New York (CNN Business) Forget about drones and armies of people driving Amazon trucks. One big Wall Street firm thinks Amazon's plan to build up its air freight delivery service may be what really winds up hurting UPS and FedEx.

Morgan Stanley analyst Ravi Shanker said in a report Tuesday that both delivery giants could lose 10% of their revenue to Amazon Air by 2025. Shanker cut his price targets on UPS ( UPS ) and FedEx ( FDX ) and both stocks plunged more than 6% as a result.

It was a particularly gruesome day for transportation stocks due to worries about the broader economy and confusion about the status of US-China trade talks.

The Dow Jones Transportation Average, which includes FedEx and UPS as well as leading airlines, truckers and railroads, fell 4.4% -- its worst drop since June 2016.

But Shanker paints a picture that should be extremely worrisome to UPS and FedEx.

Read More