Markets

Amazon Faces Penalty Risk for Shipping Hazardous Materials

An image of a pencil and a calculator
Credit: Shutterstock photo

Amazon.com, Inc.AMZN is likely to be fined again by the U.S. Federal Aviation Administration (FAA) for sending hazardous materials by air in 2014.

The FAA alleged Amazon of violating hazardous materials regulations and said on Monday that it's proposing a $350,000 civil fine against the company.

The agency indicated that it will continue with its investigation in relation to Amazon's compliance with air safety regulations.

In Apr 2014, the FAA fined Amazon $91,000 for a 2013 incident that involved improper shipment of a flammable liquid adhesive through FedEx.

Series of Allegations

FAA has quite a few allegations against Amazon. It said that Amazon shipped a gallon of "Amazing! LIQUID FIRE," through United Parcel Service, Inc. UPS on Oct 15 2014, which leaked through the fiber board box and injured nine UPS employees.

The sulphuric acid based corrosive drain cleaner caused a burning sensation to those who came in contact with the leaked boxes. The affected employees had to be treated with chemical wash.

FAA also alleged that the shipment was improperly packaged and did not carry any label indicating it was dangerous. Further, the package did not contain any emergency information and employees were not properly trained for handling those goods.

FAA stated in a news release that "Amazon has a history of violating the Hazardous Materials Regulations." According to the agency, Amazon has violated hazardous material regulations 24 times from Feb 2013 to Sep 2015.

AMAZON.COM INC Price and Consensus

AMAZON.COM INC Price and Consensus | AMAZON.COM INC Quote

The Timing

The proposal for slapping a penalty arises at a time when Amazon is putting in efforts to enhance its shipping capabilities. Recently, the company acquired stakes in Atlas Air Worldwide Holdings, Inc. AAWW and Air Transport Services Group, Inc. ATSG to create its own fleet of delivery airplanes and thereby reduce its dependency on FedEx and UPS.

The Verdict

Amazon has the reputation of being the world's largest e-commerce company and such legal issues may tarnish its image. We believe that it's time that the company increased its efforts to avoid such lapses in shipping going forward.

Currently, Amazon is a Zacks Rank #3 (Hold) stock.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

AMAZON.COM INC (AMZN): Free Stock Analysis Report

UTD PARCEL SRVC (UPS): Free Stock Analysis Report

ATLAS AIR WORLD (AAWW): Free Stock Analysis Report

AIR TRANSPT SVC (ATSG): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

AMZN UPS ATSG AAWW

Other Topics

Stocks

Latest Markets Videos

Zacks

Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

Learn More