By Al Root

For logistic companies, or for logistics investors, it is time to stay calm and carry on.

That isn't easy, with a trillion-dollar behemoth with a history of disruption gunning for business in the shipping sector. But not all disruptions are the same, and sometimes they don't amount to much.

Monday, Amazon.com sent a shock wave through the market by announcing Amazon Supply Chain Services, or ASCS, essentially opening up to outside customers the logistics network it built to support its retail business. "This story may sound familiar. Amazon built another major offering -- cloud infrastructure -- for the same reason: to run its own business better," said the company in its news release. "And then Amazon started selling it. That's how Amazon Web Services (AWS) was born...Now, Amazon is ready to do that for supply chain."

Investors who remember the now defunct Borders book stores devastated by competing with Amazon reacted with fear, sending FedEx, UPS, and a host of other logistics providers down as much as 10%.

To be sure, ASCS is no joke. Its network includes 80,000-plus truck trailers, 24,000-plus intermodal containers, and 100-plus aircraft. ( Knight-Swift Transportation operates 58,000 truck trailers. J.B. Hunt Transport Services owns about 120,000 intermodal containers. FedEx operates closer to 700 planes, including its feeder network.)

Still, Wall Street and the industry remain sanguine. For starters, Amazon logistics operations have sent shock waves through the industry for about a decade. While it expanded operations, as many growing retailers do, the rest of the industry continued to grow.

Still, this time might be different. Amazon is opening what amounts to a combination of J.B. Hunt, freight broker C.H. Robinson Worldwide, and last-mile servicer provider FedEx.

It might be different, but probably not. "The launch of ASCS represents an incremental step forward in a risk that has existed for years...but we must be cautious to not overstate this risk," wrote Citi analyst Ariel Rosa in a recent report. "The transportation and logistics industry has always been competitive...Companies with hard assets, quality offerings, and entrenched customer relationships will remain competitive."

Amazon is big, but it has no special cost advantage over companies that have been competing hard for decades.

"We continue to think that many retailers...will be cautious about giving Amazon visibility into their inventory, sales velocity, customer demand, etc.," wrote Raymond James analyst Patrick Tyler Brown. "The timing of the announcement is interesting. Amazon is leaning into third-party logistics at a point when transportation markets have been mired in overcapacity, with margins across most [shipping modes] near decade lows."

Amazon might see industry capacity tightening up, which is good news for everyone.

"We've got a lot of respect for what [Amazon has] done," Drew Wilkerson, CEO of truck brokerage firm RXO, tells Barron's. But "you're talking about an overall industry well over $400 billion dollars. So there's a huge available market...we don't worry. We only have a small piece of that. We think our best days are ahead of us."

ASCS will win some business, but is unlikely to disrupt the sector. It could disrupt valuations. Expectations for transports were running high. Coming into the week, RXO stock was up 55% year to date, with investors looking for an end to a brutal three-year long freight recession. Shares of FedEx, J.B. Hunt, and C.H. Robinson were up 36%, 28%, and 10%, respectively.

J.B. Hunt stock was trading for 30 times earnings expected over the coming 12 months, up from 22 times a year ago. That's a similar story for the rest of the sector.

Valuations reflect investor confidence in the future, maintaining that confidence got a little harder this week, but things should settle down as investors start to understand the scope of the ASCS threat.

Write to Al Root at allen.root@dowjones.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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May 08, 2026 02:00 ET (06:00 GMT)

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