The courier companies FedEx and UPS (United Parcel Service) have fallen this Friday between 5% and 3% throughout the day on Wall Street – the American Stock Exchange – during the negotiations prior to the opening of the market before the fear that Amazon breaks into your business. According to information provided by The Wall Street Journal (WSJ), the online commerce giant is preparing to launch its own parcel service called “Shipping with Amazon” (SWA) in the coming weeks, although the company has not made statement respect.
The service would initially be developed in Los Angeles (United States), although it is expected to “gradually expand to other cities” this year, as reported by WSJ. The company will be responsible for collecting third-party packages that sell products on your page and will deliver them to customers. “Amazon plans to gain in price to UPS and FedEx, although the exact structure that it will use to obtain it, is not clear”, has reported the newspaper.
Amazon seeks to reduce its dependence on parcel services such as FedEx or UPS, which give logistic support to the company and control 60% of freight in the US. According to WSJ, the service has already been tested in London (United Kingdom). With this strategy, it seeks to streamline the sales process by shortening delivery times, reduce costs, logistics software and storage, among others, to have more attractive prices and avoid overloading their warehouses.
Amazon, which has been introduced and competes in different sectors such as the retail industry, the food industry, or the pharmaceutical industry, among others, has been expanding its business in the parcel market for some time. In recent years it has expanded into the shipping sector in China, has created its own network of drivers and has invested $ 1.5 billion to boost its own air fleet with 40 cargo aircraft by partnering with Atlas and Air Transport Services.
Although Amazon already sends some of its orders in almost 40 cities in the US, it remains to be seen if the company is ready to face to face with established firms, such as FedEx and UPS. The latter is planning to invest $ 7 billion to improve its shipping network.
On the other hand, Amazon signed an agreement last week with Berkshire Hathaway and PM Morgan to create a health services company that aims to reduce the costs of medical care and improve the services offered to its employees in the US.