Amazon to challenge UPS, FedEx with new delivery service

Amazon (NASDAQ:AMZN) is preparing to launch a delivery service to compete directly with shipping stalwarts UPS (NYSE:UPS) and FedEx (NYSE:FDX).

The service will pick up packages from businesses and ship them to consumers, people familiar with the matter told The Wall Street Journal.

While the service will be tested with third-party sellers in Los Angeles, the e-commerce giant will expand the service to other cities and will open the service to other businesses beyond third-party sellers.

The Journal also reported that Amazon is planning to undercut UPS and FedEx on pricing.

Amazon has tested a few delivery services including “Prime Air,” a delivery system from Amazon designed to get packages to customers in 30 minutes or less using drones.

Amazon already delivers its own packages in some cities and is actively recruiting delivery people to work through “Amazon Flex,” which offers flexible hours and pay of  $18-$25 per hour, according to Amazon.

In 2017, Amazon shipped more than 5 billion items worldwide with Prime.

Shares of UPS and FedEx were lower on Friday.

Ticker Security Last Change Change %
FDX FEDEX CORP. 279.95 -1.97 -0.70%
UPS UNITED PARCEL SERVICE, INC. 191.36 -0.45 -0.23%
AMZN AMAZON.COM, INC. 3,327.59 -272.33 -7.56%

FOX Business reached out to UPS, FedEx and Amazon for comment.

Amazon declined to confirm the story in a statement to FOX Business.

When asked how much business UPS receives from Amazon, a UPS spokesperson told FOX Business, “We do not report revenue for any specific customer, but no UPS customer exceeds 10 percent of global revenue.”

FedEx commented, “The headline in today’s Wall Street Journal demonstrates a lack of basic understanding of the full scale of the global transportation industry.”