Amazon revealed it will begin offering shipping services to companies whether or not they sell goods on its e-tailing site — a bombshell announcement that sent shares of FedEx and UPS tumbling.
The new initiative, called Amazon Supply Chain Services, sent shock waves through the logistics industry, with shares of FedEx and UPS both plummeting by 10%. Shares of trucking companies and other freight movers also got slammed, with GXO Logistics down 13%. XPO Inc. and Old Dominion Freight Line were down 6% each.
Among the first companies to sign up for Amazon’s vast distribution network including planes, trucks and vans are Procter & Gamble, 3M, Lands’ End and American Eagle Outfitters, the company said.
ASCS is a “power move” and “shot across the bow at UPS and FedEx,” Wedbush analyst Dan Ives told The Post, adding that “We believe [Amazon] will be successful.”
Amazon already provides these services to ”hundreds of thousands of sellers” on its platform, the company said. It is now making use of extra capacity in its network.
“Amazon is bringing the infrastructure, intelligence, and scale of its supply chain services—proven over decades—to businesses everywhere, much like Amazon Web Services did for cloud computing,” said Peter Larsen, vice president of Amazon Supply Chain Services.
Each of the five ASCS customers Amazon identified are using the service in different ways with 3M using Amazon’s freight services to move products from its manufacturing sites to distribution centers, while American Eagle is using Amazon to deliver online orders from its website directly to customers.
ASCS “could be a watershed moment for North American freight transportation companies,” Morgan Stanley analyst Ravi Shanker wrote in a research note. Air freight companies and parcel carriers are likely to take the hardest hit, while truckers, railroads, ocean shippers and warehouse operators are also at risk, Shanker wrote according to a Bloomberg report.
The new service comes at a time when Amazon’s delivery model could be upended in New York City, where the City Council is considering legislation that would force Amazon to hire delivery workers who are employed right now by third party companies, as The Post reported.
The company has also recently increased the speed of its delivery to one and three hours time frames in certain cities.
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