Amazon Launches Supply Chain Services, UPS and FedEx Shares Drop
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 5 days ago
0mins
Shares of UPS (UPS), FedEx (FDX) and GXO Logistics (GXO) are under pressure on Monday after Amazon (AMZN) announced the launch of Amazon Supply Chain Services, which "extends the company's entire portfolio of freight, distribution, fulfillment, and parcel shipping solutions to businesses of all types and sizes." Amazon noted that, "Over the past three years, hundreds of thousands of Amazon sellers have trusted the company's logistics network to move, store, and deliver hundreds of millions of packages across third-party facilities, warehouses, and sales channels beyond the Amazon store. The launch of ASCS builds on this momentum, now supporting third-party logistics for businesses in industries such as healthcare, automotive, manufacturing, and retail." In morning trading, UPS and FedEx shares are down roughly 9%, while GXO Logistics has dropped over 11%.
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Analyst Views on UPS
Wall Street analysts forecast UPS stock price to rise
19 Analyst Rating
9 Buy
9 Hold
1 Sell
Moderate Buy
Current: 100.100
Low
80.00
Averages
107.06
High
126.00
Current: 100.100
Low
80.00
Averages
107.06
High
126.00
About UPS
United Parcel Service, Inc. is a global package delivery and logistics provider. Its U.S. Domestic Package segment offers a full spectrum of air and ground package transportation services. Its air portfolio offers time-definite, same-day, next-day, two-day and three-day delivery alternatives as well as air cargo services. Its ground network enables customers to ship using its day-definite ground service. Ground Saver provides residential ground service for customers with non-urgent, lightweight residential shipments. Its International Package segment consists of small package operations in Europe, Middle East and Africa, Canada and Latin America and Asia. It offers a selection of guaranteed day and time-definite international transportation services supported by its brokerage capabilities that facilitate cross-border clearance for international shipments. Its supply chain solutions consist of customized third-party logistics and specialized cold chain transportation solutions.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Revenue Growth: Revenue per piece in the U.S. rose by 6.5%, indicating that while overall revenue decreased, the higher profit margins align with management's turnaround goals, suggesting the company is moving in the right direction.
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- Amazon Delivery Volume Reduction: UPS plans to cut its delivery volume for Amazon by 50% from early 2025 to mid-2026, directly impacting revenue, with Amazon accounting for 11.8% of UPS's total revenue in 2024; revenue is expected to drop to $88.7 billion in 2025, and while a recovery to $89.7 billion is anticipated in 2026, it still falls short of 2024 levels.
- Short-term Profitability Pressure: UPS incurred approximately $150 million in transitional costs in Q1 2024 due to adjustments in its delivery network; although the
See More
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- Revenue Decline: UPS plans to reduce Amazon delivery volume by 50% from early 2025 to mid-2026, which is expected to decrease revenue from $91 billion in 2024 to $88.7 billion in 2025, with a slight recovery to $89.7 billion in 2026, still below 2024 levels.
- Profit Pressure: Adjusting the delivery network to accommodate lower Amazon volumes is eroding UPS's near-term profitability, with transitional costs around $150 million in the first quarter expected to gradually decrease in the second quarter.
- Competitive Threat: Amazon's recent launch of Amazon Supply Chain Services (ASCS) poses a significant threat to UPS, particularly targeting small and medium-sized businesses that may shift to Amazon's logistics, further eroding UPS's market share.
- Complex Market Outlook: Although management anticipates a recovery in margins in the second half of 2026, the uncertainty remains high as two-thirds of the 8% decline in U.S. domestic package volume in the first quarter was attributed to the reduction in Amazon deliveries.
See More
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- Pfizer's Current Status: Pfizer's stock has fallen about 50% from its 2021 peak, facing competition in the GLP-1 weight-loss market and several patent expirations; however, with a $150 billion market cap and a gross margin of 66.23%, it remains a large pharmaceutical giant, suggesting potential for a rebound for long-term investors.
- General Mills' Challenges: General Mills' stock is down 60% from its 2023 high, impacted by inflation and changing consumer preferences, with organic sales down 3% in the first three quarters of fiscal 2026; however, its 125-year history and strong brand portfolio indicate a likelihood of recovery in the future.
- UPS's Business Restructuring: UPS's stock has dropped over 50% from its 2022 high, as the company undergoes a business overhaul to cut costs and focus on profitable customers; despite short-term revenue declines, rising revenue per piece suggests potential for improved profitability.
- Attractive Dividend Yields: Pfizer, General Mills, and UPS offer dividend yields of 6.5%, 7%, and 6.6%, respectively, providing investors with solid returns while waiting for these turnaround stories to unfold, enhancing their investment appeal.
See More
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- Pfizer Stock Decline: Pfizer's stock has fallen approximately 50% from its 2021 peak, primarily due to overestimated long-term demand for its COVID vaccine, alongside competition in the GLP-1 weight-loss market and upcoming patent expirations; however, with a $150 billion market cap, Pfizer remains a pharmaceutical giant poised for rebound through new drug development.
- General Mills Investment Year: General Mills' stock is down 60% from its 2023 high, impacted by inflation and changing consumer preferences, with organic sales down 3% in the first quarter; yet, the company's strengths in branding and marketing suggest potential for recovery, making it an attractive buy while undervalued.
- UPS Business Overhaul: UPS's stock has dropped over 50% from its 2022 high due to decreased shipping demand post-pandemic, prompting a business overhaul focused on cost-cutting and profitable customer segments; despite short-term revenue declines, rising revenue per piece indicates a shift towards profitability, with 2026 expected to mark a turning point.
- Attractive Dividend Yields: Pfizer offers a dividend yield of 6.5%, General Mills at 7%, and UPS at 6.6%, providing investors with substantial returns while waiting for these companies to recover, highlighting the long-term investment potential of these undervalued stocks.
See More
UPS Q1 Earnings Decline but Optimistic Outlook Ahead
- Earnings Decline: UPS reported a Q1 earnings drop to $1.07 per share from $1.49 in 2025, with operating margins falling by two percentage points, indicating challenges during its multi-year turnaround process.
- Cost-Cutting Success: Despite one-time impacts, UPS is successfully shifting its business focus from low-margin, high-volume customers to more profitable ones, demonstrating initial success in its turnaround strategy.
- Revenue Growth: Revenue per piece in the U.S. rose by 6.5%, indicating that while overall revenue decreased, the higher profit margins align with management's turnaround goals, suggesting the company is moving in the right direction.
- Negative Market Reaction: Despite a generally optimistic long-term outlook, UPS's stock is down over 50% from its 2022 peak and nearly 20% in 2026, reflecting market concerns over high energy prices and recession risks.
See More
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- Upcoming Giants: SpaceX, OpenAI, and Anthropic are expected to go public by year-end, with SpaceX's valuation between $1.75 trillion and $2 trillion, while OpenAI and Anthropic are valued close to $1 trillion each, which will heighten market interest in tech stocks.
- Innovative Share Allocation: SpaceX plans to allocate up to 30% of its shares to retail investors, significantly higher than the typical 5% to 10%, aiming to raise $75 billion, which would surpass Saudi Aramco's record IPO.
- Impact of Rule Changes: The Nasdaq's new
See More
