FedEX, UPS Shares Surge As Amazon To Suspend Delivery Service For Third-Party Sellers Due To Increased Demand

Amazon.com Inc. AMZN is suspending the delivery service for third-party sellers on its platform starting June, the Wall Street Journal reported Tuesday.

What Happened

The service called "Amazon Shipping" was available in only a few handful cities in the United States, the Journal noted.

Ahead of the novel coronavirus (COVID-19) pandemic, the e-commerce giant was seemingly looking to establish it as a competitor to prominent delivery companies likes United Parcel Service Inc. UPS and FedEx Corporation FDX.

"We understand this is a change to your business, and we did not take this decision lightly," Amazon is said to have told shippers, according to the Journal. "We will work with you over the next several weeks so there is as little disruption to your business as possible."

The pandemic significantly increased the demand for Amazon services as widespread lockdowns imposed to curb the spread of the virus forced a majority of people to stay home.

Amazon said in March it was looking to hire 100,000 additional workers to meet the increased workload. The Seattle-based company's warehouses across the country remain functional at full capacity despite some protests by workers at multiple sites.

Price Action

Amazon shares closed 0.7% higher at $2,011.60 on Tuesday. The shares traded slightly lower at $2,010 in the after-hours session.

The shares of FedEx and UPS surged in the after-hours session following the news.

FedEx traded nearly 3.5% higher at $120 after closing the regular session 2.56% lower at $115.95. UPS traded 3.2% higher at $95.88 after closing the regular session 2.9% lower at $92.91.