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Abu Dhabi, UAEThursday 21 June 2018

Amazon business delivery report hits Fedex and UPS shares

Online retailer said to be expecting to roll out the new delivery service in Los Angeles in coming weeks

Amazon boxes stacked in Manhattan, New York. The company is said to be planning a business delivery service. Mike Segar/Reuters
Amazon boxes stacked in Manhattan, New York. The company is said to be planning a business delivery service. Mike Segar/Reuters

United Parcel Service (UPS) and FedEx slipped after a report that Amazon.com Inc. is preparing to start a delivery service for businesses that would compete directly with the country’s largest shipping companies.

The move to pick up parcels from businesses selling on Amazon.com and delivering them to customers, reported by The Wall Street Journal following an October article by Bloomberg News, would be the latest effort by the online retailer to expand the number of shipments it handles from online purchases.

Gaining a greater share of that business, now largely handled by FedEx and UPS, would give Amazon greater control over the timing and cost of last mile deliveries to shoppers’ homes.

The retailer expects to roll out the new delivery service in Los Angeles in coming weeks, the Journal said, citing unnamed people familiar with the matter.

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UPS fell 1.7 per cent to $107.39 at 10:10am in New York on Friday.

That put the stock on track for its 10th consecutive decline, its longest losing streak since 2007. FedEx declined 1 per cent to $236.86, while Amazon slipped less than 1 per cent to $1,339.46.

There is “tremendous opportunity” in the shipment of goods from businesses to consumers and “more growth coming to the sector and UPS, irrespective of how other companies shift strategies,” said Steve Gaut, a UPS spokesman. He declined to comment about Amazon’s business strategy.

Patrick Fitzgerald, FedEx senior vice president of integrated marketing and communications, said the Journal’s headline, which said Amazon’s delivery service would vie with the couriers, “demonstrates a lack of basic understanding of the full scale of the global transportation industry”.