Amazon has long downplayed its delivery ambitions, claiming its own shipping and delivery services are only intended to "supplement" existing partners such as UPS and FedEx.
Now, Amazon is making it clear that it's competing with those companies, as it added "transportation and logistics services" to its group of competitors for the first time in its annual filing last week. Here's the section of its filing under "Risk Factors" (emphasis added):
"Our businesses are rapidly evolving and intensely competitive, and we have many competitors in different industries, including physical, e-commerce, and omnichannel retail, e-commerce services, digital content and electronic devices, web and infrastructure computing services, and transportation and logistics services, and across geographies, including cross-border competition. "
The Risk Factors statement in its September 2018 quarterly report was identical except for the bold-faced words. The company did not mention transportation and logistics services under Risk Factors in its 2017 annual report, either, although it did mention "companies that provide fulfillment and logistics services for themselves or for third parties" under "Competition" in last year's report.
The new language suggests the importance of Amazon's growing shipping and delivery services, and that it should be considered a more serious competitor to bigger logistics players such as FedEx and UPS. The change follows Amazon's disclosure to call itself a "transportation service provider" for the first time in 2016.
In recent years, Amazon has significantly expanded its logistics footprint. It has leased dozens of aircraft and thousands of trucks to handle parts of its massive amount of shipments. It's also delivered more packages through independent contractors and new initiatives such as Amazon Flex, which depends on hourly drivers.
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Last year, Amazon began testing a service called Shipping With Amazon to take over more of its package shipments. In November, CNBC reported that Amazon was offering steep discounts — as much as 50 percent cheaper than those offered by UPS — to court more sellers to try the service. Last month, The Wall Street Journal reported that the new shipping service had expanded beyond testing markets in London and Los Angeles.
Amazon's shipping costs jumped 23 percent last quarter, to a record $9 billion, while for the full year, it spent over $27 billion on shipping. Its cost of shipping is expected to grow even further, as Amazon continues to offer faster delivery options to a wider customer base. The U.S. Postal Service, one of Amazon's largest shipping partners, has also proposed a price hike this year for a key service used for a lot of Amazon deliveries, following President Donald Trump's repeated taunts attacking its low rates.
FedEx says it is less concerned about Amazon's rising competition. Last year, FedEx CMO Rajesh Subramaniam said that Amazon's logistics should not be "confused as competition with FedEx" because of the company's global infrastructure and 40-year experience in the space.
UPS CEO David Abney, meanwhile, is cautiously acknowledging Amazon as a competitor. Last week at the World Economic Forum in Davos, Abney told Business Insider that while Amazon is a customer, he also monitors the company "as if they were a competitor."
Some Wall Street analysts are predicting that Amazon will double down on growing its shipping service this year. RBC Capital Markets' Mark Mahaney told CNBC in November that it's "only a matter of time" before Amazon invests heavily in logistics to become a more direct competitor with FedEx and UPS.
"There's another investment cycle coming, and I bet you it's around shipping and them actually coming out and directly competing with FedEx and UPS," Mahaney said on "Power Lunch." "I think it's just a matter of time before that happens, and it will be an investment cycle in front of that."
Amazon declined to comment on this story.
