Amazon Will Put UPS Out of Business

-edited

Amazon's new robot packs 600+ boxes per hour vs humans at under 200. With that announcement comes a $10K offer to quit.

Lights Out Warehouse

Please consider New Amazon Machines Pack 600 Orders Per Hour, Could Replace Thousands of Jobs.

The new machines, known as the CartonWrap from Italian firm CMC Srl, pack much faster than humans. They crank out 600 to 700 boxes per hour, or four to five times the rate of a human packer, the sources said. The machines require one person to load customer orders, another to stock cardboard and glue and a technician to fix jams on occasion.

Including other machines known as the “SmartPac,” which the company rolled out recently to mail items in patented envelopes, Amazon’s technology suite will be able to automate a majority of its human packers. Five rows of workers at a facility can turn into two, supplemented by two CMC machines and one SmartPac, the person said.

Amazon is not alone in testing CMC’s packing technology. JD.com Inc and Shutterfly Inc have used the machines as well, the companies said, as has Walmart Inc, according to a person familiar with its pilot.

“A ‘lights out’ warehouse is ultimately the goal."

Machine in Action

Opportunity to Quit

TechCrunch reports Amazon Offers Employees $10K and 3 Months Pay If They Quit

But there's a catch. They have to start their own delivery business instead.

The retailer says it will fund startup costs up to $10,000, as well as the equivalent of three months of the former employee’s last gross salary, to give the employees the ability to get their new business off the ground without worrying about a break in pay.

Amazon said last year that people were able to start their own delivery business with only $10,000. At the time, military veterans were able to get that $10K reimbursed, as Amazon was investing a million into a program that funded their startup costs.

Employees — or any other entrepreneur — who wants to become a delivery partner, are able to lease customized blue delivery vans with the Amazon smile logo on the side, and take advantage of other discounts, including fuel, insurance, branded uniforms and more.

Delivery partners, meanwhile, could earn as much as $300,000 in annual profit by growing their fleet to 40 vehicles, Amazon claims. The company said last year it expected that hundreds of small business owners will come to hire tens of thousands of drivers across the U.S.

Directly Competing With UPS, FedX

It's clear where this is headed: Amazon will directly compete with UPS and FedX.

If Amazon can offer retailers reduced costs and faster delivery, why wouldn't businesses take it?

Real Example

Consider what happened to me two weekends ago. I was at Arches and Canyonlands National Parks, staying at hotel in Moab, Utah.

A star tracker that I use for photographing the night sky broke. I wanted another ASAP and paid $50 extra for overnight delivery. I placed the order Thursday morning at 9:00 AM. I should have received it Friday, but didn't.

UPS does not deliver on Saturday. Prime does. I did not get my star tracker until Monday. I lost three days of being able to photograph the night sky the way I wanted.

These camera stores offer free 2-day shipping on most items.

If and when Amazon offers a deal to such places, they may be able to free one day shipping or save money on two-day shipping.

Mish Moments

Please check out my Photography Website: Mish Moments.

Union vs Non-Union

UPS is union-based with union costs and pension costs.

UPS is the single largest employer in the Teamsters Union. The UPS contract is the largest collective bargaining agreement in North America.

UPS will not be able to compete with Amazon on costs. UPS is doomed.

Mike "Mish" Shedlock

Comments (106)
No. 1-50
Tengen
Tengen

Labor shortage, my eye. Eventually the BLS will tell us that 200M Americans are out of the labor force, yet unemployment is 2%.

Get rid of the $1T+ deficits and it would be 300M without all the pork laden MIC/government gigs.

Kenautical
Kenautical

And here is the machine that is displacing these people -

OldEngineer
OldEngineer

I'm not as confident about Amazon's ability to wipe out UPS. I personally cringe when I buy something from Amazon and the tracking indicates that it will be delivered by their in-house people. Those are the packages that end up at the wrong house, or that don't get delivered because "they can't find a safe location to leave it." (Hint: Perhaps you could place it NEXT to the package that another Amazon driver left on my doorstep earlier that day?)

One of my neighbors went through a month-long period where every single Amazon package that was delivered by Amazon's in-house people ended up at a house almost two blocks away. Apparently Amazon's policy was that the driver MUST deliver the package the house that their Amazon app directs them to, even if it's obviously the wrong house. All they knew was that a lot of their packages weren't being delivered, until the people at the other house arrived home and found a pile of somebody else's packages on their doorstep.

Yes, UPS drivers are unionized. UPS drivers are probably making three times as much as the Amazon drivers. I couldn't tell you the last time I had to deal with a mis-delivered package handled by UPS. If I had any say in the matter, I would pay extra to get my packages delivered by UPS instead of Amazon's contract-slave labor. (Not to mention almost getting mowed down in a crosswalk by an Amazon van running a red light.)

Aaaal
Aaaal

When automation has 'retired' the human workforce who but the ultra elite will have any money to buy anything? There will be no customer base left for AMZN to sell anything to.

Tobinfrost
Tobinfrost

Still not sure how that automation will put ups or FedEx for that matter out of business.....so it packs merchandise, great. Unless you go to a ups store or a customer counter ups really doesn't pack your stuff they pick up and deliver what you or your business has already packed and deliver ot for you. Yes Amazon has a much cheaper work force...no question and they aren't going anywhere. But internet shopping is going nowhere but up and at the end of the day there is way to much business for any one company to deal with. And as far as ups is concerned I'll always support a unionized work force over that smiling third world country pay structure any day.

Tcpbc
Tcpbc

You should really do 5 minutes worth of research. UPS does in fact deliver on Saturdays. But if you ship ground (because you don't want to pay for next day air or Saturday delivery) then there is no guarantee on a delivery day.

StraightUpToYourFace
StraightUpToYourFace

Sounds like Whoever Wrote This Article Is Reaching!!! UPS Definitely Delivers Air And Ground Every Saturday💯 UPS And FedEx Have Been Around For A Very Long Time Due To Their Loyalty To The Customer Base That's Existed For Decades..They've Both Been Resillant AF And Will Continue To Be...Let's Get Those Facts Straight Before We Throw Legitimate Businesses Under The Train✔

Myself Jay
Myself Jay

UPS and Amazon are after different market segments. Amazon is trying to cut costs for shipping to consumers. But at the same time they actually created the burden they are trying to solve. UPS has been more of a business to business shipper. The online boom didn't suddenly put UPS on the map, Amazon is just racing to catch their own tail. If they fail it won't really be a cosmic event for UPS. Which also means if they succeed it's not that detrimental either. It costs more money to deliver consumer package, they would be glad to let Amazon handle that burden.

thimk
thimk

such a deal ! a fleet of 40 vehicles grossing 400k pretax/expenses. /s
the packing device is evolutionary however , the uber like delivery system not so much. will amazon also pick up the returns and unbox them? as a side note here is a dirty little secret of on-line sales . great post

SeanJ420
SeanJ420

I work for UPS and yes Amazon is semi competition to us, and that's due to Amazon only delivers materialistic things like clothes, sodas, cameras etc. UPS and FedEx deliver that too but we also transport medical equipment, court documents, and also hazmats. Until Amazon gets a license to ship such items it's still not that much of a competition

Jojo
Jojo

I don't understand this 1 day shipping infatuation that Amazon is so hyped on. There are very, very few items that I care whether they arrive in 1 day, 2 days, 3 days or 7 days.

As to Amazon workers taking out UPS, I think it may be the other way around. I hear the Teamsters are good at using baseball bats!

Truepk
Truepk

UPS does deliveries on Saturday. UPS loads package trailers at 1000 packages per hour. They unload trailers at a lot higher than that. So all this technology is just a gimmick for share holders. UPS on the other hand has made the first delivery working drone on a campus. Now we are working on machines that are way better than Amazon's measly 600 packages per hour. If Amazon had to pay taxes, they wouldn't be here today.

Yamaharacer
Yamaharacer

Good luck keeping it running. We have an Italian made overhead cnc router that breaks down more than all of the others combined

Aaver
Aaver

I'm in CA and on the test program. I can tell you now once they roll this out people will switch. Rates are 50 to 75% cheaper than UPS and FedEx ground.

MikeC
MikeC

Mish, as a long time reader I appreciate your economic analysis but think you are off on the prediction that UPS is doomed. The union comment is spot on and is a huge challenge but the rest of the article is not correct. First, UPS does deliver on Saturday and has for the last two years and my guess is that Sunday delivery will be available at some point. In regards to packing automation, that is not UPS core business so not sure how that takes away from UPS business. Amazon has the cash to compete in the segment but they are still a long way off from building out their network.

JonesyLB
JonesyLB

I've had the opportunity to tour 2 of the big automated hubs and was a loaned executive for one of the companies you mentioned and I have to tell you that you have over simplified this thesis statement to the umpteenth degree. This technology that everyone thinks is perfect and is a job killer spends more time broken down and jammed than it does running. In fact it's been my first hand experience that it often requires more staffing to run than normal ops. Then there's service, no matter what people sensationalize there is no replacing a person for quality control and making the right decision at the right time.

Although I can appreciate this kind of article to grab viewers and pay the rent, you can rest assured the big 3 shipping companies move so much of the GDP that if UPS, FEDEX, or the Post shut down tomorrow it would cause economic upheaval.

Also consider volume trends... Everyone is shipping now and Amazon is growing at the rate that is still astronomical. If Amazon were to choose to pick only UPS as their shipping partner tomorrow UPS would only be able to deliver Amazon packages. Same for FEDEX and the Post. Amazon needs to generate a last leg workforce just to meet delivery requirements.

everything
everything

I was wondering how Amazon would do this, and suspected independent contractors because hey, that's the UBER model! Just use technology. They'll work the bugs out. They won't put anyone out of business directly, but they move enough product to justify their own shipping network. They can speed up their deliveries, and provide incentive to their employees to do so. Their are plenty of other online shopping sites to keep them all in business.

T85
T85

Some of you must have never heard of "too big to fail." Amazon couldn't possibly put UPS out of business, as UPS is essentially "too big to fail." Amazon would literally have to dump all its other projects and focus solely on shipping and logistics to even come "close" to putting UPS out of business. UPS is a shipping "company"...that is all it does...Amazon is a retailer "first" before anything...They also have grocery stores, television services and now..."food delivery" on their plate...they don't have the skill, fleet or ability to challenge any company, whose sole purpose...is to ship..

Futhermore, Amazon's commercial and international shipping is essentially non existent next to UPS and Fed Ex. Second, they do not have the business accounts and contracts for retail and commercial delivery, the modes of transpo necessary to assume such, (ships, planes) nor the equipment to deliver oversized merchandise. (8x10 rugs, building materials etc.) Someone mentioned that they don't even have the licensing to deliver certain merchandise and products that require government clearance and approval before such can be done...this is a fact, and a process that alone could take yeearrs!

TBH, Amazon "actually" "uses" UPS and sometimes Fed Ex to deliver some of their packages!...I know...I used to work for UPS and many moons ago. UPS has so many moving parts, and accounts across many, many countries. Where as Amazon ...well, you know..lol

And, you better believe there is a "huge" difference in pay. I know UPS drivers who have retired from the company comfortably where as I know a few Amazon drivers, who use it as a way to make "a little extra on the side." It is far from an income supplement. They may be stealthy in delivering groceries and small packages right now... but let's have this same discussion around the holidays when manufacturers are dumping hay loads of ship container amounts of product on to ports for retailers in time for Christmas. And guess "who" is picking it up? Again Amazon couldn't possibly put UPS out of business. They don't even have the logistics to do so.

KidHorn
KidHorn

I don't get why Amazon if offering $10k for people to start a delivery business. Seems like their long term goal would be to have automated delivery. And if they lack delivery people, it would likely cost less to use UPS or Fedex than to fork over $10k.

ksdude
ksdude

UPS is great, except for the cost. And FEDx is catching up to them. UPS makes a mockery of fedex services, being someone that ships a lot I know. Fedex independent contractor drivers are the worse. I suspect Amazon will be no better but if they are cheaper they'll still get business. Just be careful what you ship. Of course, the union will press forward with pay raises, etc and we'll end up with another GM on our hands.

I wonder if the clerk(not the pm) that works in my local town of 1100 people that made $74k last year is worried?

GrubbyZebra
GrubbyZebra

UPS does offer Saturday delivery, and even Sunday delivery in certain markets.

Amazon drivers have also mis-delivered packages, this is not unique to any single carrier.

Think too about Amazon's own profit projections for this venture, it works out to $7500 annually per vehiclen harxley groundbreaking for the operator (not to mention at some point they will end up having to meet DOT regulations of a commercial carrier)

Rouvim
Rouvim

UPS/ FedEx are third-party shippers. We're not in manufacturing, therefore we don't have a need for machinery as CMC. The only thing this helps Amazon with is; keeping it's people under payed and having lower prices.

AlexandreM
AlexandreM

I doubt they will put UPS out of business. I worked for UPS and their range of services as a well the way it's organized actually is hard to match for the Uber/Postmates style delivery companies. I worked for Postmates too btw.

Grumblenose
Grumblenose

Gee, maybe UPS customers will also start using CartonWrap (or similar product). Maybe UPS will start Saturday deliveries.

Brother
Brother

It's not the union that's the problem or the packing machines that put's UPS out of business. It's the tech buzz that convinces people and under cutting competitive shipping rates. At some point it all goes back to the same shipping price.

magoomba
magoomba

There will be a lot of damage.

Homebiz
Homebiz

You should really do some research before you publish an article. Of course UPS offers Saturday delivery! And it arrives at your house more reliably than Amazon's deliveries do.

WhoaNelly
WhoaNelly

I agree with the various authors who disagree with you. UPS does deliver on Saturday's, you could have gotten your package. The idea that with 40 drivers they can not $300,000 a year is poor business math. As for ththe union issue, with a 62% turnover rate of their inside employees, and drivers working and making deliveries up to 9pm Ave tearing up their vehicles; it while management is making 6 figures between salary and stock bonuses and options, and will not be too long before Amazon get unionized. Then what?

Bankster
Bankster

Looks like the pension will be in trouble. They are 92% funded (their math), assuming a 7% return on assets, and assuming membership is steady.

Looks to me like UPS employees comprise ~20% of teamsters membership. When automated trucking comes, this is going to get ugly.

Jmarkg
Jmarkg

You have no idea what you are talking about. Amazon can't run ups and fedex out of business. Ridiculous

Arpy303
Arpy303

No way. FedEX Express gets less than 10% of revenue from Amazon and it is shrinking as they do their own thing. Good riddance, too. Let their underpaid and overworked employees deal with it.

Depth matters
Depth matters

What a load. Amazon has more that pick and pack... goody...does the author understand that is an internal Amazon process and has nothing to do with UPS. Amazon can't get people to take their deal. 10k doesn't cover the cost of a contractor start up You also fail to mention how many contractors you need to make 300k...and that you will need to pay workers comp, insurance and pay for those vans. If Amazon is so good at delivery, why do they only deliver 25% if their own volume... shouldn't they deliver all of their own volume before they put the largest and most profitable transportation company in the world out of business?

Boxboy74
Boxboy74

The real story here is the machine. 1) It reduces the amount of cardboard per box by not having all the excess flaps. 2) no plastic tape to be used. 3) automated sizing of products no excess material used or wasted space in the box ( I am tired of getting an item in a box that is way to big and they have to use plastic air bags to protect shifting). The loses here will be the cardboard box company, the winners will be the cardboard sheet suppliers and the machine company. Overall the machine should reduce shipping cost ( less cardboard, less labour, less wasted space in boxes).

There is two stories here that are unrelated

  1. the machine and automation of warehouses ( sorry worker's, you are to slow, costly and a liability)
  2. the method of delivery ups VS their own delivery vans

Just wait till they automate the delivery ( automated loading of trucks, pre generated vehicle tracking and route assigning, automated unloading or parcel delivery to either the driver or even to the house)

The next step driver will not even have to think. 1) Get in the van, it will already be pre loaded. 2) driver will just follow the gps/tracker, stop at address 3) box and packages will automatically be presented to the driver to take to customer. No mistakes as gps and bar code scanning will be on top of it all. 4) get back in can and repeat. No thinking, no time wasting.

Man I like this machine though the Cartonwrap, there is a company that is doing some good R&D.

Klyhjr31
Klyhjr31

I am driver for UPS... Since when is being a union bad? We do get compensated better than any Amazon driver.. but they are also not trained.. Amazon only cares about production which ups also does too but ups is 1000000000 miles ahead of having a better organization of how to get packages delivered.. these articles really just don't understand how unrealistic it is to put fedex or ups out of business. Hundreds and hundreds thousands not employees. We are trained better, work harder, and our routes and production we put out on a daily basis is worth multi billions specially over the next 40 years good luck Amazon but u'll just keep using already established delivering companies bc it benefits you

Hamil
Hamil

This is ridiculous click bait on its face and contains factual errors in the main article. You should be ashamed to publish this trash if you can't be bothered to do a little research first. UPS not only delivers on Saturday, they even offer an option to guarantee it is delivered before 9am in most places. Pay more attention to the shipping options and details and you will probably find your anecdotal proof was user error on your end or the business you purchased it from.

You may get a lot of clicks short term but the obvious lazy and error filled reporting will ultimately get your site relegated to the junk pile with the sites that take money to write thinly veiled advertisements masquerading as journalism.

JCapece1
JCapece1

Who wants those thugs coming up To your door and looking into your home with your family rite thier!?!? Have you seen those criminals?!? Look like they are doing a rap video!! UPS is the most professional and courteous parcel Company and I would gladly pay extra for them to ship my things and come into my property any day! You pay for what you get

Stevenjon918
Stevenjon918

Amazon will never harm UPS , but our economy ? See UPS employees will soon be right at 100k a year , wail Amazon employees need to use social services provided by tax payers to give them benifits greedy owners of Amazon will not . Union looking hard at representing workers at Amazon before changes in goverement brake them up . As of right now import taxs on their products will have huge effect on their staff and consumers , they may not even absorb that with out gov bail out . And to the preson who wrote this , UPS dose not package anything but is a shipping company only . Coddos for Amazon in tech part of packaging .

Blackfrost504
Blackfrost504

I work for Ups, I've been with the company for almost 12 years, in all honesty we aren't perfect, maybe other companies do it better than us, that doesn't mean I only work half hearted. For instance come Christmas time the average driver at Ups is delivering almost 160 or more deliveries a day, sometimes this goes past Christmas all the way into March. We work an average 10-12 hour day, walk 24 miles a day, take an average 35,000 to 55,000 steps depending on the day, or climb over 223 floors in a single day. Really in all honesty, don't forget Amazon, you might be big, might be massive, but never forget how you first got started, Ups, FedEx, and all the other major companies that helped you get started. You wouldn't even be here today, had they not given you that opportunity to start in the market, the good rates they gave you or how about when you had no way to get all those orders delivered, you don't think that some of these companies considered maybe we could have cornered the market, and forced Amazon out of business, no it's called sharing a market, Amazon might be strong, but we helped them get to where they are today. Don't bite the hand that feeds you. Also we believe in creating jobs, not destroying, think about what you do when you cut more jobs out of the market, people need to make money in order to buy your products. Good companies make more business for everyone to profit from not just one company and then fire all your employees. Enough ranting for today, check your facts before you post, do some research, hear it from the horse's mouth.

Pete casey
Pete casey

To the person who wrote this article. Hello, my name is Pete. I want my 5 minutes of my life back for reading your ludicrous article. At now point in time did it make sense. Your constant rambling is just , well stupid and have no facts. UPS delivers on Saturday. And who is going to deliver for Target? Gap? Walmart?
You , sir, are an uneducated moron.

Insider
Insider

Mish, I can't take your under informed, miscalculated, half witted asumptions anymore. Your logic is so anecdotal it makes me nauseous. The previous comments say a lot, you obviously don't know what the hell you are talking about. Don't bother doing financial analysis, no one takes you serious anyway.

Deb C
Deb C

There are just as many non-union positions at UPS as there are union. I honestly think Amazon can be competitive on several levels...it's just a matter of time before it happens. It's not always about the money that UPS drivers and other union employees (or non-union) make. Amazon treats their employees great and sometimes that's better than monetary gain. In my opinion, UPS still has a long way to go. The level of employee satisfaction there is very low.

TikiPunisher
TikiPunisher

Who is going to train these drivers speeding through our neighborhoods? Who is responsible when one of these drivers kill a kid? Its Amazon's products, they should be but the little guy gets hosed and loses his business while Amazon makes its money. Who is going to teach the machines how to pack hazardous materials they ship safely so no one gets Injured. Amazon when's again. They get all the money and none of the responsibilities.

TheGreatMiginty
TheGreatMiginty

Amazon will have to buy UPS or FEDEX so they deliver to every house and not every 20th they now do.

Omylanta
Omylanta

UPS absolutely delivers on Saturdays! Also, you can choose for your PKG to delivered by 9:00am in select areas on Saturdays.

Jillybean
Jillybean

Apparently Mish you dont understand how Amazon works because you forgot the first step which is receiving, then the next step if stowing, then the next step is picking and then packing, then you have to put stuff back on the shelf, and there are damages. All of these steps have to have people working, not machines so the lights out bs is never gonna happen

Onidraug
Onidraug
  1. UPS does deliver on Saturday, and will likely add Sunday service in the future.
  2. UPS doesn't pack the boxes, we ship them... so good for Amazon's box packing robot... more boxes for us to ship.

You probably shouldn't manage your own money, let alone offer advice to other people...

sameguy
sameguy

Hopefully these employees and others who choose to deliver for Amazon look very closely at the fine print on their contracts. I would guess they are similar to Trucking contracts young truck drivers sign when they lease a truck from the company they are driving for. What they often wind up with is extremely sub par pay, (don't believe the high pay they tell you you 'can' make) often even losing money at times and unable to get out of the contract till it expires. They you have no amazon job, your delivery job dreams are shot, and they take back your blue delivery buggy. I would also think twice before I crossed the Teamsters, you do that in Chicago or New York and you might well find yourself in a world of hurt you wouldn't understand not being in organized labor.

sameguy
sameguy

Maybe one day, we will have a rating system for the companies we buy from. It would tell us how ethically they treat their employees, how many robots they employee vs how many humans. It will come to a time, when nearly all big box stores are mostly run by technology, from warehouse to cashier, stockers, etc. They even have robots who clean the floors now a days. If I have the option to buy from a place with a good score, who treats their employees like humans, doesn't offshore their call center, actually makes a product in the USA, maybe uses renewable energy to flush the toilets many people would buy from them, possibly at a premium price, or maybe just slightly higher. If A company had a low score, their prices would reflect that and people would choose that option. Maybe the cheaper option would be taxed higher to offset the low wages they pay? Pie in the sky I know, but a guys gotta dream of a better way than we have now.

Alanjohnson438
Alanjohnson438

I just watched a Vice special about Amazon and i am so glad i am a teamster with UPS and will never lose my job to a robot. The Amazon employee said the company may say the robots are helping employees but that could not be further from the truth, the company is absolutely aiming to phase out human labor and the robots are far from as efficient as Amazon makes them out to be. We (UPS) are not a retail based company and have diverse contracts with many more companies and entities we ship for ranging from industrial, government and retail. This profession requires a human labor force to handle ship and sort packages with human discretion and abstract thinking, their robots are still not able to perform. If you think we UPS Teamsters are going to lose our jobs or UPS is going to out of business because a single company is offering to deliver their own packages...you're absolutely insane and clearly have no idea what UPS does and the number of packages including Amazon packages, we ship everyday.

USAER
USAER

Correct your story please. UPS DOES deliver on Saturdays and has for more than 15 years that I know of. Probably wherever you were ordering from could not fill the order to get it to you by the day you wanted. NEVER will EVERYTHING on the planet be in stock to be avaliable to be shipped to you within a day, PERIOD. Hello reality. You have no clue how stores or shipping companies work.