Can Uber Disrupt FedEx And UPS?

With Uber experimenting with an entry into the local delivery market, a common question has been what impact, if any, will it have on delivery and logistics stalwarts FedEx (NYSE:FDX) and UPS (NYSE:UPS)? Will the prodigiously growing technology company be able to capture enough share from these giants to really make a dent? While Uber’s technology and innovation are certainly impressive, and its same-day delivery plans look like they will be effective, we don’t believe that it will have a major impact on FedEx or UPS. Here’s why:

• Uber’s delivery service is reportedly focused primarily on local, same-day shipping, which makes sense given its existing platform and large base of both users and drivers. This is a significant opportunity for Uber, but it isn’t a major area of focus for FedEx or UPS, which specialize more in long-haul shipping and logistics.
• According to Trefis estimates, U.S. Overnight Delivery (both box and envelope) account for less than 10% of FedEx’s value. This is the area that would be most vulnerable to Uber, and much of the company’s volumes for these segments are not local deliveries. Therefore we believe there wouldn’t be significant overlap with Uber’s planned services.
• We believe Uber’s local delivery services would be more of a threat to players in that specific domain. This includes niche players such as Instacart (which provides local grocery delivery), and some larger companies such as Amazon, which has also entered the same-day delivery space.
• While Uber’s technology has revolutionized the transportation industry, UPS and FedEx are no slouches when it comes to tech and logistics. Their consistent innovation makes them comparatively less vulnerable to disruption than the taxi industry.

Have any thoughts on how Uber may affect these companies? Let us know in the comments section, and see the links below for more information and analysis:

• Three Key Strategies Driving FedEx In 2015
• Strong Increase In Pricing Expected For FedEx 
• UPS’s Margins To Improve With Increased Operational Efficiency
• Trefis analysis: FedEx’s U.S. Express Freight Volume
• Trefis analysis: UPS’s Total Ground Shipments
• Why the CEO of FedEx is wrong about Uber (VentureBeat)
• FedEx CEO: Uber Is Terrific But No Threat (WSJ)

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