By Paul Ziobro 

Amazon.com Inc. will halt a delivery service for non- Amazon packages, according to people familiar with the matter, as it re-evaluates the nascent offering that competes directly with FedEx Corp. and United Parcel Service Inc.

Amazon told shippers the service, known as Amazon Shipping, will be paused starting in June. It was available in just a handful of U.S. cities.

Under the program, Amazon drivers would pick up packages from businesses and deliver them to consumers, rather than ship orders from Amazon warehouses.

"We understand this is a change to your business, and we did not take this decision lightly," Amazon said in a note to shippers reviewed by The Wall Street Journal. "We will work with you over the next several weeks so there is as little disruption to your business as possible."

Amazon is suspending the service because it needs its people and capacity to handle a surge in its own customers' orders, according to a person familiar with the matter. The company has said it wants to hire 100,000 warehouse workers and is focusing on shipping essential items during the coronavirus outbreak.

Amazon in the past had sought to woo shippers to the new service by offering simpler rates, including the elimination of many fees and surcharges that other carriers add on to pad their revenues. It tested the program in London and Los Angeles, but didn't make it widely available in the U.S.

Amazon remains a force in the shipping industry, with over 30,000 vehicles, 20,000 trailers and dozens of aircraft that move packages across the country. In addition to its own delivery drivers, Amazon also hands off a significant chunk of its home deliveries to UPS and the U.S. Postal Service.

Amazon last year ended a shipping contract with FedEx, which increasingly viewed the online merchant as a competitive threat because of its growing shipping prowess.

FedEx and UPS have experienced a Christmas-like boom in home deliveries in recent weeks as people shop from home, while shipments have deteriorated to stores or businesses that have closed.

Meanwhile, the virus has upended the daily routine of delivering packages. Amazon, FedEx and UPS have each had to implement new safety measures and scramble to provide protective equipment as some workers test positive for the coronavirus.

A UPS spokesman declined to comment.

FedEx said its ground network is well prepared to manage the current surge in e-commerce. "We are continuing to work with our small business customers during this time to support their growth," a FedEx spokeswoman said.

Write to Paul Ziobro at Paul.Ziobro@wsj.com

 

(END) Dow Jones Newswires

April 07, 2020 18:58 ET (22:58 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.
FedEx (NYSE:FDX)
Historical Stock Chart
From Jun 2020 to Jul 2020 Click Here for more FedEx Charts.
FedEx (NYSE:FDX)
Historical Stock Chart
From Jul 2019 to Jul 2020 Click Here for more FedEx Charts.