For decades, Amazon's shipping network has been a quiet edge that kept rivals up at night. Now Amazon is renting it out to anyone with a product to move. The company is calling it the next AWS, and shipping stocks took the comparison seriously.
Amazon (AMZN %) rolled out Amazon Supply Chain Services on Monday, opening the same network that moves billions of its own packages each year to outside companies in healthcare, manufacturing, cars, and retail.
The new service has three parts: freight, warehouse and order shipping, and parcel delivery in two to five days, seven days a week.
Sitting behind it is a fleet of more than 100 cargo planes, 80,000 trailers, and 24,000 shipping containers, built up over decades to power Amazon's own retail business.
Big brands are already on board, with Procter & Gamble using the network for raw materials, 3M for shipping from factories, and American Eagle for online orders.
Peter Larsen, the Amazon vice president running the new service, said the company is bringing the same scale and tech behind its own shipping to other businesses, just like AWS did for cloud computing.
That comparison is the whole story. AWS began as Amazon's own internal cloud and grew into a side business that now drives most of the company's profits.
If Supply Chain Services follows the same path, the cost is mostly already paid. The trucks, planes, and warehouses already exist, so any new outside money lands close to pure profit.
The market saw the threat right away, with UPS (UPS %) and FedEx (FDX %) both falling about 10% in midday trading.
Amazon's pricing power is what makes this different from past delivery fights.
The company spent the last ten years building one of the densest shipping networks in the country, often at a loss, just to power its own retail. That cost is already on the books, so Amazon can offer outside customers prices the older players cannot match without bleeding profits.
For UPS and FedEx, this is the cloud computing playbook all over again. Old guard tech companies kept selling pricey servers while AWS quietly grabbed business by offering the same service for less.
Amazon is also going after markets that used to be off limits to it, like healthcare, car parts, and factory shipping, where buyers want fast, steady delivery and full tracking from start to finish.
The catch is that shipping is much more visible than cloud computing. That means pushback from lawmakers and unions could come fast, since they are already asking how Amazon treats its drivers and warehouse staff.
Shipping is one of the biggest costs for almost every consumer goods company in the country. A low-cost option from a player this big is hard to ignore.
UPS and FedEx are not going anywhere overnight, since they run global networks with deep customer ties and contracts that take years to unwind.
But they now share their core market with the same company that reshaped retail, cloud, and grocery.
The AWS playbook is back. This time the target is the trucks.
