Amazon's bold moves to mitigate supply disruption

7 December 2021

Amazon has been making its own shipping containers, chartering private vessels and utilising air freight to avoid bottlenecks.

The e-commerce company has produced 5,000-10,000 53-ft containers over the last two years, ocean freight analyst Steve Ferreira told CNBC. 

The move has helped the company avoid sky-high prices, as global shortages of shipping containers mean freight rates from China to the US have increased from around $2,000 before the pandemic to almost $20,000 today.

Ferreira said the move allowed Amazon to speed up its supply chains. “When they bring these containers onto US soil, once they unload them, guess what? They get to be used in the domestic system and the rail system. They don’t have to return them to Asia like everyone else does,” he said.

The company has also chartered ships, following Walmart, Home Depot and John Lewis, which has given it greater flexibility over shipping routes. 

Amazon has taken full advantage of this and, according to Ferreria, decided to ship to “obscure” ports in Washington to avoid bottlenecks at heavily congested ports in Long Island and Los Angeles, where around 40% of all imported goods enter the United States. The company has then trucked goods to California.

Ferreira estimated there are currently 79 vessels waiting to unload at the Port of Los Angeles, and some ships are waiting up to 45 days to come into harbour.

Logistics consultancy SJ Consulting Group estimates Amazon has shipped 78% of its own packages in 2021, up from less than 47% in 2019. 

At the beginning of 2018 Amazon’s freight shipping arm moved 5,300 containers from China to the US but that figure has now reached over 10,000, according to Ferreira.

Amazon is avoiding port congestion altogether in some instances by leasing at least 10 long haul planes to carry freight. 

The planes are able to transport smaller amounts of goods from China to the US in much quicker times, and can carry 220,000lbs of cargo. 

Ferreria said: “Amazon’s really taken advantage of some of the niche strategies I believe that the market needs to employ.”

Despite Amazon’s efforts the company witnessed a 14% rise in out-of-stock items and an average price increase of 25% since January 2021, according to e-commerce management platform CommerceIQ.

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