From Louisville Business First via CNBC
Winter is coming, logistics world.
Last week brought the news that Amazon.com Inc. had ordered 20,000 delivery vans from Mercedes-Benz. CNN reports
that this deal is a big leap from the Seattle-based e-commerce
company's first order of 5,000 vans. Amazon will lease these to
third-party partners, who will operate them for last-mile delivery —
basically, getting packages from a shipping hub to your house.
This is yet another step
in Amazon's plans to build its own delivery service, and it's worth
watching to see how it will affect United Parcel Service Inc. Amazon
also is allowing allow people to use their personal vehicles for delivery in some cities.
Around this time last year, I wrote about how Amazon's plan for a shipping hub in Cincinnati could affect UPS operations in Louisville. UPS's largest air sorting hub, Worldport, as well as significant ground and Supply Chain Solutions are in Louisville.
Amazon, for its part, operates large distribution centers in Jeffersonville and Shepherdsville.
Typically, each of these
companies does a lot of hiring to staff these operations during the
holiday season — hence my "Game of Thrones" reference above.
The news about Amazon's delivery van purchase got me thinking about how important that company is to UPS.
Being diversified is one
of UPS's strengths. It said in its annual report that no single customer
accounts for more than 10 percent of its consolidated revenue. But in
the "risk factors" section of its annual report, it acknowledges that
"changes in our relationships with our significant customers, including
the loss or reduction in business from one or more of them, could have
an adverse impact on us."
The company doesn't name
Amazon specifically. But it says some of its large customers might
account for a relatively significant portion of revenue growth and — in
talking about risk to its own business — even speculates that these
customers could take their volume elsewhere, demand lower prices or
develop their own shipping and distribution capabilities....MORE
