Morgan Stanley has released a report stating that Amazon is already delivering in the neighborhood of half of all its own packages, and that it will soon surpass FedEx and United Parcel Service (UPS) in terms of volume, according to a report by CNBC.
“Our AlphaWise analysis shows that Amazon Logistics already delivers ~50 percent of Amazon US volumes, focused on urban areas,” Morgan Stanley said.
Amazon Logistics is the company’s in-house shipping and logistics operation. Stanley said that Amazon Logistics has “more than doubled its share” of the amount of packages it ships, and that the volume is up 20 percent from a year ago. Amazon is now shipping packages at a rate of 2.5 billion a year. UPS is estimated to ship 4.7 billion and FedEx 3 billion.
“We see more of this going forward as our new bottom-up US package model assumes Amazon Logistics US packages grow at a 68 percent [compound annual growth rate from 2018 to 2022],” Morgan Stanley said.
That would mean that Amazon could be shipping as many as 6.5 billion packages a year in two years, which would make it the company with the most volume in the industry.
“To us, Amazon Logistics is already-large scale and with a fleet ~1/5 the size of competitors, it speaks to its ability to use density and technology to drive efficiency,” Morgan Stanley said.
Morgan Stanley also said Amazon Logistics focuses on densely populated areas more than its rivals do. Around 61 percent of Amazon’s shipping and package volumes come from suburban regions, and 28 percent is from urban areas. Only 11 percent of its volume comes from rural areas. Competitors like UPS and FedEx have a deeper focus on rural areas, and the rest of the industry gets about 20 percent volume from them.
Morgan Stanley rated Amazon shares overweight, and gave them a $2,100 price target, which is about 20 percent higher than the stock’s current value.