Satish Jindel, principal at data analytics firm ShipMatrix, knows a little about the parcel carrier business. He has been deeply involved in the parcel carrier market for several decades, going back to the 1985 founding of the former Roadway Package System (RPS), which was among the first post-deregulation parcel startups.
Then, in 1997, Jindel helped FedEx acquire RPS, which was rebranded as FedEx Ground in early 2000. Since then, the parcel market has navigated any number of peaks and valleys, and gone through a few evolutions. Those have been driven by events like the Covid pandemic, the explosive rise of e-commerce and its enabling technologies, the emergence of private fleets and last mile as its own submarket, and the fundamental reordering of how consumers look for and purchase goods of all types—and their seemingly insatiable appetite for next-day delivery.
And while competitor names like RPS and others have faded into the sunset, fresh players have taken their place, some which no one could foresee even 10 years ago. At the same time, the market itself seems to have been immune to a downturn, growing consistently year after year.
That was once again evident in ShipMatrix’s “2024 U.S. Domestic Parcel Market Report,” released this spring. Jindel’s research showed parcel volumes in 2024 reaching their highest level in history, with some 23.4 billion deliveries made last year.
That’s 1.5 times more than pre-pandemic levels in 2019. Last year, some 779 parcels were delivered every second, or 67 million parcels for each day of the week. Seventy parcels were delivered per person in 2024, or 1.8 parcels per week per adult. More importantly, the report notes that 3.5 parcels were delivered per week per household, building much-needed delivery density for B-to-C (business to consumer) parcel networks. From a revenue perspective, the market generated a record $188 billion last year, according to ShipMatrix.
HISTORIC DOMINANCE BEING CHALLENGED
Through it all, there’s been one constant: the dominance of UPS, FedEx, and the U.S. Postal Service. In 2024, those three combined for an average daily volume (ADV) of 33.5 million parcels, and they remain the largest providers with the most extensive networks.
Yet a deeper look under the hood of the ShipMatrix report foreshadows an accelerating shift. Megaretailer Amazon launched its own package delivery operations just over 10 years ago. By 2024, Amazon was delivering an average daily volume of 17.1 million packages over a seven-day work week, the most of any single provider.
New challenges—and opportunities—were arriving courtesy of the nation’s largest retailers as well. Walmart, Target, other retailers, and independent operators began launching and building out their own private parcel delivery services. Those were meant to capture the growing influx of direct e-commerce sales (and parcel delivery needs) from the retailers’ online platforms as well as buy-online/fulfill-from-store purchases.
Packages delivered by the private networks of Walmart, Target, and other third parties exploded in 2024 to 2.3 billion shipments that year, compared to 0.6 billion just five years earlier. Then came the growth of pure “last mile” providers and other entrants chipping away at more of the addressable parcel market (defined as the total available business in a market).
“It’s real interesting that no one could foresee that the largest customers [of FedEx, UPS, and the USPS] would in less than a decade end up delivering more packages [on their own] than the [major] parcel carriers,” Jindel observes. “In three years, private fleets will [consistently] deliver more packages than the three giants” and will continue taking market share, he believes.
THE B-TO-B DYNAMIC
The big parcel players are not without staunch supporters in their corner, particularly businesses with high-service business-to-business (B-to-B) delivery needs and requiring the breadth and consistency of an integrated national network.
“UPS is clearly our most strategic partner,” stresses John Janson, vice president of global logistics for branded apparel giant SanMar, which has over 65,000 customers across all 50 states, operates 10 DCs, and ships between 60,000 and 70,000 parcels every evening, with more during peak season.
“We are a high-service B-to-B client. Our customers like to order as late in the day as possible and get their delivery the next day, no later than 1 p.m.,” he explains. “Most of them do not carry big inventories, so we are their warehouse and their supply chain. It’s critical that we get them their product in one or two days.” He cites SanMar’s “strategic relationship” with UPS as key, as well as SanMar’s philosophy of being a shipper of choice who emphasizes open communication and collaboration with its carriers. “Because of that relationship, there are no surprises,” he says. “As [UPS automates] more of its facilities [as part of its “Network of the Future” initiative], we want those communications to be early and often, so we can help them reach more informed decisions, and we know where and when changes will happen, so we can adapt accordingly.”
Nevertheless, good business practice requires that Janson continue to evaluate all options for his parcel delivery services. He’s incorporated smaller carriers like Spee-Dee in the Midwest, noting “we give them an opportunity where they can deliver in one day where UPS cannot.” And while it handles only a small percentage of his business, Spee-Dee “provides a service that’s a bit more nimble and flexible” than what the parcel giants can offer, he says.
“But we are primarily a very brown delivery network.”
BIG BROWN UNDETERRED
UPS has persevered through numerous boom and bust markets over its 118-year history. Between rising competition, tariff actions, uncertain global trade policies, and shaky consumer confidence, today’s market may be one of its most challenging. Yet as it navigates “a very dynamic environment,” the company earned an operating profit of $1.8 billion in the first quarter, reported CEO Carol Tomé in UPS’s first-quarter earnings call. Demand for U.S. import services “surged as customers pulled forward inventory purchases ahead of expected tariff changes,” she noted.
Tomé also outlined three strategic actions the company is taking to drive profits and agility. First is the “glide down” of the volumes it handles for Amazon, which it plans to reduce by 50% by June 2026. UPS is primarily shedding outbound parcels from Amazon’s fulfillment centers, business that “is not profitable for us nor a healthy fit for our network,” Tomé said. This year, the Amazon volume decline is expected to help the company cut some 25 million operating hours.
Next, UPS is executing “the largest network reconfiguration in our history,” Tomé noted. The initiative is incorporating more automation, lessening UPS’s dependence on labor, and reducing capital requirements to run the network, she said. UPS is currently in the process of executing 164 operational closures (73 by the end of June) and has announced plans to lay off some 20,000 employees. And while its building footprint is changing, Tomé stresses that “our pickup and delivery footprint is not. We remain committed to providing industry-leading reliability … we’ll just do it with fewer buildings.”
Last is UPS’s “Efficiency Reimagined” initiative. This program is designed “to deliver $1 billion in savings by improving many of the ways [UPS does] business” by, among other things, applying more automation, eliminating manual tasks, and enhancing purchasing practices, Tomé said.
With respect to tariffs, Tomé described it as “a very complex and ever-changing topic.” She noted that the company’s U.S. import volume was some 400,000 pieces per day, but added that, from a volume perspective, this “is less than 2% of our total ADV.” As for revenue, the China-to-U.S. trade lane “represented 11% of our total international revenue,” while other trade lanes into the U.S. accounted for about 17%.
To get a gauge of the current environment, UPS interviewed some 45,000 customers through April about their shipping plans. The vast majority indicated they expect to maintain their current business models. “Most of these customers are also telling us they are letting inventory levels sell off, which will lead to lower shipping activity, at least for now,” Tomé said. And while UPS continues to model various scenarios, uncertainty remains the main concern. “The world has not been faced with such enormous potential impacts to trade in more than 100 years,” she noted. “So the only thing we’re certain of is we don’t know which, if any, of our scenarios will play out.”
At FedEx, for the past three years, the parcel carrier has been executing its “Network 2.0” transformation, combining what were separate air and ground networks into one that “simplifies service with a one-van/one-neighborhood model [that’s designed to] enhance efficiency and the customer experience,” says Jason Brenner, FedEx’s senior vice president of digital portfolio. The Network 2.0 project has so far “transformed more than 300 stations in the U.S. and Canada,” Brenner notes.
He says the company is “adapting to the shifting market with agility and foresight,” and is focused on shipper needs for better visibility and shipment management tools; more accurate, real-time data that delivers faster insights; and help with managing industry challenges such as fraud prevention. The overall objective, says Brenner: “We want to deliver a better, more proactive shopping experience for our customers’ customers.”
What’s the biggest “ask” from shippers?
It’s primarily about technology and how that supports more visibility and control, Brenner notes. “Shippers want enhanced order visibility and intervention capabilities to improve the KPIs [key performance indicators] that matter most to them.” He adds that more broadly, shippers want to limit the number of tech vendors they work with, they want improved integration capabilities with e-commerce and inventory management systems, and they want to reduce costly, manual activity in the planning and executing of shipments.
THE AMAZON EFFECT
Perhaps the most consequential development in the parcel industry over the past 10 years has been Amazon’s methodical rollout of its own parcel delivery network and its rise as a major player in the market. And the cultural expectation that Amazon largely created among consumers that they need online ordered goods the next day if not sooner.
According to ShipMatrix data, Amazon delivered 6.1 billion packages in 2024, which represented a 25.6% share of the parcel market last year. In 2019, Amazon delivered 1.7 billion packages.
“Amazon has three channels,” explains ShipMatrix’s Jindel: Goods it sells itself. Products it stores, sells, and ships for others through its “Fulfillment by Amazon” service—products that represent nearly 70% of its revenue, according to Jindel. “And then there are retailers who use Amazon’s website to get a sale but then ship directly using FedEx, UPS, or someone else.”
And it’s not yet done reshaping the parcel market.
Amazon recently announced it is investing over $4 billion to expand its rural delivery network, focusing on smaller communities in less densely populated areas.
“At a time when many logistics providers are backing away from serving rural customers, we are stepping up our investment,” said Udit Madan, senior vice president of Amazon worldwide operations, in a corporate post. The investment will expand Amazon’s rural delivery network footprint to over 200 stations and by the end of 2026, when the expansion is complete, the network “will be able to deliver over a billion more packages each year to customers living in over 13,000 ZIP codes spanning 1.2 million square miles, an area the size of Alaska, California, and Texas combined,” Madan said.
Rural delivery points are typically more expensive to service because of distance and lack of density, often have a surcharge added to the price, and, in some cases, only are served a couple of days a week.
BE SAVVY
As the market continues to shift and evolve, and carriers change and update service maps, pricing, surcharges, and fees, “it’s more important than ever to really dive into your shipping [operations] and deeply understand what’s going on with your carriers,” recommends SanMar’s Janson, noting it’s a task made all the more challenging in today’s unstable economic environment. “So you have to be very savvy about your business, knowing the pain points in your supply chain and how to resolve them, and where and how [parcel carrier] changes are really going to impact the service you expect and what you’re paying for [it].”
Multicarrier parcel management technology on the rise
One strategy shippers are deploying to ensure optimum delivery execution and better manage parcel costs is engaging multiple carriers—mixing national, regional, state, and even lane-by-lane last-mile service providers. Such strategies require powerful innovative technology platforms that can run simulations, evaluate different scenarios, consider options, and quickly decide which offers the optimum blend of cost and service. Among the rising cloud-based multicarrier parcel management platforms are solutions from software providers like Carriyo, Centiro, nShift, Logistyx Technologies (Ship-IT), Shipsy, and Shipium.
The goal of all these platforms is to streamline and better manage the e-commerce order-to-delivery process, improving and accelerating decision-making so that retailers can close more e-commerce sales, quickly and efficiently optimize parcel transport choices, and meet the ever-critical promise date to the consumer—at the lowest possible delivered cost.
Interestingly, Shipium was the brainchild of former Amazon executive Jason Murray and a team of ex-Amazon employees. Its end-to-end shipping platform optimizes execution, operations, and planning, helping carriers improve delivery speed and retailers improve the customer experience.
The platform offers solutions that help orchestrate workflows across a shipper’s current systems, data, and network. It applies what the developer calls one of the most sophisticated intelligence layers in logistics with over 20 AI [artificial intelligence] and ML [machine learning] models, like dynamic time-in-transit estimates and dynamic optimizations, notes Kris Gosser, Shipium’s chief marketing officer.
Gosser says Shipium is responding to today’s dynamic and fast-paced market, where shippers are diversifying their carrier network and retailers are constantly evolving their fulfillment strategies and processes. They are using powerful technologies to adapt shipping decisions in near real time to market conditions, as well as product and carrier availability and location, transit, environmental [like weather or congestion], and customer preference factors.
“With Shipium, inventory is still managed in the client’s system of record,” explains Gosser. “The client shares inventory status with us, then our system develops a real-time understanding of delivery needs, resources, constraints, and dates across origins to come up with the ultimate promise date for the customer—and which fulfillment location and carrier choice will meet that promise.”
Gosser believes that in today’s market, shippers more than anything else want a tech platform that enables not just highly efficient shipment execution, but also the speed, agility, and capability to plan and operate a parcel delivery strategy based not so much on historical trends as on daily real-time data, conditions, and needs.
That, he says, is what ultimately delights the consumer every time and, for the retailer, closes more checkouts from that e-commerce shopping basket. “You have to meet the ultimate promise date for the customer. If you don’t, they won’t come back.”
