Amazon's Logistics Expansion Pressure on Delhivery Sends Stock Price Down Over 4%

Delhivery Share Price Slumps Over 4% on Amazon Logistics Rivalry

On Tuesday, May 5, Delhivery's share price plummeted over 4% as Amazon unveiled a new bundled logistics offering, Amazon Supply Chain Services (ASCS), that could intensify competition in the sector. According to a Bloomberg report, Amazon's ASCS is a platform that allows businesses to access its end-to-end logistics network as a single package, incorporating services such as air and ocean freight, trucking, warehousing, and last-mile delivery.

Amazon originally established its logistics infrastructure to support its e-commerce activities, but over the last 10 years, the Seattle-based company has built an extensive in-house network, including a dedicated cargo airline, a sizable fleet of delivery vehicles operated by contract drivers, and freight brokerage services spanning sea, rail, and air. The firm has gradually begun offering these services to external clients and is now consolidating them into a cohesive package, with the branding of ASCS resembling that of other Amazon divisions, such as Amazon Web Services and Amazon Health Services.

Following Amazon's announcement, the stock prices of logistics and parcel delivery companies fell sharply on Wall Street overnight. FedEx experienced its largest single-day decline in a year, plummeting by 9%, while competitor UPS dropped by over 10%. GXO Logistics declined by 18%, and Forward Air saw a 24% decline.

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The development is seen as a potential overhang, given that Delhivery derives a significant portion of its revenue from e-commerce logistics, and Amazon is also a key client. With Amazon now opening up its end-to-end logistics network to third parties, competitive intensity in the sector is likely to rise. Analysts believe this move could impact volumes and pricing power for third-party logistics players like Delhivery, as large clients may increasingly shift to Amazon's in-house capabilities.

Delhivery's share price today opened at ₹463.05 per share on the BSE, touching an intraday high of ₹465.70 per share and an intraday low of ₹448 per share. According to Rajesh Bhosale, Equity Technical and Derivative Analyst at Angel One, the stock is under pressure today, having slipped below its key short-term moving average of the 20-day EMA. He noted that the stock has been trading in a range over the past month, with the ₹475 level acting as strong resistance on multiple occasions.

Unless this level is decisively breached, prices are likely to remain in a consolidation phase. On the downside, Bhosale highlighted ₹440, aligned with the 200-day moving average, as a crucial support level. A break below this mark could trigger further weakness in the stock.

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