Amazon Shipping offers rates 30% below FedEx and UPS, with a retail client cutting costs by 33%. Morgan Stanley warns the threat is real. UPS sheds volume, FedEx leans on guidance.
Amazon Shipping is offering corporate shippers rates that can run 30% below comparable FedEx and UPS pricing, according to a Supply Chain Dive report. The push expands a service that once focused narrowly on small packages headed to metro areas into a broader challenge for corporate shipping contracts of every size.
Logistics platform Loop has seen shippers save as much as $6 per package by shifting eligible residential volume from FedEx and UPS to Amazon Shipping, Loop's Matt Sumowski said. One large retail client using FedEx cut its annual shipping costs by more than 33% after routing most of its distribution through Amazon instead.
Hannah Testani, chief executive of freight audit firm Intelligent Audit, said Amazon Shipping is even undercutting the U.S. Postal Service on packages under a pound. Amazon's vice president of supply chain go-to-market, Jeff Helbling, told Supply Chain Dive that "businesses see the value it already offers."
UPS and FedEx shares slipped Thursday after Morgan Stanley analyst Ravi Shanker warned clients that Amazon's growing delivery reach threatens both carriers, Bloomberg reported. Amazon still lacks overnight delivery, Shanker wrote. He added that it's "likely not long before that becomes an option as well." Both stocks turned negative after the pricing specifics circulated, according to a Seeking Alpha report.
It was the second selloff this year. FedEx fell 9% and UPS dropped 10% in a single May session when Amazon launched Amazon Supply Chain Services as a bundled enterprise offering, a 24/7 Wall St report noted.
Neither carrier has ceded its highest-margin business yet. FedEx grew fiscal third-quarter revenue 8% to $24 billion and raised its full-year adjusted profit guidance to $16.05–$16.85 per share, helped by a 5% rise in U.S. domestic package volume, the same report noted. That gives FedEx a cushion heading into the price fight.
UPS has taken a different path. Chief executive Carol Tomé has told investors that 2026 will mark "an inflection point" once the company's deliberate pullback from lower-margin Amazon volume finishes running its course. UPS eliminated roughly 48,000 positions and closed 93 facilities in 2025. Its U.S. domestic average daily volume fell 8% in the first quarter of 2026 – a trade-off aimed at protecting margins over market share.
Testani argues that dynamic still favors the incumbents for now. Overnight and healthcare shipments command premium pricing that Amazon Shipping, currently limited to two-to-five-day ground delivery, cannot yet match.
Amazon's expansion into adjacent markets has precedent. AWS reshaped enterprise computing. Amazon Pharmacy pushed into drug distribution. Each expansion rattled incumbent stocks before settling into an uneasy coexistence. Whether FedEx and UPS can defend their premium lane will depend on how long they can keep express and healthcare shipments insulated from the price compression already reshaping e-commerce delivery.
The real test comes if Amazon Shipping ever adds overnight service. That is the one gap FedEx and UPS still don't have to worry about closing themselves.
AlphaScala's proprietary scoring gives UPS stock page a 66/100 (Moderate) and FDX stock page a 53/100 (Mixed), reflecting the divergent margin strategies and the pricing threat from Amazon.
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