The Wall Street Journal reported that Jeff Bezos’ Amazon.com Inc. (AMZN) will launch “Shipping with Amazon” which will be an internal delivery service that will pick up packages from manufacturers or distributors and deliver them to customers. This continuation of Amazon’s vertical integration will compete with existing freight and logistics companies such as United Parcel Service (UPS) and FedEx Corp (FDX). While Amazon already delivers some of its packages and has expanded into ocean air and land deliveries it will have to greatly expand its delivery network, infrastructure and technology in order to compete with the efficiencies and pricing of existing global delivery giants.
Today we are seeing price weakness in both Amazon and the largest shorts in the Air Freight & Logistics Sector. In late afternoon trading AMZN is down 2.8%, UPS down 4.9% and FDX down 3.4%. Short sellers are adding to their February profits with AMZN shorts up $312 million in mark-to-market profits today. UPS and FDX short sellers are having good days as well, up $71 million and $39 million in mark-to-market profits respectively.
| Air Freight & Logistics
(in $ millions) |
Ticker | Short
Interest |
1 Wk Change
Short Interest |
YTD MTM
P/L |
Feb MTM
P/L |
| United Parcel Service | UPS | $1,446 | +$26 | +$245.1 | +$299.4 |
| C.H. Robinson Worldwide | CHRW | $1,373 | -$244 | -$6.0 | +$43.6 |
| FedEx Corp | FDX | $1,178 | -$181 | +$127.1 | +$156.4 |
| XPO Logistics Inc | XPO | $1,081 | -$159 | +$77.5 | +$116.9 |
| Expeditors Intl. of Wash. | EXPD | $491 | -$7 | +$40.0 | +$41.7 |
| U.S. Air Freight & Logistics | $5,807 | -$607 | |||
| Amazon.com | AMZN | $8,530 | -$367 | -$680.9 | +$934.2 |
We are seeing additional short selling in the top three most shorted stocks in the Air Freight & Logistics Sector today. With Amazon looking to expand into the delivery business it is not only another competitor in their sector that they will have to compete with, but also a loss of existing customer revenues. Much like when Amazon announced it would be entering the Auto Parts Sector and Supermarket Sector, we should see increased short selling in the largest shorts in the sector and at least some short term price weakness.
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Contact: Ihor.Dusaniwsky@S3Partners.net
Managing Director Predictive Analytics, S3 Partners, LLC
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