The rise of e-commerce is reshaping the logistics industry in a way that leaves the two leading US delivery providers — UPS and FedEx — vulnerable to challengers. UPS and FedEx have dominated the US logistics industry — in particular, the last mile of the delivery process, when a delivery courier brings an item to a consumer's home. FedEx estimates that more than 95% of all e-commerce orders in the US are delivered by itself, UPS, or the US Postal Service (USPS). Combined, UPS and FedEx generated $119 billion in revenue last year alone, and UPS delivers, on average, 20 million parcels per day to consumers.

Surging online shopping volumes have strained UPS' and FedEx's networks, especially during peak periods. Last holiday season, for instance, UPS delivered 762 million packages to consumers during the peak period, north of its initial expectations of 750 million. UPS struggled to keep up with the higher-than-anticipated order volume, which caused delivery delays and upset high-volume retail partners like Walmart, Macy's, and Amazon, whose customers didn't get their packages on time.

The last-mile delivery space is swelling amid growing e-commerce sales — Technavio projects the North American last-mile market will be worth nearly $51 billion by 2022. That creates a prime opportunity for new players to enter the market and swallow up growing package [...]