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Happy Monday!
This morning Amazon announced that it is opening its entire logistics network, freight, distribution, fulfillment, and parcel shipping, to any business in the country. The new service is called Amazon Supply Chain Services.
The company put it on the map with 4 launch customers: Procter & Gamble and 3M for freight, Lands' End for inventory pooling, and American Eagle for direct-to-consumer parcel delivery.
Peter Larsen, who runs the new business, told the Wall Street Journal the third-party logistics market is worth over $1.3 trillion globally. He also said the quiet part out loud. ASCS is meant to be for shipping what AWS was for computing.
FedEx $FDX ( ▼ 9.11% ) and $UPS ( ▼ 10.47% ) both fell about 10% intraday. $GXO ( ▼ 17.7% ), Forward Air $FWRD ( ▼ 23.96% ), and Hub Group dropped with them. Amazon $AMZN ( ▲ 1.41% ) went up. Morgan Stanley's freight analyst called it a possible watershed moment for North American transportation.
It is worth pausing on what is actually new here, because most of these services already existed. Amazon has been selling fulfillment to third-party sellers for two decades. It runs Amazon Freight, Amazon Air, and Amazon Global Logistics. What changed today is the packaging. Everything is now under one brand, one signup page, and one pitch aimed at companies that have nothing to do with Amazon's marketplace. Healthcare. Automotive. Industrial manufacturing. Retail brands that sell on their own websites.
ShipMatrix data shows Amazon delivered 6.7 billion parcels in the United States last year. That is more than the Postal Service, more than UPS, and almost double FedEx. Amazon now runs more than 1,200 logistics buildings worldwide, more than 100 cargo planes, around 80,000 trailers, and a delivery fleet that handles roughly 13 billion items a year. The company spent $194 billion on shipping and fulfillment in 2024 alone. That is a network built for one customer, Amazon, that now has the spare capacity to serve many.
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The AWS comparison: Cloud computing was a growing market with high margins and almost no incumbents when Amazon entered in 2006. Logistics is the opposite. The margins are thinner, the rules are stricter, and every package Amazon wins is one a competitor loses. There is also the trust problem. A retailer that competes with Amazon on the marketplace may not feel great about handing over its shipping data and warehouse access to the same company.
Then there is the Postal Service. USPS lost about $9 billion last year and the Postmaster General told Congress in March that the agency could run out of cash by February 2027. Amazon was its largest customer at over $6 billion in revenue. The two sides reached a new deal in April that keeps most of that volume through October, but the long-term direction is clear. Amazon is no longer a customer that needs the Postal Service. It is now a competitor selling the same service to anyone who will buy.
Logistics has been a slow industry for a long time.
