Amazon Steps Up Its Shipping Land Grab

Amazon Steps Up Its Shipping Land Grab

Though Amazon has been playing the long game when it comes to shipping, it now seems that they are going full-speed-ahead. In typical Amazon fashion, the company is undercutting the pricing of the traditional players in this field – FedEx, UPS, USPS, and the like – by getting rid of some additional fees, such as fuel surcharges.

This is a classic Amazon tactic for entering a new market, we only need to look at Wholefoods for a recent example.

Amazon Can Take the Hit

Amazon was, for a time, the world’s most valuable public company. Unlike many other companies, Amazon has put growth before everything – including profits. In fact, if you remove Amazon’s wildly successful cloud-computing business, their retail business alone loses billions of dollars a year.

And they are perfectly happy with that.

What’s most important to Amazon is growth – at all costs, and that seems to be the philosophy fueling their expansion into delivery. With such deep pockets, Amazon can afford to lose billions of dollars over a few quarters in order to grab business away from incumbent players in the market.

Surcharges

Surcharges can end up being 30% of total shipping costs – by waiving many of these, Amazon is going to make an offer so tempting that many will be unable to pass it up.

Here are just a few examples of surcharges increases for 2019:

UPS

  • Over Maximum Limits: $700 (40% increase)
  • Additional Handling, Weight (Over 70lbs): $23.00 (21.05% increase)
  • Additional Handling, Length: $14.25 (18.75% increase)
  • Additional Handling, Width: $14.25 (18.75% increase)
  • Additional Handling, Packaging: $14.25 (18.75% increase)
  • Large Package Surcharge, Commercial: $95.00 (18.75% increase)
  • Large Package Surcharge, Residential: $115.00 (27.78% increase)
  • COD: $14.50 (7.41% increase)
  • Ground Weekly Pickup (>$75/ Week): $13.50 (8.00% increase)
  • Ground Weekly Pickup (<$75/Week): $27.00 (8.00% increase)
  • Address Correction: $16.40 (3.14% increase)
  • Delivery Area Surcharge, Commercial Ground: $2.80 (7.69% increase)
  • Delivery Area Surcharge, Commercial Air: $2.95 (7.27% increase)
  • Delivery Area Surcharge, Commercial Ground Extended: $2.80 (7.69% increase)
  • Delivery Area Surcharge, Commercial Air Extended: $2.95 (7.27% increase)
  • Delivery Area Surcharge, Residential Ground: $3.80 (8.57% increase)
  • Hazardous Materials, Air, Accessible Goods: $53.00 (10.42% increase)
  • Delivery Area Surcharge, Residential Air: $4.35 (7.41% increase)
  • Delivery Area Surcharge, Residential Ground Extended: $4.85 (8.99% increase)
  • Delivery Area Surcharge, Residential Air Extended: $4.85 (8.99% increase)
  • Residential Surcharge, Ground: $3.95 (9.72% increase)
  • Residential Surcharge, Air: $4.55 (9.64% increase)
  • Hazardous Materials, Air, Inaccessible Goods: $49.00 (5.38% increase)
  • Hazardous Materials, Ground: $35.00 (6.06% increase)
  • Dry Ice: $5.55 (5.71% increase)
  • Delivery Confirmation Signature Required: $5.00 (5.26% increase)
  • Delivery Confirmation Signature Required, Adult: $6.05 (5.22% increase)
  • Third Party Billing Fee: $4.50 (80.00% increase)

FedEx

  • Print Return Label, US Express and Ground: $1.00 (100% increase)
  • Oversize Charge: $90.00 (12.50% increase)
  • Additional Handling, US Express and Ground (Dimension): $13.50 (12.50% increase)
  • Delivery Area Surcharge, SmartPost: $1.40 (7.69% increase)
  • Ground Weekly Pick Up (>$75/week): $14.50 (7.41% increase)
  • COD: $14.50 (7.41% increase)
  • Address Correction: $16.00 (6.67% increase)
  • Hazardous Materials, Ground: $35.00 (6.06% increase)
  • Residential Surcharge, Ground: $4.40 (6.02% increase)
  • Residential Surcharge, US Express and Ground: $4.40 (6.02% increase)
  • Delivery Area Surcharge, Extended, Ground: $2.70 (5.88% increase)
  • Delivery Area Surcharge, Home Delivery: $3.65 (5.80% increase)
  • Dangerous Goods, Dry Ice: $5.55 (5.71% increase)
  • Delivery Area Surcharge, Extended, US Express Residential: $4.65 (5.68% increase)
  • Delivery Area Surcharge, Extended, Ground Residential: $4.65 (5.68% increase)
  • Delivery Area Surcharge, Extended, US Express: $2.85 (5.56% increase)
  • Residential Surcharge, Home Delivery: $3.80 (5.56% increase)
  • Dangerous Goods, Accessible, First Overnight, Priority Overnight​: $98.00 (5.38% increase)
  • Dangerous Goods, Inaccessible, US Express​​​​​​​: $49.00 (5.38% increase)
  • Direct Signature: $5.00 (5.26% increase)
  • Adult Signature: $6.05 (5.22% increase)
  • Non-Machinable, SmartPost​​​​​​​: $3.05 (5.17% increase)
  • Dangerous Goods, Accessible, International​​​​​​​: $153.50 (5.14% increase)
  • Delivery Area Surcharge, Express Residential​​​​​​​: $4.20 (5.00% increase)
  • Delivery Area Surcharge, Ground Residential​​​​​​​: $4.20 (5.00% increase)
  • Dangerous Goods, Inaccessible, International​​​​​​​: $75.50 (4.86% increase)

Just the Latest in Amazon’s Long-Term Plan

Amazon making in-roads into the delivery business is not a new development, it’s been in the making for more than half-a-decade. Back in 2013, Amazon circulated a secret document internally. It outlined a plan – dubbed “Operation Dragon Boat” – to enter (and become a dominant player in) the shipping industry.

The document leaked in 2016, in the midst of a flurry of events that seemed to back up its veracity.

In late 2018, Amazon announced that it was hiring thousands of delivery drivers for holiday season last-mile delivery. It’s highly likely that this was merely a test-run for a larger rollout of last mile delivery that will likely grow into a full-fledged service – competing with the likes of FedEx and UPS.

Intelligent Audit provides its clients with a global, all-mode transportation audit, recovery, freight payment, and business intelligence reporting partner.

You might also like...

BLOG POST

Your 2017 Rate Change Overview

BLOG POST

Holiday Shipping By the Numbers

Subscribe Now

It all starts with a conversation...

Contact Us

Set up a call with one of our experts to discuss how Intelligent Audit can help your business uncover opportunities for cost reduction and supply chain improvements through automated freight audit and recovery, business intelligence and analytics, contract optimization, and more.