Amazon founder and chief executive Jeff Bezos CREDIT: MANDEL NGAN/AFP/GETTY IMAGES
he Royal Mail is no longer able to handle up to half of Amazon's orders because it does not have the capacity to cope at peak times, the online retail giant has claimed.
Amazon’s chief executive says the firm is delivering more and more of its own parcels to the doorstep because the Royal Mail’s own delivery service cannot cope with growing demand from the public.
Jeff Bezos told an industry conference that Amazon now uses its own trucks for around half of its household deliveries because he claims the Royal Mail has run out of capacity.
He told the Recode conference, held in Rancho Palos Verdes, California: “We have to have capacity for peak delivery times. We have had to take over a lot of the last mile delivery in the U.K. over the last several years. The Royal Mail ran out of capacity at peak."
Mr Bezos denied that it was the firm’s ultimate ambition to replace rival parcel carriers, such as the Royal Mail and UPS, but that it simply wants to pick up the slack when delivery services can't handle the demand.
An Amazon.com truck makes deliveries in Los Angeles, California, CREDIT: LUCY NICHOLSON/REUTERS
The Royal Mail has brought in new measures such as Sunday parcel deliveries and collecting packages until midnight in a bid to maintain its position in the market.
But last month it posted a one-third drop in full-year profit and warned that it faces a serious threat from firms such as Amazon who were setting up their own delivery service rather than using Royal Mail vans.
Pre-tax profits fell from £400 million to £267 million last year as a rise in parcel traffic failed to make up for falling revenues, which were down 1% overall.
Royal Mail rejected suggestions it was unable to cope with demand, particularly at peak periods such as Christmas.
It pointed out that it handled 130 million parcels last December, up by six per cent on the previous year and that it has the capacity to accommodate additional volumes from its retail customers and other delivery operators
A spokeswoman for Royal Mail said: “We work with a wide range of retailers, including Amazon, throughout the year and especially at Christmas. This is a very large logistical exercise, and Royal Mail delivers more parcels than the rest of the industry put together to over 29 million addresses across the country.
“The UK is one of the most competitive parcels markets, with 16 major carriers and a significant degree of overcapacity.”
Amazon only want to cherry pick profitable deliveries in towns and cities. - Communication Workers Union
The Royal Mail has shed 3,500 staff in the last year, raising questions about its ability to cope with the increased volume brought about by the internet shopping boom.
But it says its remaining 120,000 post men and women are able to deliver just as many parcels because of a series of efficiency measures introduced by the firm.
These include postmen sharing vans which they park at a certain spot before starting their rounds - enabling them to deliver more parcels during one working shift - and parcel sorting automation. Staff have also been issued with hand held computers to improve the way they work.
“It is not correct to assume that the number of employees is directly linked to our capacity to handle and deliver parcels,” said a Royal Mail source.
The Communication Workers Union, which represents the Royal Mail's workforce, accused Amazon of "cherry picking" profitable urban deliveries but being unable to offer a comprehensive, nationwide service.
A source for the union said: "Royal Mail still massively dominates the market. Amazon are not interested in serving rural areas. They only want to cherry pick profitable deliveries in towns and cities."
Amazon’s UK office refused to expand on Mr Bezos’s comments.
