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FedEx and UPS Stocks Drop. Amazon Shipping Is to Blame.

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Shares of FedEx and Amazon are both falling after investors learn that Amazon has restarted a third-partly logistics offering.

Amazon.com is restarting a third-party logistics effort. That’s making investors in logistics stocks nervous.

“We’re always working to develop new, innovative ways to support Amazon’s selling partners, and Amazon Shipping is another option for shipping packages to customers quickly and cost-effectively,” said the company in an emailed statement. “We’ve been providing this service for a while with positive feedback so we’re now making it available to more selling partners.”The restart means more competition for the likes of UPS and FedEx. Investors don’t like it. UPS and FedEx shares were down 1.

Amazon got into logistics because scale brings the ability to insource things cost-effectively. Walmart did the same when it was getting large in the 1990s. Higher costs have resulted in higher shipping rates. “Both raised 2023 rates by almost 7% for shippers … we expect both companies to announce at least 5% rate increases for 2024,” added Becker. “Perhaps Amazon thinks they can do this more efficiently or less expensively than either UPS or FedEx.”

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