The future of Inc. is hiding in plain sight in a San Francisco parking lot.

Adjacent to recently closed Candlestick Park, Amazon is testing its own delivery network for the "last mile," the final leg of a package's journey to consumers' doorsteps. Trucks loaded with Amazon packages and driven by Amazon-supervised contractors leave for addresses around San Francisco. Similar efforts are under way in Los Angeles and New York.

Delivering its own packages will give Amazon, stung by Christmas shipping delays, more control over the shopping experience. It can also help contain shipping expenses, which have grown as a percentage of sales each year since 2009, according to securities filings.

On Thursday, Amazon reported another quarter of skimpy profit even as sales increased 23% to $19.74 billion. Shipping costs rose 31%, and it also spent on cloud computing and new initiatives. The company reported a first-quarter profit of $108 million, compared with $82 million a year earlier.

The new delivery efforts will get Amazon closer to a holy grail of e-commerce: Delivering goods the same day they are purchased, offering shoppers one less reason to go to physical stores. With its own trucks, Amazon could offer deliveries late at night, or at more specific times.

The move is a shot across the bow of United Parcel Service Inc., Corp. and the U.S. Postal Service, which now deliver the majority of Amazon packages. It is also a challenge to Wal-Mart Stores Inc., Inc. and Inc., each of which is testing deliveries.

Ultimately, a delivery network could transform Amazon from an online retailer into a full-service logistics company that delivers packages for others, according to former Amazon executives. They caution that any such effort likely is years away.

Delivery is a big step in Amazon's ambitions. The largest U.S. Internet retailer has branched into original video programming, set-top boxes for streaming video, and soon, smartphones, among other things.

It is unclear that Amazon will achieve its goals. UPS, founded in 1907, has a head start of more than a century. Industry observers say it will be difficult for Amazon to match the efficiency of UPS or FedEx in more than a handful of U.S. markets, simply because it will be delivering fewer packages over a wider area.

Amazon quietly began rolling out the delivery network in the U.S. late last year, in packages labeled "AMZL" and "AMZN_US." Customer-service representatives and former employees say those codes designate Amazon's in-house delivery network. Customers who have received the packages said they appear to use a different tracking process, with no links to an outside shipper.

Next up for Amazon is Treasure Island, a man-made spit of land in San Francisco Bay. Amazon is reviewing a lease for a site on the island to house trailers and delivery trucks, according to a person familiar with the matter. From there, Amazon would dispatch trucks into San Francisco, likely late at night and early in the morning when traffic is lighter and fewer island residents would be disturbed, this person said.

Amazon offered a peek at the delivery network in a recent job posting on its website. "Amazon is growing at a faster speed than UPS and FedEx, who are responsible for shipping the majority of our packages," the posting reads. "At this rate Amazon cannot continue to rely solely on the solutions provided through traditional logistics providers. To do so will limit our growth, increase costs and impede innovation in delivery capabilities." "Last Mile is the solution to this. It is a program which is going to revolutionize how shipments are delivered to millions of customers."

As a prelude to the U.S. moves, Amazon has been testing a delivery network in the U.K. "We've created our own fast, last-mile delivery networks in the U.K., where commercial carriers couldn't support our peak volumes," Chief Executive said in his annual letter to shareholders earlier this month. "There is more invention to come."

Typically using small couriers, Amazon delivers packages under the "Amazon Logistics" moniker and recently acquired an option to invest in Yodel, a U.K.-based parcel-delivery service. Dave Clark, Amazon's vice president for world-wide operations, said in November that Amazon would use its own trucks to make Sunday deliveries in London.

Amazon declined to comment for this article.

At San Francisco's Candlestick Park, formerly home to the NFL's 49ers, Ryder trucks are scattered around the parking lot, amid rows of bright green AmazonFresh trucks for Amazon's same-day grocery-delivery service. Trailers arrive each morning, and their contents are transferred to vans or trucks for deliveries in and around San Francisco, said one person familiar with the operation.

The precise logistics between Amazon's "last mile" hubs couldn't be learned. Even if Amazon takes over home deliveries, it will be difficult for the company to cut the major shipping carriers out of the process entirely. Amazon still relies on them to move goods around elsewhere in its supply chain.

Planning for the delivery network began several years ago, but the project took on added urgency last winter after UPS and FedEx failed to deliver Amazon packages to some customers by Christmas, according to two people familiar with the matter. Amazon blamed the carriers, but offered $20 credits to many affected customers.

"What happened during Christmas cost a huge amount of money" for Amazon, UPS and FedEx, said Marc Wulfraat, president of logistics consulting firm MWPVL International, which tracks Amazon closely but isn't working with the retailer.

If Amazon expands its delivery network, it would likely rely initially on cheaper, more flexible regional carriers—such as the East Coast's LaserShip Inc. and the West Coast's OnTrac— as well as the Postal Service for deliveries, according to supply-chain experts and logistics consultants. That would affect package volumes at UPS and FedEx, potentially hurting their efficiency. LaserShip and OnTrac declined to comment.

Sanford C. Bernstein & Co. analysts estimate that Amazon shipped about 608 million U.S. packages in 2013. The Postal Service handled 35%, UPS 30%, regional shippers 18% and FedEx about 17%. The distribution hasn't changed much in recent years.

UPS and FedEx ground rates on average have increased 3% to 5% annually in the past five years, an incentive for Amazon to develop its own delivery service, industry observers say. Amazon cited rising shipping costs in boosting the price of its Prime unlimited two-day shipping membership in the U.S. by $20, or 25%, earlier this year.

Amazon typically pays between about $2 and $8 to ship each package, according to shipping-industry analysts, with the cheapest option through the Postal Service and the most expensive via UPS or FedEx.

Amazon shipments should account for less than 1% of revenue for both FedEx and UPS, said Jack Atkins, an airfreight and logistics analyst at Stephens Inc. That suggests Amazon's delivery network would have a limited effect on the shippers' profits, at least initially.

FedEx Chief Executive Fred Smith in December said that Amazon "can unquestionably do local deliveries should they choose to do so." But he said the vast majority of packages would continue to be moved by FedEx, UPS and the Postal Service. A FedEx spokesman declined to comment further.

A UPS spokesman declined to comment.

Amazon's in-house delivery efforts have experienced hiccups. Online forums in the U.K. are rife with customers reporting missed, late or inaccurate deliveries. Several packages shipped to The Wall Street Journal's San Francisco office assigned to "Amazon Logistics" arrived several days after their guaranteed delivery dates. Customer-service representatives said that because the division is new, it is more difficult to track packages.

David Steigman, a customer in San Francisco, said two recent orders of DVDs like "The Hobbit" with tracking information for "AMZN_US" repeatedly missed Amazon's own delivery deadlines. "After the first time, I asked them not to ship me anything using that service, but they did it again anyway" said Mr. Steigman. "I don't want to be Amazon's test market for their new shipping idea—that's not what I am paying for."

Write to Greg Bensinger at and Laura Stevens at

[Business Wire] – UPS today released first quarter 2014 results. Diluted earnings per share totaled $0.98, a $0.06 decline from first quarter 2013 adjusted results. Operating profit for the quarter was $1.5 billion, down $106 million from the prior-year’s adjusted results. Read more on this.

United Parcel Service, Inc. (UPS), with a current market cap of $90.99B, finished at $99.24.   Shares have traded today between $98.51 and $99.69 per share and has traded between $84.18 and $105.37 over the past year.   Priced at 19.12x this year’s forecasted earnings, shares are relatively inexpensive compared to the industry’s 31.64x forward p/e ratio.   And for income investors, the company pays shareholders $2.68 per share annually in dividends, yielding 2.70%.   Consensus earnings for the current quarter by the 26 sell-side analysts covering the stock is an estimate of $1.08 per share, which would be $0.04 better than the year-ago quarter and a $0.07 sequential decrease. Investors should also note that the full-year EPS estimate of $5.19 is a $0.62 better when compared to the previous year’s annual results.   The quarterly earnings estimate is based on a consensus revenue forecast of the current quarter of $13.91 Billion. If realized, that would be a 3.57% increase over the year-ago quarter.   In terms of ratings, BB&T Capital Mkts downgraded UPS from Buy to Hold (Jul 15, 2013). Previously, RBC Capital Mkts upgraded UPS from Sector Perform to Outperform.   With the above information in mind, readers should note that the average price target is $109.68, which is 10.52% above where the stock opened this morning.   :  United Parcel Service, Inc., a package delivery company, provides transportation, logistics, and financial services in the United States and internationally. It operates in three segments: U.S. Domestic Package, International Package, and Supply Chain & Freight. The U.S. Domestic Package segment offers time-definite delivery of letters, documents, small packages, and palletized freight through air and ground services in the United States. The International Package segment provides delivery services to approximately 220 countries and territories, including shipments outside the United States, as well as shipments with origin or destination outside the United States. The Supply Chain & Freight segment offers forwarding and logistics services, such as supply chain design and management, freight distribution, customs brokerage, mail, and consulting services in approximately 195 countries and territories; and less-than-truckload and truckload services to customers in North America. The company also offers shipping, visibility, and billing technologies; export and import financing services; payment solutions; and risk mitigation offerings. It operates a fleet of approximately 103,000 package cars, vans, tractors, and motorcycles; and owns 33,000 containers used to transport cargo in its aircraft. United Parcel Service, Inc. was founded in 1907 and is headquartered in Atlanta, Georgia.   ~ Stock Code: UPS | Common Company name: United Parcel Service | Full Company name: United Parcel Service Inc (NYSE:UPS) .

Echo Global Logistics’ first-quarter net income fell 18% to $2.4 million, or 10 cents per share, from $3 million, or 13 cents per share.

The Chicago-based company said April 24 its revenue increased 21% to $247.7 million.

Net revenue, or revenue less purchased transportation costs, rose 9.8% to $42.2 million. Income excluding acquisition and contingency payments, taxes and interest slipped to $5.4 million from $5.6 million.

CEO Douglas Waggoner said the results were the highest gross and net revenue for the company.

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SINGAPORE (Reuters) - The next hacker playground: the open seas - and the oil tankers and container vessels that ship 90 percent of the goods moved around the planet.

In this internet age, as more devices are hooked up online, so they become more vulnerable to attack. As industries like maritime and energy connect ships, containers and rigs to computer networks, they expose weaknesses that hackers can exploit.

Hackers recently shut down a floating oil rig by tilting it, while another rig was so riddled with computer malware that it took 19 days to make it seaworthy again; Somali pirates help choose their targets by viewing navigational data online, prompting ships to either turn off their navigational devices, or fake the data so it looks like they're somewhere else; and hackers infiltrated computers connected to the Belgian port of Antwerp, located specific containers, made off with their smuggled drugs and deleted the records.

While data on the extent of the maritime industry's exposure to cyber crime is hard to come by, a study of the related energy sector by insurance brokers Willis this month found that the industry "may be sitting on an uninsured time bomb".

Globally, it estimated that cyber attacks against oil and gas infrastructure will cost energy companies close to $1.9 billion by 2018. The British government reckons cyber attacks already cost UK oil and gas companies around 400 million pounds ($672 million) a year.

In the maritime industry, the number of known cases is low as attacks often remain invisible to the company, or businesses don't want to report them for fear of alarming investors, regulators or insurers, security experts say.

There are few reports that hackers have compromised maritime cyber security. But researchers say they have discovered significant holes in the three key technologies sailors use to navigate: GPS, marine Automatic Identification System (AIS), and a system for viewing digital nautical charts called Electronic Chart Display and Information System (ECDIS).

"Increasingly, the maritime domain and energy sector has turned to technology to improve production, cost and reduce delivery schedules," a NATO-accredited think-tank wrote in a recent report. "These technological changes have opened the door to emerging threats and vulnerabilities as equipment has become accessible to outside entities."

TIP OF THE ICEBERG

As crews get smaller and ships get bigger, they increasingly rely on automation and remote monitoring, meaning key components, including navigational systems, can be hacked.

A recent study by security company Rapid7 found more than 100,000 devices - from traffic signal equipment to oil and gas monitors - were connected to the internet using serial ports with poor security. "The lines get blurry, and all industries and all technologies need to focus more on security," said Mark Schloesser, one of the authors of the study.

Mark Gazit, CEO of ThetaRay, an internet security company, said an attacker managed to tilt a floating oil rig to one side off the coast of Africa, forcing it to shut down. It took a week to identify the cause and fix, he said, mainly because there were no cyber security professionals aboard. He declined to say more.

Lars Jensen, founder of CyberKeel, a maritime cyber security firm, said ships often switch off their AIS systems when passing through waters where Somali pirates are known to operate, or fake the data to make it seem they're somewhere else.

Shipping companies contacted by Reuters generally played down the potential threat from hackers. "Our only concern at this stage is the possible access to this information by pirates, and we have established appropriate countermeasures to handle this threat," said Ong Choo Kiat, president of U-Ming Marine Transport, Taiwan's second-largest listed shipping firm by market value. The company owns and operates 53 dry cargo ships and oil tankers.

A spokeswoman for Maersk Line, the world's top shipping container group, said: "Yes, we consider cyber risk a threat, but vessels are no more vulnerable to such attacks than onshore systems and organizations. We are taking this risk seriously and ensuring that we are protected against such threats."

VIRUS-RIDDLED

A study last year by the Brookings Institution of six U.S. ports found that only one had conducted an assessment of how vulnerable it was to a cyber attack, and none had developed any plan to response to any such attack. Of some $2.6 billion allocated to a federal program to beef up port security, less than 1 percent had been awarded for cyber security projects.

When CyberKeel probed the online defenses of the world's 20 largest container carriers this year it found 16 had serious security gaps. "When you look at the maritime industry there's extremely limited evidence of systems having been breached" compared to other sectors, said CyberKeel's Jensen. "That suggests to us that they've not yet been found out."

Michael Van Gemert, a security consultant to the oil and gas industry, said that on visits to rigs and ships he has found computers and control systems riddled with viruses. In one case, he said it took 19 days to rid a drilling rig en route from South Korea to Brazil of malware which had brought the vessel's systems to a standstill.

"The industry is massively in need of help, they have no idea what the risks are," he said.

The main ship navigation systems - GPS, AIS and ECDIS - are standards supported by bodies such as the International Maritime Organisation (IMO). Indeed, that body has made AIS and ECDIS mandatory on larger commercial and passenger vessels.

Researchers from the University of Texas demonstrated last July that it was possible to change a ship's direction by faking a GPS signal to dupe its onboard navigation system.

Marco Balduzzi and colleagues at anti-virus vendor Trend Micro last month showed that an attacker with a $100 VHF radio could exploit weaknesses in AIS - which transmits data such as a vessel's identity, type, position, heading and speed to shore stations and other ships - and tamper with the data, impersonate a port authority's communications with a ship or effectively shut down communications between ships and with ports.

In January, a British cyber security research firm, NCC Group, found flaws in one vendor's ECDIS software that would allow an attacker to access and modify files, including charts. "If exploited in a real scenario," the company concluded, "these vulnerabilities could cause serious environmental and financial damage, and even loss of life."

When the USS Guardian ran aground off the Philippines last year, the U.S. Navy in part blamed incorrect digital charts. A NATO-accredited think-tank said the case illustrated "the dangers of exclusive reliance upon electronic systems, particularly if they are found vulnerable to cyber attack."

"Most of these technologies were developed when bandwidth was very expensive or the internet didn't exist," said Vincent Berk, CEO of security company FlowTraq.

NO QUICK FIX

Fixing this will take time, and a change in attitude.

"Security and attack scenarios against these technologies and protocols have been ignored for quite some time in the maritime industry," said Rapid7's Schloesser.

Researchers like Fotios Katsilieris have offered ways to measure whether AIS data is being faked, though he declined to be interviewed, saying it remained a sensitive area. One Google researcher who has proposed changes to the AIS protocol wrote on his blog that he had been discouraged by the U.S. Coastguard from talking publicly about its vulnerabilities.

Indeed, AIS is abused within the industry itself.

Windward, an Israeli firm that collects and analyses AIS data, found 100 ships transmitting incorrect locations via AIS in one day - often for security or financial reasons, such as fishing boats operating outside assigned waters, or smuggling.

In a U.N. report issued earlier this year on alleged efforts by North Korea to procure nuclear weapons, investigators wrote that one ship carrying concealed cargo turned off its AIS signals to disguise and conceal its trip to Cuba.

It's not clear how seriously the standards bodies treat the threat. Trend Micro's Balduzzi said he and his colleagues were working with standards organizations, which he said would meet next year to discuss his research into AIS vulnerabilities.

The core standard is maintained by the International Telecommunications Union (ITU) in association with the IMO. In a statement, the IMO said no such report of vulnerabilities had been brought to its attention. The ITU said no official body had contacted it about the vulnerabilities of AIS. It said it was studying the possibility of reallocating spectrum to reduce saturation of AIS applications.

Yevgen Dyryavyy, author of the NCC report on ECDIS, was skeptical that such bodies would solve the problems soon.

First, he said, they have to understand the IT security of shipboard networks, onboard linked equipment and software, and then push out new guidelines and certification.

Until then, he said, "nothing will be done about it."

(Additional reporting by Keith Wallis in SINGAPORE and Jonathan Saul in LONDON; Editing by Ian Geoghegan)