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How Amazon beats supply chain chaos with ships and long-haul planes


Since years AmazonIt has quietly been leasing aircrafts and chartering private cargo vessels to help manage the long shipping path of online orders. Amazon is making costly moves to avoid long waiting times at Long Beach and Los Angeles’ busiest ports. 

CNBC’s Steve Ferreira, ocean freight analyst for Los Angeles told CNBC that there were 79 ships awaiting arrival in the harbor.  “Amazon’s newest venture I have been monitoring in the last 2 days, it waited for two days in harbor.”

Amazon has the ability to charter cargo vessels privately for shipment of its merchandise, so it can direct its freight and avoid congestion in ports.

Who would have thought of loading something into a port in Washington and transporting it to Los Angeles? People think that the ship can be brought to L.A. Then you start to experience delays of two and three weeks. Ferreira stated that Amazon has really taken advantage some of the niche strategies the market requires.

According to the e-commerce management platform, Amazon still has an 14% increase in out-of stock items, and a 25% average price rise since January 2021. CommerceIQ.

“The consumer has been feeling price increases in everything that they’re purchasing,” said Margaret Kidd, Supply Chain & Logistics Technology program director at the University of Houston. “Ultimately, when transportation costs rise, the price is passed on to consumers.”

Amazon went on an extravagant spending spree in order to manage as many aspects of shipping as possible. The company spent more than $61 billion on shipping in 2020, up from just under $38 billion in 2019. Amazon now ships 72% of its own packages, up from less than 47% in 2019According to SJ Consulting Group.

The company even takes control of the very first stage of the shipping process by building its 53-foot cargo container in China. Containers are in short supply, There was a long wait and the prices rose from below $2,000 prior to the pandemic up to $20,000 today.

Ferreira stated that Amazon has probably produced 5,000-10,000 of these containers in the past two years I have been following it. Guess what, after they have unloaded these containers on U.S. soil? You can use them in both the rail and domestic systems. They are not required to take them home to Asia, as all other people do.

The Star Lygra, a cargo ship called Star Lygra was called to the Port of HoustonAmazon Containers filled on October 5, 2021

Amazon Containers will arrive in Houston via Star Lygra’s cargo vessel Star Lygra on October 5, 2021

Port Houston

Lauren Beagen is a maritime lawyer who founded the company. Squall Strategies. It was her work at the Federal Maritime CommissionWhen Amazon registered for the agency in 2015 it gave the agency its first sign that the company was looking into ocean freight. 

Amazon began quietly to work as a freight forwarder in 2017 through a Chinese subsidiary. It helped Chinese sellers transport goods across oceans. Fulfilled by Amazon program. Amazon internally referred to this project as “Dragon Boat”. 

They are shipping over 10,000 containers per month to small and medium-sized Chinese exporters. Amazon’s volume as an ocean vendor — that’s right, you heard me correct, they’re considered an ocean vendor — would rank them in the top five transportation companies in the Trans Pacific,” Ferreira said.

This season, a handful of other major retailers — Walmart, Costco, Home DepotIkea, Target — are also chartering their ownvessel to move goods faster, bypassing the busy ports.

The real purpose of these vessels was not to store containers. They were used for lumber, chemical, grain and agricultural products. Ferreira stated that Amazon and other clever people were able to quickly convert multipurpose containers into container thanks to their ingenuity, creativity and lackof space.

Amazon will avoid shipping some of its highest-margin items by avoiding them altogether reportedlyLeasing at least 10 long-haul aircrafts is a good option to transport smaller cargo from China to the United States much more quickly. Converted Boeing 777 aircraft can transport 220,000 pounds of cargo. Based on capacity estimates Ocean AuditAmazon, among others, has chartered small, 1,000-container cargo vessels that can carry 180 tons. The largest cargo ships can transport more than 3600 times as many passengers as planes.

Manpower is another strain in the supply chain.  

We’ve heard a lot lately about the “great resignation”, with many jobs still unfilled. Therefore, I believe companies want to find creative ways of attracting employees. Judy Whipple (Michigan State University supply chain management professor) said it could be higher pay or signing bonuses.

To fight the worker shortage — and a reputation for relentless workload and breakneck speed — Amazon says it’s offering sign-on bonuses of up to $3,000 to all the 150,000 seasonal workersThis year, it is looking to hire. It hired last year. 100,000 seasonal workers.

The 50,000 employees increase this year over the previous year indicates that there are more people available to unload. John Esborn is the international head for Amazon’s global transportation. John used to be the Wayfair logistics manager and was now the Head of International Transportation.

The seasonal workers are unloading and loading, picking and packing at more than 250 new facilities Amazon says it’s opened in the U.S. just in 2021 — a clear indication that it planned far ahead for the final bottleneck in the supply chain backlog: warehouse capacity.

See the video for more information about the risky and expensive ways Amazon avoided the worst possible supply chain crisis during the holiday season.