Old Dominion, Saia, and XPO each fell 5% or more after Amazon opened its less-than-truckload service to all U.S. businesses
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Amazon $AMZN announced Wednesday that it is expanding its less-than-truckload freight service beyond shipments destined for its own warehouses, opening the offering to businesses of all sizes shipping to any destination in the U.S., including third-party warehouses, distribution centers, and retail partners.
The announcement triggered a broad selloff among established freight carriers. According to CNBC, shares of Old Dominion $ODFL Freight Line shed more than 6%, and both Saia and XPO Logistics gave up 5%. ArcBest stock sank 4%. At the start of trading, FedEx $FDX Freight and Saia tumbled about 10%, though both stocks clawed back a portion of those declines by later in the session, Bloomberg reported. FedEx Freight began trading as an independent company following a spinoff from FedEx Corp. earlier this month.
In the LTL model, one trailer carries shipments from several customers at the same time. Each shipment usually ranges from one to six pallets and weighs between 150 and 15,000 pounds, instead of filling a whole truck. Amazon has offered an inbound-only LTL service to its partners and vendors since 2019, moving millions of pallets across the U.S. last year. The expanded service now uses over 80,000 trailers and 24,000 intermodal containers, according to the company.
"The feedback from Amazon selling partners using our LTL service was clear: the technology, visibility, and reliability were exactly what they needed — and they wanted to use it more broadly," Jim Ruiz, director of Amazon Freight, said in a statement. "Now Amazon LTL can move your freight wherever it needs to go, servicing destinations nationwide for businesses of all sizes."
The LTL expansion is the latest addition to Amazon Supply Chain Services, a suite of logistics offerings the company unveiled last month that gives businesses access to its freight, distribution, fulfillment, and parcel shipping infrastructure. When that broader program was first announced, stock in parcel carriers UPS and FedEx fell before recovering. Amazon drew an explicit parallel to its AWS cloud computing unit, which was built for internal use before being opened to outside customers.
In a note to clients, Morgan Stanley $MS's Ravi Shanker suggested Amazon could gain significant ground in the market without necessarily matching the service quality of established players right away. A more cautious take came from Bloomberg Intelligence's Lee Klaskow, who argued in a report that the threat to established carriers was limited, reasoning that Amazon would mainly attract budget-driven customers shipping low-value goods rather than shippers who demand high service standards.
Wednesday's selloff came after a period of strong gains for LTL stocks. Heading into Wednesday's session, Old Dominion's stock had posted gains of nearly 60% since January, carrying a valuation of roughly 43 times forward earnings estimates.
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