Amazon is already delivering about half of its own packages in the U.S., according to a Morgan Stanley estimate on Thursday, and will soon pass both United Parcel Service and FedEx in total volume.
"Our AlphaWise analysis shows that Amazon Logistics already delivers ~50% of Amazon US volumes, focused on urban areas," Morgan Stanley said.
Amazon Logistics is the e-commerce giant's in-house logistics operation. Morgan Stanley said Amazon Logistics "more than doubled its share" of U.S. package volumes from about 20% a year ago and is now shipping at a rate of 2.5 billion per year. For comparison, Morgan Stanley estimates UPS and FedEx have U.S. shipping volumes of 4.7 billion and 3 billion packages per year, respectively.
"We see more of this going forward as our new bottom-up US package model assumes Amazon Logistics US packages grow at a 68% [compound annual growth rate from 2018 to 2022]," Morgan Stanley said.
That would put Amazon Logistics at 6.5 billion packages per year by 2022, according to the firm, far exceeding its estimate for UPS at 5 billion packages per year and FedEx at 3.4 billion packages per year.
"To us, Amazon Logistics is already-large scale and with a fleet ~1/5 the size of competitors, it speaks to its ability to use density and technology to drive efficiency," Morgan Stanley said.
The firm says Amazon Logistics is more focused than its competitors on densely-populated areas. According to Morgan Stanley's estimate, about 61% of Amazon Logistics' package volumes are from suburban areas, 28% are from urban areas, and just 11% are from rural areas. That makes Amazon Logistics' rural focus about half of its competitors, as the rest of the industry typically derives 20% of package volume from rural areas, the firm said.
Morgan Stanley has an overweight rating on Amazon shares, with a $2,100 price target that is nearly 20% above the stock's current level.
The firm also lowered its price target on both UPS shares to $78 from $85 – about 33% below its current price – and FedEx shares to $111 from $120 – which would be a drop of about 32% from current levels. Morgan Stanley has an underweight rating on UPS and an equal-weight rating on FedEx.
– CNBC's Michael Bloom contributed to this report.