FedEx and UPS are under growing pressure as large retailers continue building their own residential delivery networks, accelerating a shift that has fundamentally changed the parcel market.
According to Satish Jindel, founder and president of ShipMatrix, the two companies risk being left behind unless they stop thinking of themselves primarily as parcel carriers and start operating as full e-commerce enablers.
The market has changed dramatically since the 1980s. In 1985, around 90% of parcel shipments moved between businesses. Today, business-to-consumer shipments account for roughly 70% of the parcel market.
Jindel argues that although FedEx and UPS remain profitable, their current approach keeps them at the bottom of the value chain. By focusing mainly on reducing the cost of last-mile delivery, they are limiting themselves to the least strategic part of the e-commerce ecosystem.
Both companies have tried to protect margins by prioritising heavier, higher-value and multizone shipments while walking away from low-yield last-mile volumes from Chinese e-commerce sellers and Amazon. UPS acquired same-day platform Roadie for $586m in 2021, while FedEx announced a $3.4bn investment in European locker and courier operator InPost in February.
But Jindel says the bigger opportunity lies elsewhere. Instead of focusing only on delivery infrastructure, he believes FedEx and UPS should invest in e-commerce platforms such as Etsy or form strategic partnerships with online marketplaces. That would place them much higher in the decision-making chain, allowing them to influence fulfilment and delivery from the top while helping millions of smaller merchants compete more effectively.
In his view, a better-integrated shipping experience would create a powerful flywheel: satisfied consumers place more orders, parcel density improves, and FedEx and UPS gain more profitable volume.
He points to Amazon as the clearest example of this broader strategic thinking. Through Fulfillment by Amazon, the company helped sellers on its marketplace with both fulfilment and delivery, turning those services into a major driver of growth. Today, around 60% of Amazon’s online sales and parcel deliveries are linked to merchants supported by FBA, helping the company build its own delivery network.
Amazon applied the same logic to other parts of its logistics chain. In 2016, it contracted Air Transport Services Group to operate Boeing 767 freighters and secured warrants for a minority stake in the company. That investment generated a strong return when ATSG was acquired last year by Stonepeak for $3.1bn.
Jindel argues that FedEx missed a similar opportunity years ago. Had it invested just $1bn in Shopify a decade earlier, rather than spending $4.8bn on TNT Express in Europe, he says that stake would now be worth $50bn. Just as importantly, FedEx might have become the main delivery partner for millions of small online merchants instead of the US Postal Service.
He acknowledges that Shopify may now be too large an investment target, but says it is not too late for FedEx or UPS to take a stake in Etsy or another marketplace, or at least build a strategic partnership.
FedEx, he suggests, could use its Dataworks capabilities to help smaller merchants improve fulfilment and delivery. In practice, that could mean creating a more seamless and attractive consumer experience than the one available to merchants selling through Amazon’s marketplace.
A smarter e-commerce strategy could also reduce the diversion of parcels to Amazon Logistics, which last year delivered more packages than any of the traditional Big Three carriers. It would also give FedEx and UPS a faster route to attracting more small and medium-sized shippers.
Jindel notes that while both companies have made many acquisitions over the years, very few have truly changed the business. For FedEx, he sees the purchase of RPS, as part of Caliber System, and Viking Freight in the LTL segment as the clearest examples of genuinely transformative deals.
RPS became FedEx Ground, and by 2012 it was generating $1.8bn in operating income, compared with $1.2bn for FedEx Express, despite producing only about a third of the revenue. For Jindel, that performance proved the strength of the RPS operating model and laid the foundation for today’s consolidation of FedEx’s Express and Ground networks.
He also notes that FedEx shareholders are expected to benefit from the spin-off of FedEx Freight into a separate company on 1 June 2026.
Recalling comments made by former FedEx CFO Alan Graf at an RPS reunion in March 2023, Jindel highlights just how important that acquisition proved to be. Graf said he could not imagine what FedEx would have become without RPS’s low-cost operating model and described it as the best acquisition in the company’s history.
Jindel’s conclusion is clear: if FedEx and UPS want to remain central in a parcel market increasingly shaped by Amazon, Walmart and digital commerce, they need to align themselves with the platforms that influence buying behaviour, not just the trucks that deliver the boxes.
