Amazon to suspend delivery service to compete with UPS, FedEx in U.S.

Amazon.com Inc will suspend a delivery service that aims to compete with UPS and FedEx in the United States, Reuters reported on Wednesday.

The online retailer told customers that the service, Amazon Shipping, will be paused starting in June, according to the Wall Street Journal, which was first to report the change.

Amazon is suspending the service because it needs people and capacity to handle a surge in its own customers’ orders, the Journal reported, citing sources.

“We regularly look at a variety of factors across Amazon to make sure we’re set up in the right way to best serve our customers,” an Amazon spokesperson told Reuters in an email confirming the halt in service.

Amazon Shipping is available in a handful of U.S. cities, including Los Angeles, and handles non-Amazon and Amazon marketplace packages.

The company is grappling with a demand surge in the United States, where most residents are under stay-at-home orders to stop the spread of the novel coronavirus that is sweeping around the globe.

Amazon has been unable to get many packages to customers in one or two days, as it had promised prior to the epidemic.

The suspension of Amazon Shipping will allow the company to focus on its core delivery operation, said Trevor Outman, founder of consultancy Shipware.

Amazon said in March it would hire 100,000 warehouse and delivery workers in the United States to deal with a surge in online orders.

UPS and FedEx shares rose 2% in extended trading on the news.