Amazon opens up its logistics network to other businesses in growth push

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May 4 : Amazon.com is opening the supply-chain network that has powered its operations for decades to other businesses, pitting it directly against logistics ‌heavyweights such as UPS and FedEx.

"Amazon Supply Chain Services" will allow companies across industries such as retail, healthcare and manufacturing to use the tech giant's freight network spanning ocean, road, rail and air to move, store and deliver everything from raw materials to final products.

With this, Amazon will unlock a new growth opportunity for its e-commerce unit, building on a service that supports thousands of independent third-party sellers worldwide.

It also marks a potential shift in a U.S. logistics industry long dominated by FedEx and UPS. Shares of both companies were down more than 6 per cent each on Monday, while Amazon climbed 1 per cent.

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With a fleet of more than 100 cargo planes — behind only FedEx and UPS — along with a vast network of warehouses and sorting hubs, Amazon's move could make it a key logistics player and intensify competition on pricing and speed.

The move is "Amazon trying to convert logistics from a cost burden into an infrastructure product," said Parth Talsania, CEO of Equisights Research.

"For UPS and FedEx, this is not immediate disruption, but it is a structural warning shot, especially in e-commerce-heavy lanes where Amazon already has density, data and delivery-speed advantages."

Amazon's expansion takes aim at the business-to-business shipping market, a prized high-margin segment for logistics firms where deliveries tend to be denser, more predictable and less expensive to serve than consumer shipments.

The company, boasting a fleet of over 80,000 trailers and more than 24,000 intermodal containers, will also offer distribution, fulfillment, and parcel shipping services, allowing businesses to take advantage of its speedy two-to-five-day delivery timelines, as well as warehousing and inventory forecasting capabilities.

Companies can use these solutions across all sales channels, including their own website, social media and physical stores, Amazon said, adding it has already signed on consumer goods major Procter & Gamble, industrial heavyweight 3M and apparel firm American Eagle Outfitters.

The move also takes a leaf out of Amazon's cloud computing unit's playbook — Amazon Web Services was launched in 2006 to revamp the company's own IT infrastructure, and it later evolved into the world's biggest cloud services provider.

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