Dive Brief:
- Amazon will pause its logistics service "Amazon Shipping" the company confirmed to Supply Chain Dive Tuesday. Amazon said the pause is not directly related to the current COVID-19 global pandemic. Business Insider was first to report the news.
- Amazon Shipping was available to shippers in a handful of cities including New York, Chicago and Los Angeles. The last pickup for current customers will be June 5 and the service will pause for an unspecified period.
- The pause is only for Amazon's third-party logistics service and does not affect the logistics of Amazon's own deliveries, Morgan Stanley analysts pointed out in a Wednesday note issued without confirmation from Amazon and emailed to Supply Chain Dive.
Dive Insight:
Morgan Stanley, previously bullish on the service's prospects, anticipates limited shipper impact from Amazon's pause since Amazon Shipping was limited in geographic scope and still in a pilot phase, and suggested most affected shippers will take their business to FedEx and UPS.
The exact details of the service, and the extent to which it competes with FedEx and UPS, have been fuzzy since reports of its existence first surfaced as early as 2017. A service rate card, obtained by iDrive Logistics in 2019 and shared with Supply Chain Dive last year demonstrated a simplistic service that would be unattractive to most shippers, according to iDrive executives at the time.
"In our view, Amazon has never had the intention of truly competing for volumes outside of its network," iDrive Logistics Strategist Matthew White said Tuesday. "The beauty of Amazon Logistics is the capacity flexibility it provides for the Prime channel, which is subject to substantial peak seasons where delivery performance is critical to the overall brand. The idea of adding outside B2C shippers to [Amazon's] portfolio was in our opinion a hedge against volume weakness in slow periods; in essence, financing capacity security for peak seasons," White emailed to Supply Chain Dive.
Amazon is currently triaging incoming and outgoing orders — favoring essential goods — due to intense coronavirus order volume, but this is not the reason for the pause according to the company.
The Wall Street Journal listed the reasoning for the pause as coronavirus-related, which Amazon refuted.
