amazon: From charter ships to crisscross cargo planes, how Amazon is trying to solve supply chain problems


Most of the cargo ships entering Everett, Wash., Harbor are overflowing with cement and lumber. So when the Olive Bay docked in early November, it was clear that this was no ordinary shipment. Under the decks there was rolled steel bound for Vancouver, British Columbia, and 181 containers stacked on top sported the Amazon logo. Some were empty and immediately used to mix inventory between the company’s warehouses. The rest, according to customs data, were stocked with laptop sleeves, fireplaces, Radio Flyer wagons, Peppa Pig puppets, artificial Christmas trees and dozens of other items shipped direct from China, products including Amazon.com Inc. needs to satisfy buyers. during a holiday period when many retailers are scrambling to keep their shelves full.

By chartering the Olive Bay and sending it to a relatively sleepy port a few miles north of the hometown of Seattle, Amazon has managed to bypass shipping grunts that have stranded vacation stocks in Los Angeles and across the country. other ports. Besides Everett, the company also docked at the Port of Houston. The extreme measures gave Amazon executives confidence that they would have enough inventory to face another record-breaking holiday shopping season, as Adobe predicts U.S. consumers will spend $ 207 billion on line, up 10% from last year. Many retailers urged consumers to buy early to avoid disappointment. Amazon’s unwavering message: Bring it on!

In addition to chartering ships like the Olive Bay, Amazon has hired 150,000 U.S. seasonal workers to help pick, pack and ship items, raising wages and offering signing bonuses of up to $ 3,000. It’s about shipping half-full trucks to get packages to customers on time. The projected $ 4 billion cost of the logistics effort threatens to wipe out the company’s profits in its most important three months of the year. But for Amazon, which has bolstered its reputation as a lifeline during the Covid-19 epidemic, the holiday season is an opportunity to extend its advantage over rivals.

If the company succeeds in keeping its promises to its customers this year, it will be thanks to Amazon-chartered ships taking products from factories in Asia, to Amazon Air cargo jets plying the United States, to Amazon-branded vans. from hundreds of local delivery depots and hundreds of thousands of employees and contractors every step of the way.

“Redundancy has structural advantages if you’re Amazon,” says Jason Murray, a former Amazonian who has led teams working on logistics software. “Amazon has its own transportation network, it has access to all carriers. Several ships, several factories.

“Phenomenal” prices

This logistical feat has not been lost on merchants selling products in Amazon’s sprawling marketplace. For years, they have resisted using the company’s global shipping service because it means sharing pricing and supplier information, data they fear the company could use to compete with. them. But the shortage of containers heading into the holiday season has persuaded many to overcome their qualms and turn their cargoes over to the world’s largest online retailer. “Amazon had room on the ships and I couldn’t say no to anyone,” says David Knopfler, whose Brooklyn-based Lights.com sells home decor and lighting. “If Kim Jong Un had a container, I could take it too. I cannot be an idealist.

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Knopfler says Amazon’s prices were “phenomenal,” $ 4,000 to ship a container from China, compared to $ 12,000 charged by other freight forwarders. Amazon also simplifies the process as it oversees shipping from China to its US warehouses. Other services have many intermediaries where goods exchange hands, which presents possibilities for miscommunication and delays. “It’s a one-stop-shop from Asia to Amazon,” says Walter Gonzalez, CEO of Miami-based GOJA, which sells a variety of products on Amazon, including Magic Fiber eyewear cleaner. “This reduces the gray areas where the shipping process could fail.” Gonzalez says his company, which uses Amazon’s global logistics service, has about 95% of the inventory it needs to meet vacation demand.

Other large retailers, including Walmart Inc., have also chartered freighters or sought to hitchhike on ships loaded with iron ore, coal, grain or other commodities, according to freight consultants. But Amazon has been preparing for this moment since the mid-2010s, when it began reserving space on freighters to provide a more seamless link between Chinese factories and its warehouses. “They basically went from zero containers per month a few years ago to over 10,000 containers per month,” says Steve Ferreira, ocean freight consultant. “The thing is an 800 pound gorilla now. ”

Amazon Air

Last year, the company added chartered planes to the mix. Most air cargo is carried in the bellies of passenger jets, but when Covid-19 restricted travel, Amazon quickly moved to replace wasted space with cargo planes. This effort complements Amazon Air, the company’s fleet of 85 aircraft that moves inventory between 40 airports in the United States and has expanded to Germany.

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Bernie Thompson, CEO of Plugable Technologies, used Amazon’s air service to ship docking stations for laptops and other electronics from China to the United States to bypass blocked ports. Before the pandemic disrupted supply chains, air inventory cost 10 times more than shipping by sea. Now, thanks to the skyrocketing cost of shipping goods by sea, air travel costs just four times as much, an extra that Thompson was willing to pay. “As long as we don’t have stuff stranded on boats,” he said, “it’s worth it.”

At first glance, Amazon has solved the challenge of trans-Pacific shipping. Getting goods from warehouses to customers’ homes could be an equally delicate challenge amid one of the worst labor shortages in the United States in half a century. The web and the airways are covered with advertisements for jobs in the company’s warehouses, touting $ 15 an hour to start and health benefits on day one. Amazon employees in online chat rooms say they can earn more than their supervisors through lots of overtime, while others fear they will burn out under overwhelming demand. Even those who don’t like work are forced to stay on vacation to qualify for bonuses.

The mom-and-pop delivery entrepreneurs who now handle most of Amazon’s deliveries to the United States are also struggling to hire and retain drivers who, in the face of demanding business demands, have been known to abandon their jobs. vehicles halfway through and exit. If delivery companies can’t keep up, Amazon can turn to its network of Flex drivers, who transport packages in their own vehicles. Flex drivers have bragged about making between $ 40 and $ 50 an hour, compared to the usual $ 18. This is a sign that Amazon is prepared to pay whatever it takes to reduce the strain on its delivery operations.

“Amazon will stick to its guns and get things to customers,” said David Glick, a former Amazon logistics manager who is now chief technology officer at Seattle Flexe’s logistics startup. “It’s going to be expensive, but in the long run it builds customer confidence. ”


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