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

8 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.

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