Obviously Amazon still benefits if they can capture some of that margin (and probably from being able to specialize to themselves and find efficiencies there), but is it a huge opportunity or is it just a worthwhile place to optimize their business?
I think Amazon's play (while financial) is also about control. If all shippers start charging more, they have to eat it. If they control it, they know their margins at all times and can adjust things. Also, this makes it much more likely for them to switch to a completely gig economy based model which could reduce costs in a way that UPS could likely never match, even internally.
I'm curious if this eventually could create market problems like we are seeing with excess shipping capacity. The World Container Index hit a 5 year low this past year due to excess capacity.
I think where it counts is the "last mile", similar to the cost of telecom. But I dont see that many package car drivers being laid off, since the demand is "inelastic". The driver still needs to cruise the neighborhood whether 1 guy or 100 guys are getting packages. If UPS's volume gets cut by 20%, there's no way they're going to need to cut 20% of their drivers.
What I predict amazon will do is just have delivery stations. I would gladly drive a mile or two to pick up my stuff from an automated locker, versus contend with some of the tricks that I hear about so much with at-home delivery (that I'm thankful has never happened to me).
If you eliminated the "last mile" package cars, all you'd need is hubs (which UPS is well on their way to fully automating for pkg sorting), long-haul drivers/pilots, and a few delivery drivers to load up the "automated lockers" in each neighborhood.
Re: world container index, I'm assuming that includes marine shipping, which should be independent of amazons network?