Amazon Launches Supply Chain Services, Enters Logistics as a Service Market

Amazon has launched a new service called Amazon Supply Chain Services (ASCS), expanding its reach into the logistics sector. This move allows businesses to use Amazon’s extensive supply chain network for a fee. Amazon’s network includes over 100 cargo aircraft and a large overseas shipping operation, making it one of the largest in the world. The company aims to offer its logistics capabilities to other businesses, putting it in direct competition with established logistics providers such as UPS, FedEx, and DHL Supply Chain.

Key Highlights

• Amazon launches Amazon Supply Chain Services, offering logistics as a service to businesses.
• ASCS provides access to Amazon's global supply chain network including over 100 cargo aircraft.
• FedEx and UPS shares fell over 9 percent after the announcement, Amazon shares rose nearly 1 percent.
• ASCS offers Freight, Distribution and Fulfillment, and Parcel Shipping through a centralized console.
• Amazon's third-party seller services generated $172 billion in net sales last year.

Amazon’s Supply Chain Network

Amazon’s supply chain network was previously reserved for its own retail operations and independent selling partners. With the launch of ASCS, Amazon opens this network to a wider range of businesses. The service targets sectors including retail, healthcare, manufacturing, and automotive. Early customers of ASCS include Procter & Gamble (P&G), 3M, and American Eagle Outfitters.

Amazon’s logistics network supports the movement, storage, and delivery of goods. Companies can use the network for transporting raw materials, finished goods, and other items through freight, distribution, fulfilment, and parcel shipping. The network’s scale is only surpassed by a few global logistics companies.

Market Impact and Service Offerings

The announcement of ASCS had an immediate impact on the logistics market. Shares of FedEx and UPS each fell by more than 9 percent, while DHL shares dropped 7.3 percent. In contrast, Amazon’s shares rose by nearly 1 percent following the news.

ASCS is structured around three main offerings: Freight, Distribution and Fulfillment, and Parcel Shipping. These options cover a range of logistics needs, from ocean and air shipments to label creation and shipment tracking. Businesses can access these services through a centralized console. The network can also handle orders placed through platforms that compete with Amazon, such as Walmart-run marketplaces, Shein, Shopify, and TikTok.

According to Armstrong & Associates, the global market for third-party logistics services is valued at over $1.3 trillion. Last year, Amazon became the world’s largest third-party logistics company by gross logistics revenue, driven by its third-party seller services. These services accounted for about 24 percent of Amazon’s total revenue, with net sales of $172 billion. Since 2006, independent sellers have shipped more than 80 billion units through Fulfilment by Amazon.