Amazon Expands into Third-Party Logistics, Shaking
Shipping Industry
The company said its shipping, fulfillment and delivery services would be offered to other
businesses. Several large corporations have already signed on.
·
Major move: Amazon will now offer its
logistics network to companies beyond its own marketplace.
·
New service: “Amazon Supply Chain Services”
will include freight, warehousing, fulfillment, and
last-mile delivery.
·
Big clients onboard: Firms
like American Eagle Outfitters and Procter & Gamble have already signed up.
·
Scale advantage:
o
6+ billion parcels handled in 2024
o
200+ fulfillment centers
o
Fleet of 80,000 trailers and 100 aircraft
·
Market reaction:
o
FedEx shares ↓ 9.1%
o
UPS shares ↓ 10%+
o
Amazon stock ↑ 1.4%
·
Revenue strength: Amazon
generated over $31 billion in parcel revenue in 2024, making it a major
logistics player.
·
Strategy parallel: Move
mirrors Amazon Web Services, which grew from internal infrastructure to global
dominance.
·
Existing users: Companies like 3M are already
using Amazon’s freight network.
·
Industry disruption:
Expansion positions Amazon as a direct competitor to traditional shipping
giants.
·
Key takeaway: Amazon is leveraging its vast
logistics infrastructure to become a full-scale global supply chain provider,
potentially reshaping the delivery and freight industry.
Amazon
said on Monday that it would sell its logistics services to companies
unaffiliated with the online sales giant.
With
Amazon Supply Chain Services, the company will broaden its existing freight,
distribution, fulfillment and parcel shipping
offerings. Large corporations including American Eagle Outfitters and Procter
& Gamble have already signed on.
“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,” Peter Larsen, vice president of the service,
said in a statement.
Amazon
currently offers these services to vendors that sell items through its website.
The shift to broaden the scope of Amazon’s logistics arm had an immediate
impact on competitors. Shares of FedEx closed down 9.1 percent Monday, while
UPS fell more than 10 percent. Amazon’s stock rose 1.4 percent.
Amazon
handled more than six billion parcels in 2024, according to last year’s Pitney
Bowes Parcel Shipping Index, second only to the Postal Service in the United
States. Amazon’s parcel revenues were more than $31 billion in 2024, according
to the index.
The
Postal Service, by comparison, handled just under seven billion parcels. Amazon
has more than 200 fulfillment centers
across the United States and a fleet of more than 80,000 trailers and 100
aircraft operated through company partnerships.
The
expansion follows a playbook similar to the introduction of Amazon Web
Services, which grew out of the retail giant’s technology infrastructure and
last year accounted for 30 percent of the global cloud computing industry,
according to a report by Synergy Research.
That
exposed some vulnerabilities in such reliance. Last year, an outage across a
part of Amazon’s cloud computing network took hundreds of services offline.
Lands’
End is working with Amazon’s network to fulfill
orders, and American Eagle is using it to deliver online orders, according to
the statement. Procter & Gamble will ship raw goods through the service.
The chemical and Scotch tape maker 3M is already using Amazon’s freight
services to ship items from its manufacturing sites to distribution centers worldwide, Amazon said in the statement.