Amazon is building an air hub in Texas — and that means more bad news for FedEx and UPS, Morgan Stanley says.
Amazon is building an air hub in Texas. That’s good news for Amazon, according to a new analysis from Morgan Stanley, and bad news for UPS and FedEx.
The hub could also allow Amazon to save between $1 billion and $2 billion next year.
It was poised to take market share from UPS and FedEx with its fleet of 40 Boeing 767 cargo planes.
Amazon already has an air hub at Cincinnati/Northern Kentucky International Airport. And while Amazon said the facility in Texas was the first of its kind for the company, it also announced plans last week to expand operations at Chicago’s Rockford Airport.
Amazon shares have been on a wild ride this year, rising 75% through the first eight months on their way to an all-time high of $2,050.50 per share at the end of August. Since then, the stock has plunged 22% amid a broader stock-market rout.
Amazon is up 35% this year, while UPS and FedEx were down 21% and 29% respectively.
Morgan Stanley, “We also estimate that Amazon Air’s lanes overlap with over two-thirds of the volume flown by UPS+FedEx combined.”
As a result, Morgan Stanley lowered its price target for UPS to $87 from $92 and for FedEx to $230 from $240.
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