Amazon is taking on FedEx and UPS. That may not be so simple.

By Hannah Pedone

FedEx and UPS shares are falling, but one analyst isn't sure that Amazon's new service will have a significantly disruptive effect

Shares of United Parcel Service and FedEx fell on Monday.

Amazon.com is building out what one analyst calls the "AWS of Logistics," and that weighed on freight stocks Monday.

Shares of United Parcel Service (UPS) fell more than 10% and FedEx (FDX) sank 9% after Amazon (AMZN) launched Amazon Supply Chain Services. Through this, the company is opening up its freight, distribution, fulfillment and parcel-shipping services "to all types of business and sizes," the company said.

Previously, these services were only available to Amazon's selling partners.

Baird analyst Colin Sebastian expects the project could scale into a $25 billion business, generating efficiencies across the freight and distribution industries and broadening the company's logistics footprint. He compared the service to AWS - calling it a "cohesive platform and enterprise sales effort," in a note.

Over the past three years, Amazon sellers have used the company's logistics network to deliver packages across third-party warehouses and sales channels, Amazon said in a statement.

"The launch of ASCS builds on this momentum, now supporting third-party logistics for businesses in industries such as healthcare, automotive, manufacturing, and retail," the company added.

Read more: Amazon's chip business scores another major win

Short-term stock moves aside, William Blair analyst Dylan Carden isn't sure that ASCS will disrupt the freight industry the way investors in traditional transportation stocks seem to be fearing.

Amazon has made numerous announcements in the past 15 years that have driven significant short-term stock drops in categories like grocery and pharmacy, he said. But some of those have proven to be "knee-jerk" reactions as Amazon has had mixed success gaining traction in new areas.

Amazon shares rose 1.4% on Monday.

Carden also said that it's unclear how Monday's announcement differs from an end-to-end logistics framework, Supply Chain by Amazon, that the company introduced in 2023, let alone what the current announcement would mean for freight.

Supply Chain by Amazon didn't seem to be "a runaway success," he said, adding that there weren't many major organizations that signed up for the service.

"We live in a weird market," Carden said.

That said, he suspects Amazon could use ASCS to build on efficiencies it was starting to see with the previous platform - cutting down on miles per delivery, limiting unnecessary state-border crossings, or leveraging data on where best to store inventory. The new name could be a "rebranding" opportunity thanks to headline clients like Procter and Gamble (PG).

American Eagle Outfitters (AEO) and Lands' End (LE) are also initial partners.

See also: Big Tech's $700 billion spending on AI this year is called the 'greatest capital misallocation in history'

-Hannah Pedone

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05-04-26 1905ET