Amazon Launches External Logistics Business, Taking Aim at UPS and FedEx

Amazon has launched Amazon Supply Chain Services (ASCS), a new logistics business that will allow external companies to access its freight, warehousing, and fulfillment capabilities.

Initially, ASCS was only available to Amazon's own retail business and platform sellers. However, with the launch of ASCS, all types of enterprises can now use Amazon's supply chain services, including Procter & Gamble (PG), 3M (MMM), Lands' End (LE) and American Eagle (AEO).

ASCS covers ocean, land, rail, and air freight, and offers delivery timelines of 2 to 5 days, inventory forecasting, and multi-channel fulfillment capabilities.

AWS founder Andy Jassy said that Amazon's supply chain capabilities were originally built for the retail business but can be repurposed for external companies. He emphasized that many businesses do not want to manage complex logistics systems themselves and that Amazon can integrate upstream allocation, warehousing, a single inventory pool, and last-mile delivery.

The launch of ASCS has been seen as a competitive strike against UPS (UPS) and FedEx (FDX), with shares of both companies falling by more than 9% after the announcement. However, analysts are cautious about the impact of ASCS on Amazon's logistics business, noting that it must next prove whether it can cultivate a stable, replicable, and scalable pool of external customers.