In a remarkable turn of events, Amazon has emerged as the dominant force in the U.S. delivery business, outpacing both UPS and FedEx in parcel volumes. The e-commerce giant, known for its green up-pointing triangle on stock exchanges, has consistently expanded its delivery capabilities and is on track to widen the gap further in the coming year.

According to internal Amazon data and insiders, the company delivered more packages to U.S. homes in 2022 than UPS, and it had already surpassed FedEx in 2020. Despite the U.S. Postal Service retaining its position as the biggest parcel service by volume, handling millions of packages for all three companies, Amazon's rise to the top is a testament to its strategic growth and evolving logistics network.

A decade ago, Amazon was a significant customer for UPS and FedEx, and many executives and analysts scoffed at the idea that Amazon could challenge the established delivery giants. However, Amazon's exponential growth, coupled with strategic shifts at FedEx and UPS, has disrupted the balance of power in the industry.

Before Thanksgiving this year, Amazon had already delivered over 4.8 billion packages in the U.S., with internal projections estimating a year-end total of around 5.9 billion. This surpasses last year's figure of 5.2 billion packages, highlighting the company's continued expansion and dominance in the delivery space.

Amazon's success is attributed to its focus on fast delivery, pioneering the two-day shipping model that customers have come to expect. To stay ahead of competitors like Target and Walmart, Amazon is overhauling its distribution network. The company's figures only include packages shipped from start to finish, unlike UPS and FedEx, which include packages handed off to the postal service for final delivery.

As Amazon's share of deliveries has risen, both FedEx and UPS have emphasized their focus on delivering more profitable parcels rather than engaging in a volume race. FedEx even parted ways with Amazon in 2019, while Amazon now accounts for about 11% of UPS's revenue.

Despite reaching this significant logistics milestone, Amazon has not celebrated the achievement publicly. A former senior Amazon logistics executive commented, "There's not a lot of perceived value in chest-thumping on being the biggest." Instead of a grand celebration, Amazon executives reportedly exchanged high-fives and immediately returned to work.

The shift in the parcel delivery landscape is a stark contrast to the skepticism voiced by logistics CEOs just a few years ago. In 2016, FedEx's then-CEO Fred Smith dismissed the idea of Amazon becoming a threat, stating that the primary deliverers for e-commerce shipments would be UPS, the U.S. Postal Service, and FedEx. However, Amazon, once in third place, has built one of the world's largest logistics networks, fueled by programs like its franchise delivery initiative launched in 2018.

Amazon's strategic moves, especially during the pandemic, have played a pivotal role in expanding its e-commerce reach. The company opened numerous warehouses, sorting centers, and logistics facilities, almost doubling its network size from the start of the pandemic to late 2021. The regionalization of its logistics network aims to reduce delivery distances, ensuring faster product delivery and improved profitability.

While Amazon has surpassed UPS and FedEx in residential delivery, it has yet to replicate their global coverage. Analysts note that Amazon excels in the one-way network of delivering goods at high speeds but lacks the same level of pick-up and delivery coverage. The competition between these industry giants is likely to continue evolving as each company refines its strategy to meet the demands of the ever-expanding e-commerce landscape.