- Amazon will launch a shipping service to compete directly with UPS and FedEx, the Wall Street Journal reported Friday.
- Shares of the two shipping giants are down more than 5% in early trading Friday.
Shares of the two largest US shipping companies, UPS and FedEx, are tumbling after the Wall Street Journal reported that Amazon will launch a competing package delivery service known as SWA, or “Shipping with Amazon.”
Amazon has flirted with shipping its own packages for a while now, most recently in October 2017, when shares of UPS and FedEx fell on news of a program called “seller flex,” in which Amazon would deliver packages on behalf of third-party sellers on the site.
It wasn’t immediately clear how much of an effect losing Amazon’s business will have on FedEx and UPS. In 2016, FedEx VP of Market Development Michael Glenn said Amazon accounts for just 3% of the Memphis-based carrier’s revenue.
UPS, on the other hand, carries about 30 per cent of Amazon’s total US shipments – roughly $US1 billion of annual revenue. That’s only 1.5% of the Atlanta-based carrier’s $US65.87 billion 2017 revenue.
SWA will roll out in Los Angeles over the next few weeks, according to the Wall Street Journal, and will then spread to other cities around the US over the course of the year.
Amazon’s creation of the new delivery service comes as the company pushes into new avenues of business including the acquisition of grocer Whole Foods and a newly-announced joint healthcare venture with JPMorgan and Berkshire Hathaway.
Shares of Amazon were up just less than 1% in early trading Friday.