Amazon will be pushing shoppers to buy Christmas gifts four weeks early and expects the supply chain disruption to last at least until spring next year, according to an internal document The independent one.
According to the company’s planning documents, the UK branch of the retail giant is expected to ask customers to order up to four weeks before Christmas Eve given the global supply crisis. Even Prime customers who pay for faster delivery can expect delays in their orders.
“There are efforts to postpone the big surge in orders that will come in before mid-December,” said a person familiar with Amazon’s operations. “It’s hard to overestimate the extent of the supply disruptions we face, even with our resources. It’s going to be a long, rather painful road to a new normal, and air freight can’t fully take the strain on other routes. “
The reminders start with “shop early” banners on the website and in the app before launching an email campaign trying to move the majority of Christmas orders earlier towards the end of November than the second and third December week.
The online store, like other companies, is struggling with global supply chain disruptions that threaten the post-pandemic economic recovery. The heads of state and government of the G7 promised on Wednesday to join forces to tackle the problems of world trade.
Pictures of queues outside some of the largest ports in the world have shown the widespread clutter. Still, some of the problems facing the UK are UK specific, according to the planning document.
His assessment of the depth and duration of the supply crisis is particularly significant given that according to its own internal estimates, Amazon accounted for more than a third of UK online retail activity this year. As one of the top-selling companies in the world, his belief that delivery bottlenecks and port bottlenecks will persist well into 2022 is also a worrying signal for global growth. His view was repeated by furniture salesman Ikea.
The UK truck driver shortage, exacerbated by changes in UK immigration and tax rules after Brexit, has led Amazon and other companies to grapple with debris in container ports. The increased demand in view of the strain on the delivery networks has also made it difficult to secure storage space.
“Ports can move boxes and load and unload ships; the problem is getting goods in and out of the port, ”said Tim Morris, CEO of Major Ports Group. “We have to manage the storage space very carefully. Problems start when it fills up. “
Amazon’s planning document underlines that even those companies that have a lot of money to invest in high-tech logistics capacities cannot avoid queuing at ports. The company also believes that there is insufficient capacity to reroute orders via air freight in sufficient quantities to offset the impact of other transportation issues, although this is being used to meet delivery targets for Prime orders.
Building permit requests for more storage space have also been clogged by delays from Covid-19 in local government, Amazon noted. And while Amazon offers higher wages, like other companies, it is struggling to recruit enough warehouse workers to fill its operation.
The same person familiar with the company’s operations said Amazon’s UK management was concerned that negative reports The working conditions in the company’s warehouses also made it difficult to recruit additional staff.
An Amazon spokesperson declined to comment on the details of the planning document, but noted that the company is hiring 20,000 temporary positions across the UK “over the Christmas period”.
They added that they provide a safe environment for workers and that their “competitive wages start between £ 10 and £ 11.10 an hour” depending on the location.
The planning document also notes that some estimates of when the supply chain disruptions will subside were overly optimistic.
At a central banker summit in Jackson Hole, Wyoming, in August, Federal Reserve Chairman Jerome Powell said “supply problems have begun to be resolved,” suggesting that this pressure is becoming one of the world’s boardrooms has become big problem, world would relax soon.
However, this did not prove to be the case when US President Joe Biden announced on Wednesday that the Port of Los Angeles would enter 24/7 operation to clear its jam. The pent-up demand after the pandemic is facing limited shipping capacities, which is driving up costs in a market that, according to the planning by Amazon and external experts, often takes at least two years to increase capacity.
“We have weeks of inventory,” said Phil Chesworth, general manager of Midland Pallet Trucks, a supplier of industrial equipment. “Containers that arrived this week will not be delivered until November. It’s horrific. “
The cost of shipping containers has risen sharply, with one that may have cost £ 3,000 before the pandemic now costs £ 20,000. “To us, the goods in a container could only be worth £ 36,000,” said Chesworth.
Some of Midland’s goods are stuck in China because shipping companies are prioritizing light cargo that is more profitable to ship, Chesworth said. “We’re at the very back of the queue.” Storage problems have contributed to the growing bill.
Small retailers are also feeling the pain.
Kenny Kaneko, the owner of the London Tree House in Notting Hill, London, said he had waited two months for inventory to be delivered in some cases, while toy prices also skyrocketed during that time.
He said The independent one: “It was hard to get things – when I get them I get what I want, but it’s very quick and it’s difficult to get them back. The deliveries took anywhere from a week to two months. Some things have not yet arrived, even from large companies.
He said, “I’m a small shop. I have to deal with a lot of children. Since I don’t have any storage space, I only order a large number of small quantities. I try to order it in advance as often as possible, but you can’t predict how much of something you will need. ”
Representatives from the Port of Felixstowe, which accounts for 36 percent of UK freight container traffic, said The independent one that containers spent an average of 10 days at the site, almost twice the average before the pandemic.
Meanwhile, data from shipping statistics firm Project44 showed that some containers en route from China to Europe were delayed by up to 30 days.
Josh Brazil, Vice President, Supply Chain Insights at Project44, said, “A lack of capacity in the UK’s main port in Felixstowe adds fuel to the fire as bottlenecks, labor shortages and ongoing Covid issues create the perfect storm for the transportation sector.