Amazon.com, Inc. (NASDAQ:AMZN) raised a lot of eyebrows this week when a Wall Street Journal story broke detailing its impending foray into business shipping services.
Naturally, UPS and FedEx shares sold off on the news, as investors feared the shipping giants would be significantly impacted. However, JPMorgan came out with a note later in the week stating the true loser in the equation will be the U.S. Postal Service.
CNBC has more details from the recent note to clients:
“Sentiment remains cautious on the two stocks based on a heightened risk of disruption. We believe the headline overlooks the primary company at risk, which is the U.S. Postal Service,” wrote analyst Brian Ossenbeck. “We estimate the USPS is Amazon’s largest carrier so not only does it stand to lose volumes from Shipping with Amazon, but it generally lacks the same labor flexibility and service offerings; postal workers are unionized and Amazon Flex drivers can also provide premium products and services such as perishable goods and same day deliveries.”
“With a localized pick-up and delivery system beginning within the Amazon ecosystem, the service is not directly comparable to the standard ground offerings of either public carrier but rather the final mile of the USPS,” the analyst continued.
While Ossenbeck believes FedEx and UPS could face some pressures here, their large logistics networks should provide some relief. It’s also important to note that Amazon is nowhere near being able to handle its own package volume — let alone having excess capacity to sell to other businesses.
Amazon.com, Inc. shares closed at $1,448.69 on Friday, down $13.07 (-0.89%). Year-to-date, AMZN has gained 23.88%, versus a 2.34% rise in the benchmark S&P 500 index during the same period.