UberRush Not Yet a FedEx Killer

By Laura Stevens

Reports of FedEx Corp.'s demise at the hands of UberRush have been greatly exaggerated.

The expanded launch of Uber Technologies Inc.'s new service is being heralded in some quarters as a potential threat to both FedEx and United Parcel Service Inc.'s bread-and-butter services of delivering packages.

UberRush is now available in New York, Chicago and San Francisco, as part of what Uber's chief executive has called an effort to build an "urban logistics network" tapping an army of more than 200,000 drivers to deliver packages and other goods within cities as part of both UberRush and UberEats.

That does put Uber in a position to snatch away some parcel delivery orders. But the smartphone-enabled courier service is focused on quick, same-day deliveries, which make only a small portion of its larger rivals' business. Drivers go from point A to point B, and the service is limited to a small geographical area - much more suited to delivering flowers, Starbucks or lunch than, say, a book or costume jewelry from Amazon.

Both FedEx and UPS have spent decades developing intricate hub-and-spoke systems to fly and truck packages across the U.S. efficiently. Huge hubs process thousands of packages a minute on automated conveyor belts. UPS delivers an average of 15.6 million packages a day in the U.S.; FedEx nearly 10 million.

"I don't think there's any real competitive threat there," said Jack Atkins, a transportation analyst with Stephens Inc. "On the whole, when you think about the network that UPS and FedEx have set up in the United States, it's impossible to replicate."

While deliveries by upstarts like Uber Rush are no doubt disruptive, they're unlikely to put the delivery giants out of business -- or even make a material impact anytime soon.

In the past, FedEx's CEO and founder Fred Smith has said that while Uber is "terrific, " he thinks it's unlikely it will become a major competitor in the delivery space. Companies like Uber may compete for local, same-day deliveries, he said, a service FedEx already offers in more than 20 major metro markets.

"Great company, great concept, but I don't think it's...likely to be a major player in the logistics business," Mr. Smith said on an earnings conference call earlier this year.

Write to Laura Stevens at laura.stevens@wsj.com

Subscribe to WSJ: http://online.wsj.com?mod=djnwires

(END) Dow Jones Newswires

October 14, 2015 14:29 ET (18:29 GMT)

United Parcel Service (NYSE:UPS)
Graphique Historique de l'Action
De Juin 2024 à Juil 2024