$61bn push for supply chain control: Amazon builds 10,000 containers as it charters long-haul planes and private cargo ships
E-commerce Amazon remains largely unaffected by the global supply chain crisis as it is increasingly taking control of the entire supply chain.
The company is building its own containers, and has “quietly” been hiring long-haul planes as well as private cargo ships, according to a CNBC report this weekend.
Its 53-foot containers are manufactured in China, thereby avoiding the global short supply, which has led to prices surging to about $20,000 per container, compared to $2,000 before the pandemic.
As it controls its own container ships, Amazon keeps maximum control over routes, designated ports and offloading times. In fact, it is zooming in on smaller harbours to avoid port congestion and long delays, as ocean freight analyst Steve Ferreira explained to the US network.
“Who else would think of putting something going into an obscure port in Washington, and then trucking it down to LA? Most people are thinking, well, just bring the ship into LA.”
“But then you’re experiencing those two-week and three-weeks delay. So Amazon’s really taken advantage of some of the niche strategies I believe that the market needs to employ,” he said.
“Amazon has produced 5,000 to 10,000 containers over the last two years I’ve been tracking it.”
Ocean freight analyst Steve Ferreira
“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.”
Unsurprisingly, these efforts have required large investments. The e-commerce company reportedly spent more than $61m on shipping costs last year, a significant jump compared to the $38bn it coughed up in 2019.
As a result, Amazon is currently able to ship around three in four of its own packages, compared to just 47 per cent in 2019, according to data from SJ Consulting Group that CNBC cited in its report.