Video Discussion: How Amazon Beat Supply Chain Chaos With Ships, Containers and Planes

Note: The video provides a great overview of Amazon’s supply chain strategies in response to the current shipping crisis and their broad industry implications. You will also learn how international shipping and logistics work today, including processes, technologies, innovations, and remaining challenges.

The latest industry estimates show that Amazon’s apparel and footwear sales in the U.S. grew by roughly 15% in 2020 to more than $41 billion, more than Walmart did. This represents a highly impressive 11%-12% share of all apparel sold in the U.S. and 34%-35% share of all apparel sold online. Amazon achieved early success by offering a wide range of basics, but it has since expanded its fashion business. It now features a growing slate of name brands. The company also launched online luxury fashion shops in the fall of 2019.

Discussion questions:

  1. What are the unique features of Amazon’s supply chain strategies in response to the current shipping crisis? Do these strategies work well? What is your evaluation?
  2. To what extent can other retailers emulate what Amazon is doing? Should they?
  3. Should conventional fashion companies (such as Macy’s and Gap Inc) see Amazon as a competitor or a potential collaborator? Why?
  4. Is there anything else you find interesting/intriguing/thought-provoking in the video? Why?

Shipping & logistics terms mentioned in the video:

  • TEU (Twenty-foot Equivalent Unit): TEU is a measure of volume in units of twenty-foot long containers. For example, large container ships are able to transport more than 18,000 TEU (a few can even carry more than 21,000 TEU). One 20-foot container equals one TEU.
  • FEU (Forty-foot Equivalent Unit): Two TEUs equal one FEU.
  • FCL (Full Container Load): This means that a shipment occupies the entire space of a container without having to share it with other shippers. In an FCL cargo, the complete goods in the container are owned by one shipper.
  • LCL (Less than Container Load): LCL describes the transportation of small ocean-freight shipments, which do not require the full capacity of a container.
  • ULD (Unit Load Device): A container used for baggage, cargo and mail on wide-body and narrow-body aircraft.
  • Freight Forwarder: An agency that receives freight from a shipper and arranges for transportation with one or more carriers to the final destination. While the forwarder does not always handle the freight itself, it contracts with other carriers to move goods via road, rail, ocean and air.

Supplementary reading: The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger (2016, 2nd ed) by Marc Levinson

Author: Sheng Lu

Professor @ University of Delaware

10 thoughts on “Video Discussion: How Amazon Beat Supply Chain Chaos With Ships, Containers and Planes”

  1. 1. The unique features of Amazon’s supply chain strategies in response to the current shipping crisis are that they have been quietly chartering private cargo ships, making its own containers, and leasing planes for years to better control the complicated shipping journey of an online order. These strategies work well because they are still managing to provide and get their goods to their consumer’s doors despite all that is going on.
    2. Other retailers can emulate what Amazon is doing, but only to a certain extent because not all retailers have as much revenue to indulge in these strategies. I think they should engage in what Amazon is doing – if they are able to – because then it will disperse the wealth and Amazon won’t be such a dominating corporation. Conventional fashion companies, like Macy’s and Gap Inc., should see Amazon as a potential collaborator rather than a competitor. I think that these companies would generate a great sum of money if they were to partner with Amazon. They shouldn’t see Amazon as a threat, but rather as an opportunity to learn and grow.
    3. I thought that this video was extremely interesting as I am a frequent Amazon shopper. I was curious as to why Amazon was able to weather the shipping crisis as opposed to other companies, but now I am more educated on the methods they have been using. This was eye-opening and an extremely intriguing video.

    1. Great analysis and thoughts! I think Amazon’s approach to shipping can also be applied to sourcing. Using in-house production theoretically is the best way to achieve flexibility in sourcing and shorten the lead time. However, this is also the most expensive way of sourcing and requires lots of capital investments. In comparison, most fashion companies do outsourcing today, which is cheap but can be vulnerable in the current business environment. Thus, it makes sense to see many fashion companies try to strengthen their relationship with key vendors and achieve flexibility without making heavy investments.

      It also interests me that Amazon calls itself a “logistics company.”

  2. 1. In response to the current shipping crisis, some unique supply chain strategies Amazon uses include chartering its own cargo ships and making its own containers. Due to shortages in containers, Amazon started producing their own in China. This guarantees that their equipment is going to be readily available to them, whereas other companies have to return it back to Asia. By chartering their own cargo ships, Amazon is able to use smaller vessels that allows them to dock at smaller ports. This helps to bypass the busiest ports during the busiest time of the year. In addition, another way Amazon has been bypassing ports is by using a cargo plane. Amazon is now looking to lease 10 larger planes that can hold 25% more volume. However, this can be extremely costly. Amazon’s efforts have proven to be effective. Since Amazon has been using their own equipment and producing their own shipping, these unique strategies allow Amazon to be ahead of the problems faced by the supply chain industry. In turn, other companies like Walmart, have been following in Amazon’s footsteps. While Amazon has been able to avoid the worst of the shipping crisis, the strategies that they’re implementing can have a massive effect on the carbon that is being emitted due to more vessels being used. However, Amazon has collaborated to ship for third parties. Combining supply chains allow for less usage of trucks and containerships. Although Amazon has been smart in their ways and put themself ahead of other retailers, the supply chain industry is still reaping the worst of it.

  3. I would like to start off by saying this was a really interesting article to read and also a very interesting video as well. I think it is really important to talk about Amazon and everything they’re doing to be the most competitive company in the world. I thought it was really interesting in the video when they said Amazon has been planning what to do in regards to shipping for the past year because they were like three steps ahead of everyone else. They knew a year ago shipping was going to get increasingly worse so instead of just waiting for the inevitable Amazon took initiative in order to shorten lead times and give them a sustainable competitive advantage against everyone else. That being said, Amazon does a really good job of analyzing the market and certain trends in order to appeal to their consumer market and their wants and needs.

    1. This article was extremely interesting because it allowed insight on how Amazon is functioning in regards to their supply chain and how it ships. They are leasing planes, making their own containers, and using their own ships to transport their products at a faster rate than any other corporation. Amazon is doing this while still offering a plethora of products ranging in any type of category while getting these items to the customer in a timely manner. Their way of getting product to the consumer differentiates them from other competitors. They also keep up with trends and popular items drawing consumers to come back to their website to purchase the demanded goods. They use their resources and innovations to get ahead of the competition and avoid shipping ports and other export expenses. Their strategies keep them prepared even throughout a supply chain crisis.

  4. 1. In regard to Amazon’s supply chain strategy response I’m not surprised at all that they are able to handle the crisis better than any other company. This is because Amazon’s strategy has always been about being the top logistical supplier of goods. They are able to take control due to the fact that they have their own cargo containers and ships in which they are able to avoid busy shipping ports. In addition due to the high shipping costs through water, they realized shipping through the air is comparable in price due to high prices throughout this crisis; thus they have branched out in creating their own cargo plane’s in which they are now able to ship their goods even faster by air. Another strategy they use is data science which allows the company to track consumer behavior and purchases to ensure they are prepared and stocked up, this was especially critical for the holidays. These strategies definitely work well for Amazon, they are pushing to ensure they remain the top logistical suppliers and are managing to ensure consumers are still receiving their goods in a timely manner amidst the crisis by ensuring they are in control each step throughout the supply chain.
    3. I believe other retailers such as GAP and Macy’s should look at Amazon as a potential collaborator rather than a competitor. Amazon is a great example of how companies can take control of logistics in order to supply products fast to the customer’s front door. However, many companies do not have the money Amazon has to strategize their logistics the same way. Thus, by collaborating and selling products through Amazon, this will ultimately merge shipments onto the same cargo planes and cargo ships and other companies will be able to benefit from the strategy Amazon created to avoid the shipping crisis.
    4. My family is an avid user of Amazon and orders from the company on a weekly basis. When I heard about the shipping crisis earlier in the semester I actually wondered if this would affect the speed of “Prime” shipping. I haven’t really noticed anything out of the ordinary regarding my shipments or out-of-stock items and I believe it’s due to Amazon being prepared for the crisis and using logistical strategies and commitment to readily provide to their consumers.

  5. 1. Amazon decided to make their own FEUs and TEUs to get their cargo unloaded faster. This way AMazon will not be returning their cargo back to China. Amazon is not only exporting and importing by ships but by planes also. The strategies are working well for them. It is helping them get the products to consumers faster and they will start to expand to other companies. I think Amazon creating their own cargo is a good idea that way they will not be wasting time to produce a service faster. I also think this is a bad idea because it is not sustainable. If Amazon starts flying products in the air it will produce more chemicals into the air which will lead to more environmental damage.

    2. Other retails can emulate Amazon’s idea of creating their own FEUs and TEUs this way time is not wasted because they have to share with other companies.

    3. I think conventional fashion companies should see Amazon as both a competitor and a potential collaborator. Amazon will be a great collaborator because they can get the fashion companies their products faster than other shippers. Amazon can be a competitor because Amazon is already pretending what will sell before the consumers know. This makes Amazon a great retailer. If conventional fashion companies collaborate with Amazon it will make it easier for Amazon to see where the fashion companies get their products and Amazon will try to replicate the product and sell it for a more affordable price.

    4. Amazon has planned for this for years. They try to be ahead of the game and now they are trying to become top logistics. Amazon is trying to take over every industry from fashion to agriculture.

  6. 1. Amazon has been famously known for their fast shipping because they can manage their shipping and supply chain better than other competitiors. During the current shipping crisis, Amazon already predicted the supply chain chaos. They invested billion dollars on shipping, so they can control every steps. They also have their own cargo ships and make it own containers. Which can guarantee the equipments would be available for them. They even operate the project called “Dragon Boat” to carry the goods from China sellers to Fullfiment by Amazon. Along with that, Amazon owns more than 80 air cargos to ship accross the country to avoid the busy ports and they are planning to buy the bigger air cargo jets, so they can fly accross the sea to China. They definitely need more workers, that’s why Amazon offer to pay more for hour wage and sign-on bonus up to $3000. These strategies work pretty well, I can see that Amazon knows how to make them more outstanding from other big retailers. And they prove that they can make things better and faster in logistic and supply chain during the crisis.

  7. 1) The unique features that amazon’s supply chain is doing in response to the shipping crisis are that its Chartering its own cargo ships, Making their own shipping containers, Doubling down on workers and warehouses, leasing long haul planes to expedite high priority goods from china to the U.S, and they are making their own 53 foot containers in China. These strategies have 100% worked so far and Amazon was able to increase their prices by 25% due to the 14% decrease in out-of-stock items from other places. I think that these are great strategies and are ones that create more independence from the usual system and also gives amazon more control over their business.
    2)Other retailers can emulate what Amazon is doing by either chartering their own vessels or collaborating with other companies with the transportation of products. They should 100% start to emulate what amazon is doing because it creates less back ups, less problems with imports, and it is more environmentally friendly.
    3) Conventional fashion companies should see amazon as a collaborator because it would be beneficial for fashion companies to sell through amazon because they always seem to be one step ahead when problems arise. Also if they don’t collaborate with amazon then they should collaborate transportation with each other because right now there is a massive amount of carbon released so if they collaborated then they would be removing thousands of trucks from the road.
    4) What I found interesting was that Amazon doesn’t want to be the largest retailer, they want to be the largest logistics company. This was interesting to me because I think that they proved this since they always seem to be one step ahead of everyone and outsmarting the system. They also are creating new practices for companies to start thinking about and following. I also found it interesting the way that they are able to get all this information and able to stay on top of new issues that are arriving. The video says that the more amazon ships the more information it gathers and that they are watching on a hourly basis so that if any changes in terms of cost increase of one mode of transportation vs another, then they are able to determine if it’s cheaper to fly the product instead of chartering it.

  8. 1) Amazon has its own supply chain to remove avoid bottlenecks that resulted from the pandemic and will likely remain moving forward as consumerism grows around the world. They have added on so many features to the company, such as Prime Air, manufacturing their own shipping containers, chartering their own cargo, creating their own delivery service, and having locations all around the United States so orders can be shipped as soon as they arrive at the location nearest to the destination. Amazon’s business strategy in creating its own supply chain is very smart because they have had very low issues with shipping and delivery rates. They have had some of the greatest success throughout the pandemic because of the logistical planning that was involved in making Amazon one of the most efficient supply chains in the world.
    2) I don’t think any retailer will come close to the level that Amazon is at, but there are many attributes to Amazon’s business strategy that can and already are being applied to other large retailers in the United States. For example, Walmart and Target are already attempting to charter their own shipping vessels so they can get products overseas faster. Walmart is also being used to ship same-day and next-day deliveries for Home Depot in some southern U.S. states. I think it would be wise for large retailers to adopt some of the strategies used by Amazon because it would allow for an increase in control over aspects of the supply chain.
    3) I think conventional fashion companies should see Amazon as both a competitor and collaborator. Amazon has very affordable fashions compared to stores like Macy’s or Gap. Even though Amazon may have an advantage for price points, these companies should collaborate through shipping and delivery methods. Amazon has multiple shipping locations in each state, which would allow conventional fashion companies to ship products faster while reducing the number of shipping containers with empty space.
    4) I thought the most interesting part was how Amazon is selling cargo space to its competitors. Not only does it help other businesses get their merchandise to retail stores sooner, but it gives Amazon the competitive advantage to stay at the top in the global business realm. I was genuinely impressed by the way Amazon has implemented supply chain management strategies to overcome the struggles that are still being faced by many companies and shipping ports.

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