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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

Updated 3 mins ago - Politics & Policy

Supreme Court agrees to hear major Mississippi abortion case

Photo: Erin Scott/Bloomberg via Getty Images

The Supreme Court has agreed to hear a challenge to a Mississippi law that bans nearly all abortions after the 15th week of pregnancy.

Why it matters: It will be the first abortion case to be argued before the Supreme Court since Justice Amy Coney Barrett was confirmed, handing conservatives a 6-3 majority. The case could potentially provide a pathway to challenging Roe v. Wade and allowing outright bans on abortion.

Dan Primack, author of Pro Rata
20 mins ago - Economy & Business

The winners and losers of AT&T's split with WarnerMedia

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AT&T is unwinding a huge part of its $84 billion acquisition of Time Warner, less than three years after it closed.

Driving the news: AT&T this morning announced that it will merge its WarnerMedia properties with Discovery Inc.'s media assets.

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Blinken says he hasn't seen evidence Hamas was in AP building Israel struck

Smoke rises after sraeli forces destroyed building in Gaza City where Al-Jazeera and Associated Press had their offices. Photo: Mustafa Hassona/Anadolu Agency via Getty Images

U.S. Secretary of State Antony Blinken said Monday he had not personally seen evidence that Hamas was operating in a building that housed offices for Al Jazeera, the AP and other media in the Gaza Strip, as the Israeli government has claimed, AP reports.

The latest: "The Secretary was referring only to what he personally had seen. As he made clear, any such information would be provided to others in the administration, not directly to the secretary of State," a senior State Department official told Axios.