50 policy.
So the drivers would be self-insured. If they decide to miss a premium, Amazon would be notified that their policy lapsed, and they would remove them from being an eligible driver. Besides, the driver is operating an independent business, and can either accept or reject routes offered by Amazon. The driver would also be free to accept other driving gigs, so there would not be an employer-employee relationship established.
Wolf, I’m sorry but I’m not impressed by all this. All they are doing is transferring delivery jobs from a centralized company to “gigs”. Overall, efficiencies get less in the whole system, and costs go UP. Sure some fools will drive for less than minimum wage, but how long can that go on for? This is all tripe.
BTW, how will the so-called “Prime Wardrobe” service ever make money? The basic math just doesn’t add up. You really have rose-colored glasses when it comes to Amazon. No, make that welder’s glasses.
“…Sure some fools will drive for less than minimum wage…”
This is no different than the person who delivers my paper every morning in a Kia SUV. I do feel badly for them. They are using up their vehicle for some much needed short term gain. In the 90’s I worked with a programmer that had a 200+ delivery paper rural route. They seemed to make it work, in their minds at least.
Sad to say there are an endless supply of these “fools.”
“there is a endless supply of fools willing to work for minimum wage using up their cars they have not payed for yet” took the liberty of editing your last sentence but you hit the nail on the head,not much more to add,hard times for many…..
I just had a conversation with my new neighbor who said he delivered the local newspaper for about four years. He quit when he finally did the math and realized that he was making about $1/hour.
Most are not fools.
“Hard Times, they say, will make a monkey eat red peppers…”
When I first moved to Florida, over ten years ago, the post office was using independent delivery companies to deliver the mail. It was awful, lots of missing mail and outright theft. Eventually they stopped outsourcing the deliveries. I think Amazon will learn that lesson too, the hard way.
The Prime Wardrobe thing only works for full priced merchandise. Someone like me would never use it because I always head for the sales rack first. I don’t think they want to ship me everything on sale in my size, for my viewing pleasure.
The difference is that Amazon can electronically track everything these drivers do, so if there’s theft or a missed delivery it’s very hard to hide. If they’re using an Amazon app to route their deliveries that means that Amazon is tracking their movements and can tell exactly where a package is checked off as delivered, and when.
Started to notice this when I realized I was ocassioanly getting same day delivery at 8 or 9 at night. Always comes in an Amazon van. Oh and they deliver on Sundays too.
It’s all good for now but if they drive out all the competition things will get shitty.
not just UPS raising prices per se but everything that’s not tied down is goin up in price (fast) or sizes shrinking (even faster).This economy is in perpetual negative growth soaring costs mode as far as the eye can see,it is what it is
Thanks to a fiat currency.
UPS has been muscling into Canada for some time. I would guess the main reason is that the big boys like Amazon used to stipulate delivery must be by UPS. However, my opinion is that they are a ver crappy company and service. Furthermore, we are a big country and they do not have the infrastructure in place to actually do the work so they ‘contract out’ legs. They seem to be more of an organizer/expediter than anything else.
I usually stipulate for any online purchases that they DO NOT use UPS. Occasionally, a supplier does anyway, and my package ‘disappears’ for a very long time forcing my anger to get on email and phone and try and see where my package is ‘waiting’.
If it is from the States I request USPS first, and Fed Ex 2nd choice. In Canada I ask for Canada Post. Often times, a UPS package goes to several companies and ends up with Canada Post, anyway.
I once bought a small 4X4 garden tractor from Arkansas. They gave me a fixed price delivery cost and then used UPS. At that time our buck was higher than US dollar. How do you damage a tractor, anyway? Ask UPS, they did. Now, when I need tires, parts, or implements I stipulate USPS or Fed EX. (Still cheaper than the local Kubota dealer who is a bandit).
UPS wear brown shirts for a reason as far as I’m concerned.
“the local Kubota dealer who is a bandit).”
I bought a small new Kubota excavator several years ago. It was priced right and has been one of my best investments. But parts from the dealer are out-to-lunch. A battery clamp was $28 ! So I bought a good jobber clamp for $4 bucks.
I thought about contacting Kubota, then thought WTF- let them lose sales if they are that greedy/stupid.
UPS is an awful company. I used to work for an organization that sent documents almost every day to my house. The envelopes would actually have tire tracks on them! How’d THAT happen? They’d be so dirty I’d have to sponge them off before handling. Also had a shipment of jewelry stolen out of the envelope. They left the torn envelope on the porch when I was supposed to sign for it.
Since Dec 2015 Amazon has purchased thousands of truck trailers…getting into transportation/logistics. Are Amazon Class 8 truck purchases here or around the corner?
Interesting question. Just guessing from how the local deliveries are set up (Amazon doesn’t employ the local drivers and doesn’t own the vehicles), I think this would be the model Amazon follows for the over-the-road drivers. I think they’ll be owner-operators and trucking companies. They’re still buying trucks to haul the Amazon trailers. Possibly instead of UPS or other carriers buying them?
Another nail in the coffin of “legitimate” work – where the employer also pays into Social Security, Medicare, unemployment insurance, workers compensation, etc. – and another step closer to all-piecework-all-the-time for the Prolz.
All profits to evil, gnome-like creatures like Bezos; all risks, responsibilities and obligations on the shoulders of the rest of us.
Here, Prolz, go fetch…
Amazon Logistics has screwed up two orders to me so far, NEVER had a problem with UPS or FedEx. I’ve heard of other similar screw ups.
Teething problems? Probably.
When I called Amazon to get a refund on the non-delivered stuff, the person on the phone knew about the problem, and said it had already been passed up the chain of command.
My problems were that Amazon does not have a tracking system like UPS and FedEx, so stuff can go astray when it is handed off from Amazon to contractors who do the “last mile” of delivery.
Two years ago in Florida, UPS drivers were making $29 an hour, $60K a year. They are unionized and get all the other benefits too. That is a very good salary/job in Florida. I think they are a great company, too bad they will get hurt by the race to the bottom.
Most of my Amazon packages are delivered by USPS.
In my part of Florida, UPS is the closest thing to having a gorilla delivery the goods. If my reasons are why Amazon stopped using them, well can’t blame Amazon.
UPS will set boxes on the side of the road. I have had them do “sign for” without my knowledge and that includes signing “FIDO” I kid you not. I have had boxes arrive as if the truck back over the box more than once. NEVER received a box that was not dented as if dropped. A Rotel receiver looked as if they dropped it from ten stories and then ran over it…had the damn nerve to tell me “they picked it up that way from the store”. Bye Bye UPS, you did yourself in.
FedEx completely the opposite. In fact FedEx will walk up the 200 foot drive way and hand you the box regardless is it is insured or sign for. The boxes 99% of the time look as if they sat on grandmas lap during the whole trip. Got a jar of raw honey from Walmart ( Not available here) and the guy walked it up and put it in my hands. Can’t say enough nice things about FedEx and they are cheaper than UPS. Friendly, polite, efficient, what more could you want.
USPO is about the same as FedEx but expensive and the delivery person we have wines if it is more than a letter to carry.
It must be employee related because a desk I purchased was broken 3 times by fedex and they also broke the chair. I no longer buy big items if they are delivered by fedex in my area. Where I am they are worse than the post office. UPS is always fine.
FedEx Ground (green logo) drivers are contractors.
FedEx (air — orange logo) are employees.
I live in Germany. I come home for a few weeks at Christmas. I had to get some stuff out of the house and sold it on Ebay. I was surprise by how expensive shipping was in the US.
I most cases I can ship it back from Germany cheaper than I can ship it inside the states.
I can send up to 500 gram (1 pound) with a combined HLW dimension of 90 cm for only 3.70 € as a “gross Brief, or 1 kg HLW 90cm for 7€ (Maxi Brief) Mailing something from the US to Germany would cost an arm a leg.
They have a service in Germany called “Warensendung” for goods in clasped envelopes for up to 500 gram in Germany for 1,90€, 0,90€ up to 50 gram. I never had a problem with the envelop not being sealed shut.
All in all, I find the German mail much better than the USPS.
I sold some stuff on Ebay to US buyers and it was cheaper to mail it from Germany before I flew home, than to bring it home and mail it.
In my case here in the US it was the UPS , FedEx and USPS rate hikes that started in earnest 6 years ago equaling or exceeded the value of the items I was shipping to the EU/UK and Asia that was the final straw pushing me into taking the FA , PA , CPA etc advice .. selling out .. throwing in the towel and taking early retirement from what had been since the 70’s both my vocation and avocation . Oh well .. luckily …[ don’t kid yourself all ye of victim mentality .. luck does play a significant role in one’s success along with a lot of hard work ] ..I was well positioned to do so … though in all honesty I’m becoming quite bored with this early retirement thing .
This explains why State Farm sent me a questionnaire asking if my Dodge Caravan was used in business. Describe the type of business. Current mileage. What is your estimated yearly mileage. I have owned vans for many years . This is the first time I was required to send in the form. My wife who worked in insurance told me they used to ask if the vehicle was used in pizza delivery.
Every insurer does that and has been doing that since as far back as I can remember . Fact is I’d be hard pressed to remember a time when insurers didn’t ask if the vehicle in question was being used for ‘ business ‘ regardless of what kind of vehicle it is .
Amazon has been planning this for some time but the Uber delivery is the newest. $25 /hr should get them lining up !
Here’s the jets from last year
United Parcel Service has been a great company. Their drivers are pretty well paid but they work their asses off each and every day plus holidays.
UPS costs have risen with inflation; plain and simple. I view them as a good indicator for overall general inflation (not asset inflation such as houses, college, etc.)
Amazon has not made any profit yet. Their model appears to be undercutting other competitors until they force them out. It is a race against time in a sense because Amazon can’t continue to lose money forever or con the investing public with their stock price.
It will be interesting to see how this all plays out but my guess is that they will not be as fabulously successful as everyone thinks these days. In the end, real economics may catch up with them; things like paying people a real wage for services rendered.
WTF? Do you live in a vacuum? Amazon has made a profit for 8 straight quarters.
You are correct. I stand corrected. And WTF, I don’t live in a vacuum. Just made a mistake (senior moment). Thinking of another company. That said, I still believe Amazon’s model is overly hyped and will NOT play out like many believe. I could be wrong though. Known to have been a few times in my life.
AU Contraire in regard to AMZN’s retail operations
Please do 3 things
First subtract out all stock grants from reported profit.Employees consider it compensation and so should the company.Eventually the shareholders pay for these grants.Stock grants are definitely a cost for the company.
Second AMZN uses a large amount of operating leases and capital leases.Operating leases are like renting and the asset stays OFF THE BALANCE SHEET .Enron became infamous for hiding problems in off balance sheet items.Capital leases are more like loans ,but only the interest is considered as a cost in the cash flow statement.This overstates operating cash flow and increases income
Third ,separate AMZN’s cloud computing business form its retail operations
If you do these you will find that AMZN is losing money and is COMPLETLY dependent on its negative working capital to provide capital.
You are correct. Any reported profits are phony. Like a shark, Bozos has to keep moving to stay alive. Hence the Whole Foods deal.
My son’s friend was lucky enough to get a warehouse job with Amazon and he is very happy. He was working for McDonalds making minimum wage for years and Amazon paid him $14 hr. to start.
“AMZN has not made any profit yet…”
AMZN retained earnings turned positive around 2010; Mar 2017 net balance for LTD accumulated profit (aka: retained earnings) is $6.3B.
The USPS blows away UPS shipping prices, AND, usps delivers tons of ups packages at boot.
AND the USPS parcel business is actually profitable!
UPS? My Amazon Prime packages are usually delivered through USPS. Only on rare occasions would Amazon use UPS and this is based on 3 years history. And yes, I too live in San Francisco.
Amazon hereabouts sometimes uses a combination of UPS and USPS – UPS in a batch to the local post office, rural letter carriers the last leg.
For the last six or eight years deliveries to the farm have been about equally divided between FedEx, UPS, and On-Trac (the Post Office won’t deliver out here–I have to drive to town and pick up a package). Lately, though, I get deliveries from an unmarked minivan, usually driven by immigrants (Pakistanis for the most part), at night and on Sundays. This is not just shipments from Amazon, but from various sources. My farm is eight miles from a small town, and my driveway is a dirt road a mile long. Everyone who delivers out here loses money on it; I’m grateful that they make the trip.
Some commentators express dismay that this sector is shifting over to the gig economy. It seems like there is a contradiction here. The virtues that our culture pretends to embrace–independence, self-reliance, gumption–are the virtues of the gig economy. The nanny corporate employer that takes care of every aspect of life is just the opposite of that. Although self-employed farming is not exactly a ‘gig,’ I feel solidarity with the independent delivery people. More power to them.
“The virtues that our culture pretends to embrace–independence, self-reliance, gumption–are the virtues of the gig economy.”
Yup, exactly this. I’ve asked numerous Lyft, Uber drivers and Airbnb hosts how they like those platforms. The ones that are motivated can make a lot of money and love it! It seems like any other endeavor to me: the harder you work, the more you get out of it.
I think it is a fair bit more complicated than just having “independence, self-reliance and gumption”. I have great respect for the garage inventor who creates and markets something people want. Or the guy who tries to build up a working restaurant. Or the farmer who tries different seed varieties or plants to move his product up the food chain.
But these kind of gig jobs are acts of desperation and don’t lead anywhere. These guys aren’t going to end up with solid income streams that can be used to provide for a family over the long-term. That’s exploitation, not self-reliance.
So career step one is Uber. What is step two? There is no step two. Even McDondalds has better career prospects than uber – you can actually get a promotion there. And unlike actual entrepreneurship, gig jobs lead nowhere, no matter how successful you are. You are still building someone else’s business and working according to the terms they set just like any other employee – but like an entrepreneur you are accountable directly for any and all failures.
Gig jobs can be good stepping stones for people who need money, who doesn’t, on the way to something better. But mostly it is just a roach motel for struggling millenials (who are easily wow’ed by any salary higher than minimum wage) who are still clinging to the hope “one more degree” will finally put them on the right path.
great perspective! After thinking about your point of view….I agree.
If this gig doesnt work out for someone…they will eventually move on either by choice or default. Ultimately this all ties back to inflation and deficit spending. The corrosive effects gradually erode any standard of living.
Couldn’t UPS and Fedex just copy Amazon delivery model? Even today UPS hands off packages to USPS sometimes.
If you are UPS, these small companies will be very useful. First off, you don’t need them on your payroll; no need to pay for healthcare or pay a steady income. Secondly, it saves you the headache of figuring out the last mile problem in every city; these local businesses know it better. Thirdly, you are free to walk away from any of these local delivery folks if you don’t like. If UPS badly needs them, they can always acquihire these companies.
The point is Amazon has no economic moat here. The same actors will show up whether you are dealing with Amazon, Walmart, or any other delivery through UPS.
If you ask me, it opens up the market that was locked away by UPS and FedEx to competition. More employment opportunities too since anybody can start a delivery company now.
Maybe this is UPS’s way of giving the middle finger to Amazon? Do they have an all-inclusive contract or a per-package delivery fee? There’s no way they can make money delivering one trinket here, one trinket there. Increase the rates and decrease Amazon’s BS. Stick it to the man.
UPS seems like a good company that values its employees (maybe I’m being naive). I hope they remain successful. Amazon is trash.
I think the company is called Lasership, they require that you own a white package van and they are undercutting UPS by a large amount. UPS drivers will have to rip up their contract and open up to lowering wages for drivers or they will be priced out of many contracts that lasership is taking on. I think lasership delivers vitacost also.
In general, the problem w/ automobiles (and the societies that depend on them) is that by themselves, the cars do not produce any value for the owners. Driving a car cannot pay for the car.
In general. What pays is debt: the drivers, their bosses, their companies’ customers, etc. all borrow from banks/Wall Street with that money funneled back to car manufacturers. Drivers are conduits carrying the flow of funds from finance upstream: instead of economic return drivers obtain ‘utility’ = pleasure. Status. Self- expression … in general.
In 3d world countries, luxuries such as personal cars are unaffordable except for upper income persons: all others must use the vehicle for pay for itself, and the driver a pittance; cars are used for delivery, jitney, informal taxi, farm use, etc. An American using his car to deliver packages for AMZN is the same a driver delivering packages (goats) in Pakistan, Kenya, Dominican Republic or Cambodia. Ditto driving for Uber or Lyft.
Regarding AMZN, the issue is whether the small payments to drivers are enough to offset the costs of operating the vehicle now that the utility part of the car ownership equation has been ‘factored out’. If a car is intended to be a money machine then it really has to be one!
Otherwise AMZN (and Lyft and Uber) are simply eating into a rapidly wasting reserve of both funds and good will.
Cars have been the mainstay of American pop culture since the early 1900’s; identified with ‘fun’ and sex (in the back seat). Now they are becoming something ‘else’: instruments of middle class decline.
That USA Today story begs the question. Would this be allowed if those abused truckers were American citizens rather than immigrants?
And they said the American Middle Class don’t deserve their fate. Ignorance is indeed bliss!!!!
UPS doesn’t deliver packages, they hand them off to the USPS which adds a day or more to delivery time. Let them go out of business.
Wrong. That’s UPS *SurePost*, a cheaper option from the company you bought from.
UPS still delivers to us, but not from Amazon.
UPS big brown vans deliver most packages here. For large packages, Probably about 80%UPS 10% FedEx and 10% USPS.
Smaller packages often originate with USPS.
What has not been mentioned is how UPS behaves like total asses on short distance shipments. If you ship something 50 miles, they will still use 3 days unless you pay for expedited shipping.
That behavior alone makes me loathe UPS with a passion, and cherish their going out of business. Also, the rate differential between individual and business customers is steep.
Lastly, in many cases, it appears the package stays still during the weekend, which is not the case with USPS.
I don’t expect an Oreo or Kim Kardashian memoir delivery from Amazon on a Sunday—I have a little more decency and respect than that. Does everything have to be 24/7? Can’t anyone catch a break? Maybe if this country took a day off a week and thought about sh/t, we wouldn’t be in this mess.
Like in Germany.
No delivery at sunday and mostly not at monday.
You are right.
Patience is not an american virtue.
The main complaint against UPS is that they will sit on the shipments for 2 days if it is local, but without having paid extra for overnight delivery. Saturday and/or Sunday delivery is separate.
I live in Germany. The Sundays here are great. Almost everybody has the day off. No stores are open, but with a little planning it doesn’t matter. There is a better quality of life. The streets are dead. People go out and walk or ride their bikes in the woods. It is one day in the week you you can take break from consumerism.
“Patience is not an (A)merican virtue.”
This American was a patent examiner and knew a German national who was much less patient that he was (is).
Stereotypical generalizations just insult the exceptions.
So don’t use UPS for shipments under 50 miles,
How hard can this be?
I’m in central Florida and get about 100 packages a year (roughly 75 from AMZN), split between UPS and USPS. AMZN stuff almost always comes faster (1-2 days) than everybody else. In 4.5 years, have not had a damaged shipment from anybody.
AMZN has recently started giving me a $1 credit if I opt for 4-5 day delivery times (which I am beginning to do).
I prefer FedEx over UPS anyway. The Fed Ex service is much faster for packages from Seattle to central California and less expensive. There was another delivery service that was bringing some items to my house, “OnTrac” based out of Arizona. They were really very poor in their service. They wouldn’t bring packages to the house and just dropped them by the road. After complaining about it to Amazon, nothing changed. Then, they did it again. A package got driven over by “someone” and returned to Amazon. Amazon has now promised no more deliveries to my house by “OnTrac”. So far, so good…
I live in a locked building on a busy city street (Pittsburgh) and AMZN drivers tend to buzz and then leave the package on the sidewalk leaning against the front door. I’ve been here to go down to retrieve packages but will think twice about ordering from Amazon if I have to deal with missing packages. I hate Walmart but if there is a competitive price I’d rather go pick up a package at the local store.
Some day…Alibaba will take Amazon to the woodshed….all the way from China.
However, right now, the have WAY different business models. Alibaba is more like eBay than AMZN, matching buyers & sellers with sellers doing their own shipping (this obviously works in China).
Why so? Details plz…
The internet has caused a dis-inflationary effect on the economy . I know that many of these companies have disrupted traditional business models/cartels (e.g airbnb, uber, nerd wallet, amazon) and many are not financially sound only to be “kept alive” by high stock prices and unlimited cheap debt financing courtesy of the Feds. You as a consumer have greatly benefited from the resulting lower prices. So maybe the feds money expansion does “trickle down” to some degree. But eventually a company needs solid earnings per share. On a side note: the feds are raising rates is this dis-inflationary/low growth environment which completely contradicts earlier fed speak .
Amazon uses UPS, FedEx, and USPS. They use
all three to bid against each other. If a certain
area has a high number of delivery failures, they
will switch to another delivery service. For most
deliveries, USPS is cheaper just not always quicker. There is a reason FedEx and UPS
let the Postal Service deliver for them.
Bikes. That will be the last mile.
Let’s see, where do I start?
Let’s go with Australia Post. This year the head of Australia Post quit. He was getting paid around A$4.8 million a year. Yep, that’s right.
Service and costs from Australia Post have never been worse. The price of a domestic letter went from 50 cents with next day delivery to A$1.00 with a 2 or 3 day delivery. If you want the ‘old’ next day delivery’ (no guarantee of course) the price shoots up 10 A$1.50.
The price of a basic international letter to the USA now costs A$2.95. Way back when you could use regular stamps on the letters. After the GST (a VAT or sales tax) was introduced for domestic products the post office came out with “International Stamps” for use on international mail which required no GST.
However, you can use regular stamps on international mail, but have to ADD another 10% for GST purposes.
You figure that one out – so if you use regular stamps that international letter now costs $$3.25 to the USA. The next step up the ladder for a letter is A$8.00 using international stamps.
Ridiculous. I don’t send Christmas cards to the USA anymore.
Parcels or registered mail within Australia? What a joke. To send a package from Melbourne to Sydney using an Australia Post pre-paid satchel will cost A$8.50 and take up to four days. That is for the smallest satchel with weight up to 500 grams. (Just over a pound.)
Well, maybe as there have been huge problems with the parcel sorting machines that send parcels all over the place and then get lost for sometimes months……….It took two weeks for a parcel I sent to a suburb 20 kilometers away.
To send a parcel overseas. Let’s look at one to Japan. To send a 300 gram parcel will cost you A$14.39 for economy air and A$22.26 standard. No tracking included.
(By the way that same parcel from Japan to Australia will cost you 380 yen or less than A$4.00 by economy air. If you want to send it EMS (Express) from Japan it would cost you 2000 yen and include tracking, insurance up to 2 million in value, and a 3 day delivery estimate, and weight up to 500 grams.)
Equivalent from Australia to Japan would be A$41 with no coverage.
Insurance on that item from Australia to Japan would cost you………………….just wait…………….over $A400!!!!!
And continuing with Japan, a big Japanese transport company, Yamato, is pulling the plug on same day Amazon deliveries as they weren’t making any money and the stress on drivers.
Yamato also increased its prices for delivery for the first time in 27 years!!
Where I live (Pasadena, CA) Amazon’s “own” delivery service is going full throttle. Main upshot is grubby white vans with panicky looking drivers pulling mid-block U turns and stopping in traffic lanes. This morning I was behind a guy who parked in a traffic lane, jumped out of his van leaving the door open and sprinted across the street to make a delivery.
When younger I travelled widely, and always appreciated coming home to a place where good jobs abounded and wealth was (to some extent) shared. Now it feels like a third world economy with desperate people doing risky things just to make a buck.
UPS is Teamsters and all the negatives that entails. UPS is the Union’s biggest employer. The handwriting is on the wall for the Mafia-run union.
Here in China we have UPS, but no union. Also, they bought a Chinese company called TNT to try to catch up with Fedex and China Post parcel division EMS.
If you look at revenue per employee for UPS, it’s about the same as it is for non-union FDX. Your ignorant characterization of The Teamsters as mafia-run is counter factual. The key difference is that the unionized employees at UPS get better compensated, better benefits, including a pension plan (defined benefit). In other words, the workers that contribute to those revenues, share in those revenues. Maybe you’d prefer the Chinese model, where the laborers are better exploited, and their “communist” overlords take the Lion’s share of profits, all the while ignoring worker and environmental safety. Like the smog, pollution and proletariat exploitation, stay in China. Good luck when the next revolution rolls around. I’ll stay in the good old USA with it’s higher standard of living, thank you very much.
As far as I know the Teamsters pension plan is in big trouble. They have or are going to cut pensions. Those UPS workers are probably the only thing keeping them going.
You’re referring to two different funds.
Teamsters working for UPS have their own pension fund. The ones in trouble are the multi-employer regional plans, which are no longer viable because of deregulation and the collapse in union density.
Central States, specifically, is in deep doo- doo, for sure. It was a Taft- Hartley plan, and trucking deregulation did it in. I believe UPS has a special carve out deal for the New England pension, so UPS employees covered have a reasonable guarantee.
Walmart’s delivery system needs some work. They offer a new pickup option that allows you to order on-line and pick up items at the store, for a discount. I ordered something three weeks ago. Received an email last week saying it was not ready for pickup yet. Today received an email saying it was already picked up, but I didn’t pick up anything. I contacted the store designated as the pickup location, but they couldn’t tell me the status. They said they’ll call me back. I’m left hanging.
Walmart appears light years behind Amazon in terms of systems to track things. Maybe they can’t find any decent programmers to move to Bentonville, maybe they aren’t serious about making investments in the on-line area, or maybe they don’t have a culture of execution. Either way, that company appears way behind Amazon’s service levels. Anybody thinking Walmart will be strong competition in this area should think twice.
Just do home delivery next time then—it’s very quick and they package very well. You have to show an ID to pick up your item, keep that in mind if they say you picked it up already. I don’t see how they’ll save money doing this store pick-up option because I had to buzz somebody to come over and they then had to sift through packages to find mine.
Walmart developer team is in Silicon Valley and they are investing big money to catch up with Amazon. They are hiring big time.
I am based in Bay Area. I have heard horror stories of how badly the s/w teams in Walmart here are. A few years ago Walmart bought a company that it renamed to Walmart Labs. Walmart Labs, in its previous avatar, was all about social shopping (remember that fad?). The Walmart Labs people then took charge and relocated the office. But before that they laid off a bunch of people. There was always a fear of pink slips.
The Walmart Labs move turned out to be, from what I hear, a dud. The story goes that the place is now as bureaucratic as it can get. I was told that there was no work to do and everything, including making a cosmetic change to a button on a web page for example, has to go through an approval process. No room for the developer to make any mistakes or try anything new. I have heard of developers stressing out about becoming fall guys should they make a small mistake in editing the style sheets.
Another story I heard was of an applicant getting rejected because the resume’s font size was not to the liking of the manager! These kind of stories tell you volumes about what the managers think of their part in saving the company — not their problem.
I hear the people from Jet.com are now in charge. I am guessing the hiring you mention is due to them.
I have seen these acquisitions happen in Bay Area in the last 15 years. A big behemoth acquires a start up hoping to use it to salvage itself. The acquired group then tries a power grab. Little do they realize that the “deep state” is entrenched and it will prevail. The deep state has neither the interest nor the urgency that is needed. They focus on building empires. Pretty soon, the star developers in the acquired start up leave and it is business as usual for the deep state.
Tomorrow, there will be another Jet.com kind of start up by an alum of Walmart who will then repeat the whole process all over. IMHO, Walmart will not be able to fight back against Amazon.
There are two highly invasive predatory species at large in North America.
In consumer goods it’s the Snake.
In financial fraud we are plagued by the Vampire Squid
The “Uber-ing” of delivery services. cool.
I previously posted about my AMZN packages left on the sidewalk. Yesterday there were three other AMZN packages for a neighbor left on the sidewalk. I can’t imagine Amazon tolerating this behavior from its contractors, but until it changes I’ll take advantage of ebay’s price matching policy and order there instead.
Wow,such passion, loved reading all comments. Gotta throw mine in… I love my local UPS team. I live 34 miles from a small town in Eastern Oregon. UPS comes in horrible weather and even climbs through my barbed wire fence if I forget and lock my gate. Regular FedEx does OK here and I get most Amazon packages at my PO Box, in a hamlet, 5 miles away. UPS driver sent a repair man for my broken heating line during our horrible winter. Of course it broke on a Friday afternoon and no one from town would come out. Keith delivered a package, listened to my tail of woe, knew a local welder, and two hours later the man and his wife showed up and I had heat again in half an hour. Bless, you, UPS.
The ubiquity of Amazon Prime is/was distorting UPS’ business model. They never aspired to deliver to every house like the Postal Service.
Also, Amazon’s delivery service is substantially replacing the odious OnTrak, which was Amazon’s former low-cost provider. (In a incident of divine irony, an OnTrak vehicle once killed a bicycle-riding Amazon executive.)
UPS will continue to prosper with commercial/industrial logistics.
UPS doesn’t really want Amazons lightweight business. There is no money in small package delivery. Too many stops per driver. That is why their pricing scale on small parcels does not compete well with USPS. That is also why they have implemented a surcharge on holiday deliveries. The training of seasonal drivers and the additional fleet demands suck up more money than they can ever make. So their plan… chase those last second deliveries to the competition and let them deal with the headaches. Then UPS can maintain their excellent service to their regular customers without having to change their entire schedule to handle a few weeks huge volume increase.
They want heavier packages and most of all they want large volume deliveries to a single delivery point. That’s where the money is.
I like Amazon. But UPS has some pretty smart guys running the show too. They will be just fine.