Amazon spending big to take on UPS and FedEx
Amazon is investing heavily in adding more warehouse and growing its fleet of airplanes, trucks and vans. The company revealed last week in its first-quarter earnings that its capital expenditures grew 80% over the trailing 12 months.
The investments are part of Amazon’s goal to manage its own deliveries and speed up the process, thus relying less on third parties such as UPS and the U.S. Postal Service. Amazon has long set its sights on being the fastest in the online delivery race.
By operating its own fulfillment and logistics network, Amazon can continue to optimize the process of preparing and delivering packages to shoppers’ doorsteps. In doing so, Amazon has already shifted from a two-day delivery model to one- and even same-day delivery.
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Supply chains playing inventory catch-up against growing backlog of orders
Manufacturers across multiple sectors have worked to increase inventory to match the rising demand for their products, but due to supply chain challenges in the current market, doing so is easier said than done.
American global manufacturer of cleaning products, Clorox, has been working for months to increase inventory and production on specific lines and facilities in an attempt to meet demand and named capacity as a key priority. Despite investments, Clorox has not been able to match demand in multiple segments.
The combination of a growing backlog and low inventory means that manufacturers will be working hard to fulfil orders. “We’re pulling every lever available to us to improve supply, including working with third-party supply sources as we continue to run flat out,” CEO Linda Rendle said.
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Ever Given’s Suez Canal blockage still disrupting global shipping
Global shipping is still suffering after the giant Ever Given container ship ran aground in Egypt’s Suez Canal and blocked the key waterway for about a week. Ports across the world are still clearing cargo logjams from March 23rd when the ship first got stuck in the main shipping route between East and West.
Since Ever Given’s problems in the Suez Canal, container freight rates have surged more than 10% to a new high. This has forced companies to resort to airfreight which is more expensive and rail transportation which is considerably slower.
There is no end to the congestion in sight just yet, and the port will remain congested through May as it has to cope with scheduled vessels as well as those held up by the blockage. The blockage also came at a time when cargo processing at U.S. ports was already struggling to keep pace with soaring cargo volumes, due to a labor shortage which was also in part a consequence of the pandemic.
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