New PPI Report Says More Competition in Parcel Shipping is Needed to Support Growth in E-Commerce

May 27, 2025
Diana Moss
Andrew Fung

WASHINGTON — A new report from the Progressive Policy Institute (PPI) unpacks competition in U.S. parcel shipping. The report looks at growth in e-commerce, the role of the legacy UPS-FedEx duopoly in the parcel shipping market, and the importance of entry and expansion to keep prices down for consumers and businesses. The report, “Unpacking the Shake-Up in Parcel Shipping Competition,” authored by Diana Moss, Vice President and Director of Competition Policy, and Andrew Fung, Senior Economic & Technology Policy Analyst, details how smaller and innovative carriers are eroding the duopoly — but barriers remain.

“The UPS-FedEx duopoly still has an outsized influence in the parcel shipping market,” said Moss. “More competition is needed by disruptive business models to deliver the economic benefits that businesses and consumers have come to expect from e-commerce.”

The report documents a surge in parcel shipping volumes — up 95% over the past eight years, largely to support burgeoning e-commerce. But much higher unit costs for UPS and FedEx, and parallel price increases are shining a light on the importance of smaller and more innovative carriers that compete hard on lower prices, faster delivery, and more flexibility.

Key findings in the report include:

Retailing is a vitally important sector of the U.S. economy and the e-commerce channel is growing rapidly, more so than the brick-and-mortar channel. As a percentage of total retail, e-commerce could top 30% by the late 2020s. Parcel shipping is a critical infrastructure that supports this growth.
UPS and FedEx together command roughly 65% of total revenue in parcel shipping, despite handling less than 40% of total package volume. Their per-package costs are far higher than those of Amazon Logistics and smaller players such as OnTrac, which are a leading source of competition that challenges the UPS-FedEx duopoly.
Disruptive competitors are making incursions into parcel shipping, particularly in last-mile delivery. These firms are capitalizing on demand for alternatives to the legacy carriers and providing competition that will keep shipping prices down, spur quality improvements, and benefit businesses and consumers.

The report urges policymakers to recognize the central role parcel shipping plays in the retail e-commerce channel. “Parcel shipping isn’t just about logistics — it’s the critical infrastructure behind the e-commerce economy,” said Moss. “Fostering more competition is essential for keeping the cost of living, and the cost of doing business, down.”

Read and download the report here.

Founded in 1989, PPI is a catalyst for policy innovation and political reform based in Washington, D.C. Its mission is to create radically pragmatic ideas for moving America beyond ideological and partisan deadlock. Find an expert and learn more about PPI by visiting progressivepolicy.org. Follow us @PPI.

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Media Contact: Ian O’Keefe – iokeefe@ppionline.org