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Amazon Gives Markets Reason To Believe In New Shipping Business

Investors have been speculating about e-commerce giant Amazon.com, Inc. (NASDAQ: AMZN)'s plans to create a new shipping business that cuts out logistics companies like FedEx Corporation (NYSE: FDX) and United Parcel Service, Inc. (NYSE: UPS). However, on Friday, the firm sent a very clear signal to markets that a dedicated delivery business is on its way.

First Signs Of Shipping Arm

A securities filing by Amazon showed that the firm was planning to dabble in logistics as it referred to itself as a "transportation service provider" and listed "companies that provide fulfillment and logistics services" as competition, according to the Wall Street Journal. So far, Amazon has made no public comments about the filing, but many believe that it marks the firm's first concrete step into the industry.

Related Link: Portfolio Manager: Amazon's Q4 Miss Was A "Small Setback And Not A Reason To Dump The Stock"

Getting A Foot In The Door

Amazon has already started using its own fleet of branded trucks and couriers to cut down on shipping costs, but many expect the firm to branch out to offer its logistics services to other companies as the business develops. At the moment, Amazon's continuous growth is likely to be enough for its transportation arm to take off, but years in the future could see the firm's logistics service taking a bite out of the market share for competitors like FedEx and UPS.

Playing Nice

While market chatter has centered on how Amazon's logistics efforts will disrupt the shipping industry, Amazon has kept things peaceful between itself and its shipping partners by saying that the firm's latest move into the industry is meant to assist in deliveries during peak times, not to cut them out completely.

Those remarks suggest that the retailer isn't planning to eliminate FedEx or UPS shipping completely, but to bolster current services with its own logistics options. However, many believe it is only a matter of time before Amazon is able to take over its own shipping completely and eventually offer shipping services to other retailers as well.

Image Credit: Public Domain

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