Amazon Opens Logistics Network to Outside Companies, Pressuring UPS and FedEx
Amazon is opening its logistics network to outside companies, turning one of the company’s largest internal operations into a broader business service and creating a new challenge for UPS, FedEx and other shipping providers.
The company announced Amazon Supply Chain Services, a platform that allows businesses to use Amazon’s freight, distribution, fulfillment and parcel shipping capabilities. Amazon said the service is open to businesses of different sizes and industries and can be used to move, store and deliver goods from raw materials to finished products.
Amazon said Procter & Gamble, 3M, Lands’ End and American Eagle Outfitters are among the early companies using the service. The company said the offering builds on logistics tools already used by Amazon sellers to move goods across warehouses, third-party facilities and sales channels beyond Amazon’s own store.
The economic consequence is significant. Amazon is no longer only using its logistics network to support its own marketplace. It is offering that network as infrastructure for other businesses, putting it more directly in competition with UPS, FedEx, DHL and other freight and fulfillment companies.
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Reuters reported that the move positions Amazon against logistics giants as it expands its role in the U.S. shipping market.
Investors reacted quickly. Current market data showed UPS shares down more than 10% and FedEx shares down more than 9% after the announcement. Amazon shares were higher in current trading.
The larger question is whether Amazon can repeat a familiar strategy: build massive internal infrastructure, then sell access to it. That approach helped turn Amazon Web Services into a major cloud business. Logistics is a different, lower-margin and more physical industry, but the pressure on incumbents is immediate.
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