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Amazon is making its own containers and bypassing supply chain chaos with chartered ships and long-haul planes

For years, Amazon has been quietly chartering private cargo ships, making its own containers, and leasing planes to better control the complicated shipping journey of an online order.

Now, as many retailers panic over supply chain chaos, Amazon’s costly early moves are helping it avoid the long wait times for available dock space and workers at the country’s busiest ports of Long Beach and Los Angeles.

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https://www.cnbc.com/2021/12/04/how-amazon-beats-supply-chai...
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I read somewhere that it costs $1,200 (maybe more today) to ship an empty container back to China. I wonder what it costs Amazon to build its own containers in quantity?

intercst
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Now, as many retailers panic over supply chain chaos, Amazon’s costly early moves are helping it avoid the long wait times for available dock space and workers at the country’s busiest ports of Long Beach and Los Angeles.

Air freight would certainly avoid the ports, but how does owning your own containers get them through the ports faster?

DB2
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how does owning your own containers get them through the ports faster?
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It may not, but having the container means you are at least in line. I'm guessing they have logistical algorithms which may be pointing them towards solutions which many don't have the ability to use.

One of the advantages I had when I was in the business of potentially supplying any mixture of hundreds of thousand of unique items quickly and at the lowest net cost to my firm to my customers was a software database I wrote. It had to integrate data from each of the formats of our sources.

On a daily basis, it was updated with the inventory and landed prices of a couple of dozen manufacturers and distributors that we sourced from. The purchasing agents could then query by a simple Boolean search on a command line and a matrix off who had the item, where it was located (shipping time) and at what net landed cost (what the items were initially sorted on. As items were selected, purchase orders were built on a per-distributor basis.

Today, this sounds obvious, but we are talking about the 1980's and the inventory positions were sent on floppy disk by overnight mail by the sources (as the internet was not invented yet).

The distributors would drop-ship the goods with our paperwork, rather than theirs.

This allowed us to deliver a broader range of products quicker, at both a lower cost to our customer base and a higher profit margin to us, than any of our competitor.

Having access to their own containers is only one aspect of Amazon's solution to circumventing what amounts to a blockage of certain ports. (I heard of one outfit which circumvented the issue by building a 100 meter rail link in Canada which made it legal to import there and route across the Canadian border - if there is a will, there is a way)

Jeff
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Air freight would certainly avoid the ports, but how does owning your own containers get them through the ports faster?

It does - potentially - if you do certain things.

1. Ports are (were) refusing to accept empties “if they were not the right color” (60 Minutes). [I’m guessing shippers designate their containers by color in the same way that hotels designate their sheets by the color of their thread stitching?] That means that certain shippers/vendors were not getting their empties back so they could be reloaded and shipped again to the US. And since there was (is) a crunch on new containers they were unable to buy enough to solve the problem in any other way than air freight, which is vastly more expensive and not worth it for some weightier, low value goods (think: dishware, fireplace grates, etc.)

2. If you own your own containers and have the size of Amazon you can charter your own smaller ships, fill them with your own stuff, charge your vendors for shipping (at a premium, probably), and use secondary ports to receive. Since it is not a mixed container ship coming in and you have warehouses everywhere, you can transship the stuff to your other warehouses yourself rather than hope mid-level distribution centers get the stuff and ship it timely to the Amazon warehouses where it’s going anyway.

3. A smaller shipper may not have the option of using a secondary port since they rely on the existing infrastructure to get their products to destinations from the major ports which are set up to handle and split such cargoes and they’re probably hustled onto the newer, gigantor “more efficient” cargo vessels. Amazon, if it has that issue at all, has its own infrastructure which presumably could handle much of that itself.

4. There are over 30 ports capable of containerization in the US, but after the top 3 the volume drops off dramatically. In fact in many of these smaller locales the volume has actually gone negative the past year, even as the largest ports increased 10% or more, with ships waiting in the channel to offload.

5. Chartering a smaller vessel with only or mostly your own containers is probably easier now that there are gigantors running the Panama route and elsewhere, and there are many ports which can’t accommodate them because of size.

6. And you won’t get caught up in the “no trailers” and “no empties” issue that has confounded some of the larger ports lately (again, 60 Minutes)

This is all speculation on my part, I ain’t no expert in freight logistics, but the big guys (Walmart, Amazon, Apple, etc.) have dedicated teams devoted to just such issues (I’m sure Apple is mostly air freight, but the principle is the same) and have the scale to make it worthwhile. So yes, I’d guess that it can be more efficient.

Google tells me that it costs less than $400 to ship an empty container back to China ($250-$450), and that a new, no frills container costs $1200 and up. “Frills” include waterproofing, ventilation, skylights (for plants, presumably), insulation, etc. which can put the price north of $5,000 depending on how many customizations you add.
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Air freight would certainly avoid the ports, but how does owning your own containers get them through the ports faster?

Maybe it puts you in control of which ports to use, allowing you to pick the suitable port with the smallest backlog.

I found an article from late October stating that a shipping company was (allegedly temporarily) dropping the Port of Seattle from its schedule, preferring Vancouver (but so far I haven't been able to determine whether that's Vancouver WA or Vancouver BC), because of delays of up to two weeks at the Port of Seattle. https://gcaptain.com/port-of-seattle-becomes-latest-casualty...

The Port of Vancouver (WA) has its own backlog, of course.
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2. If you own your own containers and have the size of Amazon you can charter your own smaller ships, fill them with your own stuff, charge your vendors for shipping (at a premium, probably), and use secondary ports to receive. Since it is not a mixed container ship coming in and you have warehouses everywhere, you can transship the stuff to your other warehouses yourself rather than hope mid-level distribution centers get the stuff and ship it timely to the Amazon warehouses where it’s going anyway.

3. A smaller shipper may not have the option of using a secondary port since they rely on the existing infrastructure to get their products to destinations from the major ports which are set up to handle and split such cargoes and they’re probably hustled onto the newer, gigantor “more efficient” cargo vessels. Amazon, if it has that issue at all, has its own infrastructure which presumably could handle much of that itself.


I read another article that said that is pretty much what Amazon is doing. For example, some Amazon containers are going to the small Port of Everett instead of the overcrowded Port of Seattle.

One thing Amazon isn't doing is screwing their vendors. Many Amazon vendors are reluctant to use Amazon logistics because they have to disclose pricing and other information but Amazon has containers right now is charging a fraction of the market rate.
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Home Depot, WalMart, & Target go one step further.
They contract their own container ship.
https://www.cnbc.com/2021/06/13/home-depot-contracted-its-ow...
https://www.businessinsider.com/target-chartered-cargo-ship-...
https://www.msn.com/en-us/money/companies/walmart-charters-i...

Walmart has chartered a grain cargo ship, stuffed it full of toys and consumer goods, and sent it away from the LA Port to a nearby cargo dock, Reuters reported Thursday. Home Depot sent its own vessel loaded with Halloween and Christmas decorations to San Diego. Target, Costco, Ikea, and Dollar Tree are also getting on board the boat-chartering trend.
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