Amazon Moves To Directly Compete With Fedex, UPS In Shipping Services

Amazon.Com Inc AMZN 0.43% has begun transporting cargo for outside customers as the online retailer works to grow its shipping business.

What happened: After increasing the capacity of its logistics network by 50% year over year, Amazon will now be moving shipments for outside customers, according to a report from CNBC. One investigation found that the tech giant has already been transporting packages for the U.S. Postal Sevice.

Amazon already has a “logistics as a service” program in the U.K. and analysts predict a similar program will be available in the U.S. later this year, or in the next 18 months.

Why It’s Important: Amazon is not expected to provide the wide array of services offered by FedEx Corp FDX 0.37% and United Parcel Service IncUPS 0.44%, but rather choose the routes and cargo that work best with its logistics network.

Amazon is currently shipping 72% of its own packages, a big increase from the 46.6% the company was transporting in 2019. “If Amazon develops a platform, it works well, and of course if it’s going to have excess capacity, they’re going to try to sell it to someone,” former Amazon product safety manager Rechel Greer tells CNBC.

The company currently offers FBA services (Fulfilled by Amazon) which provide deliveries for some orders from eBay, Walmart and other companies.