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Photo: Smith Collection/Gado/Getty

Amazon appears to be lowballing rivals in a classic squeeze to take over yet another industry: freight.

Why it matters: With its track record of upending nearly every business it enters, Amazon has the potential to decimate UPS and FedEx as it moves into shipping. Its tactic is a modern example of putting competition through a Rockefeller-style "good sweating."

"Amazon is turning areas of the business that were historically costs into new revenue streams," says Gartner L2 analyst Griffin Carlborg. Shipping could be a massive source of profit for the tech giant — U.S. companies spent $1.5 trillion on moving goods in 2017, reports WSJ.

  • Amazon's online trucking platform is already undercutting the big players' average shipping rates by up to 33%, reports FreightWaves.
  • The behemoth can also scoop up customers with its top trust rating. Raymond Neal, an independent bookstore owner who sells on Amazon, tells me, "People pay more for the same book if it's 'Fulfilled by Amazon,' or Prime."
  • Logistics incumbents should worry, Carlborg says. "[Amazon is] breaking into new industries by offering services that are too good to be true or prices that are too good to be true, and figuring out opportunities to monetize it later."

Analysts say it’s a familiar strategy. Amazon has tried to grab customers from sellers on its site by debuting cheaper, private label products right alongside the existing selection.

The company denies the lowballing: "We work with many line-haul service providers in our transportation network and have long utilized them to carry loads for Amazon. This service, intended to better utilize our freight network, has been around in various forms for quite some time. The analysis suggesting dramatic undercutting of pricing is false."

The big picture: As we noted when Amazon announced 1-day shipping, one way the company can slash delivery times for Prime is by building its own logistics network — chipping away at its reliance on the big shippers.

Axios emailed UPS and FedEx. The companies did not immediately return requests for comment.

Go deeper

3 hours ago - Health

FDA advisory panel recommends Pfizer boosters for those 65 and older

A healthcare worker prepares a dose of the Pfizer-BioNTech Covid-19 vaccine at the Key Biscayne Community Center on Aug. 24, 2021. Photo: Eva Marie Uzcategui/Bloomberg via Getty Images

A key Food and Drug Administration advisory panel on Friday overwhelmingly voted against recommending Pfizer vaccine booster shots for younger Americans, but unanimously recommended approving the third shots for individuals 65 and older, as well as those at high-risk of severe COVID-19.

Why it matters: While the votes are non-binding, and the FDA must still make a final decision, Friday's move pours cold water on the Biden administration's plan to begin administering boosters to most individuals who received the Pfizer vaccine later this month.

3 hours ago - World

France recalls ambassadors from U.S. and Australia over submarine deal

Secretary of State Antony Blinken (L), French Foreign Minister Jean-Yves Le Drian (C), and French ambassador to the U.S. Philippe Etienne. Photo: Nicholas Kamm/AFP via Getty Images

France has taken the extraordinary step of recalling its ambassadors to the U.S. and Australia after both countries blindsided their French allies with a new military pact and submarine contract, the French Foreign Ministry announced on Friday.

The backstory: While sealing an agreement with the U.S. and U.K. to acquire nuclear submarines, Australia ripped up an existing $90 billion submarine deal with France. That led senior French officials to accuse the U.S. of a "stab in the back."

Updated 4 hours ago - World

In reversal, Pentagon now says drone strike killed 10 Afghan civilians

Caskets for the dead are carried towards the gravesite as relatives and friends attend a mass funeral for members of a family that is said to have been killed in a U.S. drone airstrike, in Kabul on Aug. 30. Photo: Marcus Yam/Los Angeles Times via Getty Images

A U.S. drone strike launched on Aug. 29 killed 10 civilians in Afghanistan, including seven children, rather than the Islamic State extremists the Biden administration claimed it targeted, the Pentagon said Friday.

Why it matters: U.S. Central Command said at the time that officials "know" the drone strike "disrupted an imminent ISIS-K threat" to Kabul's airport, and that they were "confident we successfully hit the target."