Amazon Goes Rural While FedEx and UPS Retreat

In previous years, UPS and FedEx have moved to reduce service in rural areas. Flying in the face of traditional carrier logic, Amazon recently announced that it would invest $4 billion by 2026 to expand its rural delivery network significantly.

Why rural? Why now? And what does it all mean for you?

What Will a $4 Billion Investment Buy?

This substantial investment aims to triple Amazon's rural delivery footprint, adding over 200 new delivery stations and more than 100,000 jobs.

In its investment announcement, Amazon shared, "Once this expansion is complete, our network will be able to deliver over a billion more packages each year to customers living in over 13,000 zip codes spanning 1,200,000 square miles—an area the size of Alaska, California, and Texas combined." By building its own infrastructure, Amazon is taking greater control of the last mile in these regions, a critical step in meeting customer expectations for faster delivery.

Amazon Prime members love fast, free delivery, and Amazon's expanded rural infrastructure will give even more Prime members access to over 300 million items eligible for this perk.

What are UPS and FedEx Doing in Rural Areas?

This strategy stands in interesting contrast to some of the recent adjustments we've observed from established carriers like FedEx and UPS. While these giants have long served rural communities, the economics of delivering to fewer recipients spread across vast distances has led to strategies focused on optimizing efficiency, which sometimes translates to service modifications in rural areas.

In recent years, FedEx and UPS have explored and implemented changes to increase efficiency and manage costs in lower-density markets. For instance, just last September, UPS introduced its rural deferred program that, in some rural zip codes, adds an extra day in transit by consolidating deliveries. In 2022, FedEx scaled back its Sunday home deliveries in some outlying areas. Instead of delivering to 95% of the US market on Sundays, it would only deliver to 80%. These decisions are often driven by the need to make rural routes more economically viable, a stark difference from Amazon's significant capital injection aimed at expanding service in these very areas.

Why is Amazon Ramping Up Rural?

The difference in approach highlights the distinct priorities and business models at play. With its focus on e-commerce growth and customer Prime membership value, Amazon sees enhanced rural delivery as a key differentiator and a way to unlock further market potential. By building out its own network, Amazon can reduce its reliance on third-party carriers for the final mile in these challenging locations, gaining more control over the customer experience and lowering long-term per-package costs as volume increases.

No Matter Where You're Shipping, Parcel Audits Are a Necessity!

Don't let the complexities of carrier strategies and pricing eat into your bottom line—partner with ShipRx to automate parcel audits and unlock potential savings. No matter what the future holds for rural deliveries, ShipRx will always be here to help you secure savings.