Shares of companies in the transportation sector are dropping sharply in Tuesday trading. At last read, the Dow Jones Transportation index was down almost 4.5%. AMAZON AIR GROUNDS COMPETITORS. Shares of package delivery firms United Parce Service (UPS) and FedEx (FDX) are down 7% and 6%, respectively, after Morgan Stanley analyst Ravi Shanker slashed his price targets on the package deliverers, citing worries over competition from Amazon (AMZN). Shanker said investors so far have been focusing on Amazon’s last-mile efforts and build-out of its logistics network, but he warned that missing the potential risk posed to UPS and FedEx air volumes from Amazon’s in-house Express Air network. While “Amazon Air’s” rollout is in the early stages, Shanker already estimates a 200-300 bps impact on the Domestic Air volume growth of UPS and FedEx and expects more erosion. Amazon Air could put 2% of potential revenue for UPS and FedEx at risk in 2018, and Shanker sees that growing to over 10% by 2025, he tells investors in a note. Following the Amazon Air analysis, the analyst lowered his price target for UPS to $87 from $92 and for FedEx shares to $230 from $240. Shanker kept an Equal Weight rating on FedEx and an Underweight rating on UPS. OVERALL TRUCKING INDUSTRY SEE HEADWINDS: Trucking stocks are lower on Tuesday after UBS downgraded Knight-Swift Transportation (KNX), Hub Group (HUBG), and Werner Enterprises (WERN) to Neutral from Buy. The firm also lowered its estimates and price target on J.B. Hunt Transport Services (JBHT). “The outlook for truckload and intermodal rates in the 2019 contract season is unclear but we believe that a more muted pricing outcome has become more likely,” wrote UBS analyst Thomas Wadewtix, according to Bloomberg. PRICE ACTION: In addition to the sharp drops in United Parcel Service and FedEx other sharp decliners include American Airlines Group (AAL), Delta Air Lines (DAL), United Continental (UAL), Greenbrier (GBX), Genesee & Wyoming (GWR), Canadian Pacific (CP), Trinity Industries (TRN), Ryder (R), Landstar System (LSTR), Knight-Swift Transportation, Werner Enterprises, Old Dominion Freight, (ODF) Schneider National (SNDR), and CSX (CSX).