Quick Update: The UPS 'Shocker' Nobody Wanted to Believe Was Coming
Amazon's entry into the shipping business, as a competitor, was there for all to see.
▶That Amazon might actually become a competing freight service to UPS and FedEx should come as no surprise.
If you missed it, the company announced that it has officially launched Amazon Supply Chain Services, which opens its logistics network to all businesses. This includes ground shipping and freight services. While nobody was looking, Amazon built a fleet of more than 100 aircraft, 80,000 trailers, and 24,000 intermodal containers.
In other words, it’s big… big enough to be more than just a bit player.
Here’s what I wrote last August in my red flag report on UPS…
“At the same time, Amazon continues to build its own freight fleet as it now ships more than two-thirds of its own packages as well as packages for its third-party sellers, with the constant risk that Amazon will open up its freight business to a bigger base of potential customers.”
You can read the full report here…
Just think about all of those Amazon trucks ALREADY on your street… and how the company disrupted retail... and more to the point: How it used its excess server capacity to become a major supplier of cloud services to corporations.
The crazy part, especially with the stock’s tumbling today – down more than 8% as I write this: It’s almost as if investors chose to ignore what was happening in broad daylight – and as if Amazon wasn’t sending a BIG signal when it pulled most of its business away from UPS over the past year. Instead, as the chart below shows, with the stock’s earlier surge, they chose to go with UPS’s spin of a “glide down” in terms of the impact of UPS’s exit.
But as I’ve quoted UPS critic Donald Broughton of transportation-focused Broughton Capital numerous times, saying that UPS’s structure is fundamentally flawed.