Amazon to Suspend Third-Party Shipping Service
E-commerce giant Amazon is suspending its third-party shipping service, Amazon Shipping, beginning in June. The service was being piloted in major cities and was set to compete with FedEx and UPS.
The suspension comes as Amazon deals with a surge in demand as the coronavirus pandemic forces many Americans to stay at home. Not only is Amazon dealing with an increase in online shopping, but they are also trying to make essential items, like medical supplies, a priority. This means that many shipments have been unable to get to consumers in the normal one to two days.
Suspending Amazon Shipping will allow the company to focus its efforts on having the people and infrastructure in place to meet the growing demand for deliveries. The company said that the decision was made “after a regular review meant to ensure that the company is best serving its customers,” according to an article from CNN.
In addition to devoting less resources to Amazon Shipping, the company also announced plans to hire an additional 100,000 warehouse and delivery employees in the U.S. As an incentive, Amazon promises to raise wages of those working in fulfillment centers, transportation, stores and deliveries by $2.
The suspension was good news for FedEx and UPS who were seen as the main competitors of Amazon Shipping. Both companies saw a 2% rise in stock as the news was released.
USPS Under Threat
While Amazon is experiencing an uptick in packages being shipped, the U.S. Postal Service is seeing a dramatic decrease in the amount of mail being delivered. The decrease leaves USPS, which was already experiencing financial difficulty, in an increasingly desperate situation.
A big part of the problem is that businesses have stopped advertising through the mail because of the coronavirus situation. A decrease in advertising means that the volume of mail being shipped has decreased dramatically, with some predicting that the volume could decrease by 60%.
Congress approved a $2 trillion emergency bill that included a $10 billion loan to USPS, but that may not be enough for the service. Last year, with normal volumes of shipments, USPS experienced a loss of $8.8 billion. A decrease in mail will only make a bad situation worse.
“The Postal Service is insolvent,” said Rep. Gerry Connolly, D-Va., in a statement to NPR. “It needs debt forgiveness, not debt extension. And it needs an infusion of capital right now.”