Amazon passed the U.S. Postal Service as the largest domestic parcel carrier in 2025, anchoring a broader market shift away from traditional couriers, as it in-sourced a large amount of last-mile delivery work previously handled by UPS, according to data published Monday by ShipMatrix Inc.
Amazon (NASDAQ: AMZN) handled 6.7 billion parcels last year, up 9.8% year over year, compared to an 8.3% decline for the U.S. Postal Service to 6.6 billion pieces. UPS (NYSE: UPS) also experienced an 8.3% volume decline at 4.4 billion deliveries. FedEx (NYSE: FDX) delivered 3.6 billion parcels in 2025, up 5.9%. Amazon’s parcel growth isn’t just fueled by its own online orders, but new contracts from third parties that don’t sell on the retailer’s platform.
Overall, industry volume was essentially flat (+0.4%) at 23.9 billion packages. Volumes for alternative carriers grew 13% to 2.6 billion units, highlighting a continued market shift to logistics services from online retailers like Walmart and Target, and low-cost start-ups and other independent carriers such as UniUni, Veho, Gofo, Jitsu, SpeedX, OnTrac and Better Trucks, said ShipMatrix, a provider of carrier benchmarking software for parcel shippers.
UPS and FedEx are making a strategic retreat from commodity last-mile delivery — short-distance transport of lightweight merchandise from e-commerce fulfillment centers to residential addresses — to focus on B2B logistics and high-value e-commerce shipments where they can command a premium for complex services. The companies have made clear that low rewards from local courier service don’t cover the high-cost structure associated with operating global integrated express delivery networks. Instead, they are consolidating ground shipping centers and reducing capital investments to focus on shipments that are heavier, cross multiple shipping zones, and in high-density routes that generate higher revenue per parcel.
But UPS and FedEx face a challenge targeting a smaller base of B2C parcels and B2B business. B2C represents 75% of the parcel delivery market, while the B2B delivery segment’s market share has shrunk to 25%, the report showed. Meanwhile, delivery distances have become shorter in recent years as Amazon shifted from a national distribution model and fulfillment companies like Radial, Shipbob, Shiphero and Stord stocked products at multiple facilities to be closer to consumers. Also, the Postal Service’s Parcel Select product travels less than 150 miles.
Even as FedEx focuses on B2C parcels that weigh more than 50 pounds, and parcels over 2 pounds that travel more than 300 miles, ShipMatrix data on billions of shipments shows that less than 5% of B2C parcels weigh more than 50 pounds and fewer than 50% of B2C parcels travel under 300 miles.
Last summer, FedEx began providing residential delivery of larger, hard-to-handle shipments for Amazon after severing ties with the retailer in 2019 because of low yields and difficult service requirements.
The U.S. parcel market generated $196 billion in revenue, an increase of 4.1% from the prior year, as the Big Three carriers were able to push through general rate increases and more extensive surcharges, according to ShipMatrix’s annual study. Average revenue per parcel of $8.20, up from $8 in 2024.
UPS topped its competitors with parcel revenues of $58.3 billion, followed by FedEx at $57.1 billion. Amazon Logistics and the USPS had $38.5 billion and $32.5 billion in revenue, respectively. A long list of smaller carriers fought over the remaining $15 billion in sector revenue, although revenue for these other carriers grew 15.4% year over year.
The continued strength of online shopping is reflected by the fact that the average adult receives 1.84 parcels per week, with parcel carriers moving 91 million pieces each weekday. ShipMatrix said.
The shipping technology and consulting firm estimates the parcel market will grow at a 3.9% compound annual rate to 26.8 billion pieces in 2028. The jump in growth compared to 2025 is attributed to physical stores holding fewer items and offering missing items via free delivery directly to homes combined with enhanced technology enabling online retailers to convert more shoppers into actual sales, said ShipMatrix.
Click here for more FreightWaves/American Shipper stories by Eric Kulisch.
Write to Eric Kulisch at ekulisch@freightwaves.com.
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