Amazon's New Supply Chain Services#
Amazon has officially launched Amazon Supply Chain Services, broadening its logistics network to include third-party shippers beyond just its marketplace sellers. This move allows businesses of all sizes to utilize Amazon's extensive freight transportation network, which includes trailers, intermodal containers, and aircraft capacity, along with its fulfillment centers and delivery fleet.
Market Reaction#
Following the announcement, transportation stocks experienced significant declines. Notably, C.H. Robinson and RXO each fell nearly 10%, while GXO Logistics saw an 18% drop, marking its worst single-day performance since going public. Forward Air's stock plummeted by 24%, and major parcel carriers FedEx and UPS saw declines of 9% and 10.5%, respectively.
Analysts' Perspective#
Stifel analysts believe the market's reaction was exaggerated. They argue that while the new service enhances Amazon's commercial offerings, it does not fundamentally change the company's existing capabilities. Amazon has been providing supply chain services to third parties for over a decade, starting with truck brokerage and expanding into air and trucking services.
The analysts suggest that Amazon's offerings are designed to increase its own capacity rather than compete directly with established logistics providers that offer higher service levels. They note that Amazon is targeting price-sensitive customers, similar to other large shippers who provide excess capacity to the market.
Competitive Landscape#
Stifel's research indicates that Amazon is still largely absent from many competitive bids. Early feedback suggests that major companies like Procter & Gamble, 3M, Lands End, and American Eagle are primarily using Amazon for basic freight or inventory linked to Amazon's sales channels. Despite the market fluctuations, Stifel maintains Buy ratings on FedEx, UPS, Forward Air, and GXO, citing signs of recovery in the transportation sector.