Amazon has opened its entire logistics network to external businesses with the launch of Amazon Supply Chain Services, a move that could reshape the freight market and has already impacted the stock prices of UPS and FedEx.
Amazon's internal logistics capabilities have long been a competitive advantage, and the new offering brings together freight, distribution, fulfillment, and parcel shipping into a single platform available to any business, regardless of whether it sells on Amazon's marketplace.
The service already has high-profile customers, including Procter & Gamble, 3M, Lands' End, and American Eagle Outfitters, who are using Amazon's freight network for raw materials, product distribution, and last-mile delivery. The launch sent UPS shares down nearly 10% and FedEx shares down more than 9% in early trading. Amazon has become the nation's largest parcel shipper by volume, according to parcel-analytics firm ShipMatrix, and operates more than 200 fulfillment centers in the U.S., over 80,000 trailers, 24,000 intermodal containers, and 100 aircraft, delivering 13 billion items annually.
Peter Larsen, vice president of Amazon Supply Chain Services, compared the launch to the origins of Amazon Web Services, noting that Amazon is bringing its supply chain to outside businesses "much like Amazon Web Services did for cloud computing." Larsen told the Wall Street Journal that the company prohibits using supply-chain customer data for its own marketplace decisions. In his annual shareholder letter, CEO Andy Jassy said the company is exploring selling its custom AI chips and robotics to outside customers.
With its vast network and proven logistics expertise, Amazon is poised to become a major player in the freight industry, offering a flexible alternative to traditional carriers and potentially opening new avenues for businesses that rely on efficient supply chains.
