Amazon Opens ASCS, Another AWS? Logistics Business May Become New Growth Engine

TradingKey - Recently, Amazon ( AMZN) announced that it is opening Amazon Supply Chain Services (ASCS) to all businesses, making its complete freight, warehousing, fulfillment, and parcel delivery capabilities available to all types of enterprises, no longer serving only its own retail business and platform sellers.

Official disclosures show that ASCS covers ocean, land, rail, and air freight, with the initial batch of customers already including Procter & Gamble ( PG ), 3M ( MMM ), Lands' End (LE) and American Eagle ( AEO ), with business operations spanning the healthcare, automotive, manufacturing, and retail industries. This means Amazon has officially packaged its logistics network, which originally served only its own retail and third-party sellers, into a business for external sale.

Logistics business shifts toward commercialization

In the past, Amazon Logistics was primarily a support system for the e-commerce business, with the core mission of accelerating fulfillment, lowering costs, and enhancing the user experience. Now, ASCS has transformed these capabilities directly into external products, meaning that warehousing, line-haul transportation, inventory management, and last-mile delivery have all begun to possess independent revenue-generating potential.

Amazon emphasized that over the past three years, hundreds of thousands of sellers have already validated the efficiency of this network through third-party warehouses, cross-sales channels, and off-Amazon channels; therefore, opening it to the public was a natural progression. Peter Larsen, a Vice President at the company, even stated explicitly that ASCS allows other businesses to access the cost efficiency, reliability, and speed that Amazon has built over many years.

Reuters reported that ASCS also offers delivery timelines of 2 to 5 days, inventory forecasting, and multi-channel fulfillment capabilities, allowing businesses to integrate orders from their own websites, social platforms, and physical stores into a single network.

From a logistics business model perspective, this step is more than just an additional revenue stream; it also means that asset utilization will be repriced. With more than 100 cargo aircraft combined with a network of warehouses and sorting centers, Amazon already operates one of the most asset-heavy and comprehensive systems in the U.S. logistics industry.

For Amazon, the same set of warehouses, vehicles, aircraft, and systems can serve both its own retail business and external clients. As network utilization increases and fixed costs are diluted, the operating leverage of the logistics business will become stronger than in the past.

More importantly, Amazon is not targeting low-margin, individual express parcels this time, but rather the most valuable segment of B2B logistics. Logistics industry insiders point out that business-to-business transportation is often highly dense, predictable, and has lower service costs, making it one of the high-profit sectors most prized by logistics companies.

Evercore ISI stated that Amazon's opening of ASCS is a direct competitive strike against UPS and FedEx ( FDX ), with Baird also warning that the market may reassess the competitive landscape in sub-sectors such as less-than-truckload, air freight, and transshipment in the short term. Following the announcement on May 4, shares of both UPS and FedEx fell by more than 9% at one point, while Amazon's stock rose by nearly 1.41%.

For Amazon's logistics business itself, the long-term value of this transformation lies in upgrading its delivery capabilities into infrastructure products.

Amazon CEO Andy Jassy, in explaining the business, emphasized that these supply chain capabilities were originally built for the retail business, but the logic is similar to AWS: perfect the most difficult infrastructure internally first, and then open it up to a broader range of enterprises.

Jassy stated that many companies do not want to manage complex logistics systems themselves. If Amazon can integrate upstream allocation, warehousing, a single inventory pool, and last-mile delivery—as it has done for retail—while maintaining high quality and low cost, the service will be highly attractive.

What should investors focus on?

From an investor's perspective, Amazon's logistics business must next prove whether it can cultivate a stable, replicable, and scalable pool of external customers. If ASCS continues to attract companies across consumer goods, industrials, healthcare, and retail, the logistics segment will no longer be just a cost center for Amazon's retail business; instead, it will gradually evolve into a growth engine capable of exporting capabilities, much like AWS.

However, it should be noted that if the expansion of external customers is slow, or if rising service complexity negatively impacts the company's own fulfillment experience, the marginal value of this business will be discounted.