FedEx (FDX) and UPS spent half a century as the only two names that mattered in American package delivery.
They built the aircraft fleets, sorting hubs and delivery routes that turned next-day shipping into a routine promise.
The company that once filled those planes and trucks with its own packages is now trying to take its rivals other customers, too.
Amazon Shipping is offering corporate shippers simplified pricing, waived residential surcharges and rates that can run up to 30% below comparable FedEx and UPS pricing, according to a Supply Chain Dive report.
The push expands a service that once focused narrowly on small packages headed to metro areas into a broader challenge for corporate shipping contracts of every size, putting real volume at risk for both incumbents.
Amazon’s discounts hit at a vulnerable moment
Logistics platform Loop has seen shippers save as much as $6 per package by shifting eligible residential volume from FedEx and UPS to Amazon Shipping, according to Loop’s Matt Sumowski.
One large retail client using FedEx cut its annual shipping costs by more than 33% after routing most of its distribution through Amazon instead, a shift that shows how quickly volume can move once price becomes the deciding factor.
Related: Delivery giant closes facility, cuts 100s of workers
The pressure extends beyond the two incumbents. Amazon Shipping is even undercutting the U.S. Postal Service on packages under a pound, according to Hannah Testani, chief executive of freight audit firm Intelligent Audit.
Amazon’s vice president of supply chain go-to-market, Jeff Helbling, said the momentum tells the company “businesses see the value it already offers” in comments to Supply Chain Dive.
Wall Street has already priced in the threat
UPS and FedEx shares were already sliding Thursday after Morgan Stanley analyst Ravi Shanker warned clients that Amazon’s growing delivery reach threatens both carriers, Bloomberg reported.
Amazon still lacks overnight delivery, Shanker wrote, but he believes it’s “likely not long before that becomes an option as well.”
Both stocks surrendered their gains and slipped into negative territory later that day once the pricing specifics circulated, according to a Seeking Alpha report.
It was the second such selloff this year: FedEx fell 9% and UPS dropped 10% in a single May session when Amazon first launched Amazon Supply Chain Services as a bundled enterprise offering, according to a 24/7 Wall St report.
