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 volume.

LastMile_marketsizeBusiness Insider Intelligence

In the Amazon Fulfillment Report, Business Insider Intelligence detailed how the e-commerce giant could take down the duopoly in the US last-mile delivery market. And in a pair of notes, we analyze two companies that could also pose threats to UPS and FedEx’s last-mile duopoly. In this first note, we take a deep dive into Uber’s potential in the last-mile space, looking specifically at why its UberRush delivery service was unsuccessful, and how the ride-hailing titan's massive driver network could give it a pathway toward denting the duopoly. The second note will focus on leading crowdsourced startup Postmates and explore how its [...]