Amazon Halts Amazon Shipping in the United States

Yesterday, Amazon announced that the company will put a pause on Amazon Shipping starting in June. This company-wide pivot comes as a huge shock to the shipping world. Just in 2019, Jeff Bezos committed close to $1 billion to build out Amazon’s shipping network, and to make one-day delivery a reality for all Prime customers. The same year, Bezos even broke ground on a Prime airport in Kentucky that would serve as the company’s North American delivery hub. Now, due to a recent surge of orders amidst the Coronavirus pandemic, those plans to disrupt the logistics world are on hold.

Why the eCommerce Giant Put a Temporary Stop to Amazon Shipping

The reason behind Amazon suspending Amazon Shipping comes down to resources. Or in this case, a lack of resources. Right now, the company needs to dedicate all of its resources to handle the massive surge in customer orders.

When asked about the halt in the shipping service, a company spokesperson told Reuters:

“We regularly look at a variety of factors across Amazon to make sure we’re set up in the right way to best serve our customers.”

Right now, apparently the best way for Amazon to serve customers is to get out of the shipping game altogether.

Amazon Will Still Rely on Major Shipping Carriers Like USPS and UPS

In the meantime, Amazon will continue relying on the major carriers to deliver packages to its customers. That means that USPS, UPS, and FedEx will now handle and deliver the millions of packages passing through Amazon’s network.

Of course, the company has relied on USPS all this time anyway, utilizing the carrier to complete last mile delivery for Amazon packages. Beginning in June, analysts expect the majority of Amazon’s packages to be injected into the Postal Service’s network. Theoretically, this should reverse the drop in package volume that USPS has seen from Amazon over the past several years.

UPS and FedEx Stock Prices Soared as a Result of the News

Amazon’s problem presents an opportunity for other logistics companies and competing carriers. In the summer of 2019, Amazon cut all ties with FedEx for express and ground shipments. Now that Amazon Shipping won’t be an option beginning in June, other carrier alternatives like FedEx now have the most to gain by picking up the slack.

In response to the news, both UPS (NYSE:UPS) and FedEx (NYSE:FDX) stock prices soared. In the trading day April 8th, UPS closed up 6.33% to $98.79, and FedEx closed up 8.19% to $125.54.