Goods that haven’t left China yet won’t be here in time for the holidays

Walmart holiday shopping
  • Shipments from China to the US take about 73 days to reach their destination – two days after Christmas.
  • The problem is only expected to get worse in the coming weeks as record backlogs meet soaring demand.
  • Several major retailers have taken steps to side-step the issue, but it might not be enough.

It might already be too late to start holiday shopping.

The US receives much of its goods from overseas, in particular China, which serves as a primary source for anything from furniture and auto parts to tech and toys. It currently takes an average of 73 days for shipments from China to the US to reach their final destination, according to data from Freightos, an online freight marketplace. But, Christmas is in 71 days.

What’s more, delays are only expected to lengthen in the weeks leading up to the holiday season, rising from levels that are currently 83% higher than pre-pandemic shipping timelines.

For consumers, the lengthened turnaround times mean the longer they wait to shop, the more likely they are to face shortages this holiday season. Shoppers who are ordering goods online might also not be able to receive their items until after the holiday season has passed. While many major retailers like Amazon and Walmart are known for their well-stocked warehouses – even large companies are racing to replenish diminished inventory levels since the pandemic started.

“Shortages are guaranteed,” Jonathan Gold, vice president of supply chain and customs policy at the National Retail Federation, told Insider. “Retailers are taking a lot of steps, especially going into peak shopping season, but there’s only so much you can do.”

port of la congestion ships
Container ships wait off the coast of the congested ports of Los Angeles and Long Beach, in Long Beach, California, U.S., September 29, 2021.

Earlier this week, the White House announced a 90-day plan to address the backlogs, but it is only expected to help move an extra 3,500 shipping containers a week from ports in Southern California. Meanwhile, the ports have about 500,000 shipping containers floating along the shore, waiting to dock and unload.

Storms and power outages have also slowed down shipments out of China. In the US, massive backlogs at key ports, railroads, and warehouses have companies scrambling to find new ways to bring in goods. At the same time, the entire industry has been faced with a shortage of truckers and warehouse workers.

UBS analysts noted Thursday that the supply chain has become so fragile since the coronavirus pandemic started that even minor disruptions of one to two weeks “could result in meaningful disruption” this holiday season.

The CEO of a mid-sized toy company, Basic Fun, told Bloomberg earlier this month that his company has about $8 million or 140 shipping containers worth of goods waiting at a single factory in Shenzhen alone.

“I got Tonka trucks in the south and Care Bears in the north,” Jay Foreman, Basic Fun’s CEO, said. “We’ll blow last year’s numbers away [in sales], but the problem is we don’t know if we’ll get the last four months of the year shipped. The supply chain is a disaster, and it’s only getting worse.”

A recent survey from UKG, a workforce-management group, found that about 85% of retailers expect supply-chain disruptions to affect customers.

Many executives were warning customers to order their holiday shopping goods in August and September. Last month, Nike warned investors that they expected there would be shortages of popular products like sneakers due to factory shutdowns overseas and shipping delays.

Shipping containers piled high

“I half-jokingly tell people, ‘Order your Christmas presents now because otherwise on Christmas Day, there may just be a picture of something that’s not coming until February or March,'” UPS President Scott Price said in August.

On Wednesday, Insider reported “supply chain” has become a hot topic in investor meetings. Several major companies have attempted to side-step supply-chain snags. Earlier this month, Coca-Cola announced it was chartering bulk shipping vessels usually reserved for transporting raw materials like coal and iron.

Other companies like Walmart said they have started chartering smaller vessels to avoid backlogged ports like those in Southern California, while Home Depot, Nordstrom, and Levi have shifted to using more air cargo planes.

“Our intent is to meet consumer demand,” Levi CFO Harmit Singh told investors earlier in October. “And economically, if you have to air freight, we will air freight to meet that.”

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Conservatives take to social media to blame Biden for the supply chain crisis with #BareShelvesBiden, while others hit back with images of fully stocked stores

Supply chain stock shortages
A grocery store shopper browses a limited supply of bread.

  • Conservatives are flocking to social media to blame President Biden for supply-chain issues using the hashtag #BareShelvesBiden.
  • In response, some users are debunking images of empty grocery stores as old, edited or from a different country.
  • The movement comes amid mounting tension over supply chain snags and Biden’s “Build Back Better” economic plan.

As the supply chain crisis intensifies, some Americans are taking to social media to blame President Joe Biden and mock the administration’s $3.5 trillion “Build Back Better” economic plan.

On Twitter, the hashtag #BareShelvesBiden has started trending, as users share photos and memes of empty shelves from retail stores around the country. The movement has prompted a subsequent backlash from others debunking the images as old, doctored, or from other countries, as well as countering with images of their own of fully stocked grocery stores.

#BareShelvesBiden first began picking up steam on Tuesday, following a viral Facebook meme that contrasts a fully stocked grocery store shelf with an empty one, along with the captions “Trump’s America” and “Biden’s America,” respectively. According to the fact-checking site Snopes, the top image is actually a 2012 photo from a store in Melbourne, Australia, while the bottom photo was taken in South Carolina in 2018 during Hurricane Florence.

The meme was allegedly posted in response to continued delays at major ports, which have since prompted the Biden Administration to broker a deal to expand 24-hour operations at the Port of Los Angeles.

“With holidays coming up, you might be wondering if the gifts you plan to buy will arrive on time. Today we have some good news: We’re going to help speed up the delivery of goods all across America,” Biden said in an address at the White House on Thursday, the Associated Press reported.

The #BareShelvesBiden movement continued to grow on Wednesday, after conservative commentator Kimberly Klacik shared a since-deleted photo of an empty grocery store with the caption “A Look at #BuildBackBetter.” According to Politifact, the image – which depicts price tags in British pounds – is actually from a UK grocery store, taken at the beginning of the pandemic in March 2020.

The photo was featured on an editorial in The Guardian published on March 27, 2020, along with the caption “Empty shelves at a Tesco store in Worcester,” Politifact reported.

The social media discourse reflects rising tension over pandemic-driven inflation and mounting supply chain snags, driven by factors including raw-material shortages, increased transportation costs, delays in production, port congestion, and the national labor shortage.

The country’s largest ports in Southern California reached new ship-backlog records every day last month, as shipping times and costs dramatically increased. An estimated 77% of global shipping ports are expected to face delays, and UPS President Scott Price said last month to expect delays and lags to continue through the rest of 2021 and into 2022.

The discourse also comes amid contention over the Build Back Better plan, a $3.5 trillion reconciliation bill proposed by House Democrats that includes expanded social safety net programs and funding to combat climate change. The legislation is widely opposed by Republicans and some conservative Democrats, including Senators Krysten Simena and Joe Manchin, due to the high price tag.

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Port traffic in Southeast Asia is the worst its been in over 6 months – and could create even more chaos for US supply chains

FILE PHOTO: Containers are seen at Yantian port in Shenzhen, Guangdong province, China July 4, 2019. REUTERS/Stringer/File Photo
FILE PHOTO: Containers are seen at Yantian port in Shenzhen

  • Some of the world’s largest ports in Asia are facing major backlogs.
  • Hong Kong and Shenzhen were forced to suspend operations this week due to Typhoon Kompasu.
  • Delays will tack weeks on to shipments that already take double the usual travel time from Asia.

Two of Asia’s largest ports are facing their highest backlog in over six months, according to a report from Bloomberg.

Ports in Shenzhen and Hong Kong – key thoroughfares for tech products that connect South China to the rest of the world – had 271 ships at the locations on Friday. The ports had 109 ships waiting off the coast to enter the port, a jump from the 67 ships waiting to dock the day before.

The congestion will likely take several weeks to ease, adding to a host of disruptions in the global supply chain. It currently takes about 73 days, or 83% longer than pre-pandemic times, for goods to travel from Asia to their final destination in the US, according to data from Freightos. If the pace does not increase, goods that have not yet left China will not reach the US in time for the holiday season.

Port of Shenzhen, the third largest port in the world
Port of Shenzhen, the third largest port in the world

Some of the largest ports in the US are facing similar issues as the supply chain struggles to overcome COVID-19 shutdowns while consumer demand booms. Ports in Southern California, the main passageway for imports from China, are at near-record capacity, with ships waiting as long as five weeks before they can dock and unload.

The congestion in the Asian ports will only add to the turnaround time. Cargo ships wait weeks on both ends of their journey to be unloaded, further exacerbating a global shortage of shipping containers.

On Tuesday, the ports were forced to suspend operations as Typhoon Kompasu passed through the South China Sea, leaving 1 person dead and 21 injured in Hong Kong, according to state-side media outlets. The tropical storm has since made landfall in Vietnam, disrupting shipping processes in Haiphong, one of the country’s largest ports.

As of Friday, port operations in Shenzhen and Hong Kong have mostly returned to normal, but the temporary closures have set shippers even further back at a time when the ports were already facing backlogs. James Teo, an analyst at Bloomberg Intelligence, said the congestion at the two ports would likely extend into February.

Experts have warned that the shipping crisis will continue well into 2023. The White House has taken some steps to address the backlogs in Los Angeles and Long Beach ports, but executives have told shoppers that the holiday shopping season will be impacted by the shipping delays as shortages and price hikes abound.

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Worker shortages across Vietnam, Malaysia, and Thailand may lead to big delays in holiday shipping this year

Clothing factory in Vietnam
Workers working at a garment factory in Vietnam.

  • Several Southeast Asia countries are grappling with a labor shortage that’s straining the global supply chain.
  • In Vietnam, factory workers have headed home from Ho Chi Minh City after months of strict lockdowns.
  • In Malaysia, a migrant manpower squeeze has hit the palm oil sector especially hard.

A shortage of workers in several Southeast Asian manufacturing hubs is adding to the global supply chain crisis that is expected to wreak havoc on Christmas shipping.

Countries including Vietnam, Malaysia, and Thailand are still grappling with containment of the COVID-19 virus, causing disruptions in the movement of the workforce required to produce goods.

Those disruptions could cause major problems for retailers ahead of the holiday season.

“The rebound in economic growth in many of the world’s largest consumer markets, including the US and EU, is boosting demand for ASEAN exports,” Rajiv Biswas, chief economist for the Asia Pacific at research house IHS Markit, told Insider.

But the labor crunch in affected areas will persist, he said, leaving low-wage industries like manufacturing and agriculture vulnerable until border restrictions are eased.

Vietnam’s factories are scrambling to find workers

In Vietnam, factories making clothing, footwear, and electronics are now facing worker shortages after tens of thousands left the business hub of Ho Chi Minh City after months of strict lockdowns.

Many workers who flocked to the city have returned to their rural homes, as they report fatigue and fear from the pandemic.

Earlier lockdowns had already caused problems, with Nike warning of “supply chain headwinds,” while the delivery of Apple’s iPhone 13 has also been delayed, the Nikkei reported.

Factories are now looking for ways to safely bring in workers again, according to local media outlet VnExpress. Doing that will likely further slow production down, as virus containment guidelines and protocols require additional time and administration.

Such safety measures are especially critical in a place like Vietnam, where only around 17% of the country is fully vaccinated, according to the Johns Hopkins Coronavirus Resource Center.

A migrant worker crunch in Malaysia has stressed the palm oil industry

In Malaysia, the palm oil industry faces a similar issue, but with foreign migrant workers.

Malaysia produces about a third of the world’s palm oil; the versatile, edible oil is used in various products, from chocolates to detergents and shampoo.

The country’s palm oil industry, however, has long relied on migrant workers from countries like Indonesia and Bangladesh to harvest the crop.

Workers harvesting oil palm fruits in Malaysia.
Workers harvesting palm oil fruits in Malaysia.

As COVID-19 cases exploded in the country – spiking over four times in two months to about 25,000 cases a day in late August the country put in movement restrictions and strict border controls. Migrant workers left the country in droves, and many have not been able to return, though the government has recently loosened restrictions to allow around 32,000 workers to return, according to the New Straits Times.

But that’s less than half of the number of 75,000 workers the industry is short of, per the New Straits Times report.

Malaysian oil palm plantations have tried to entice local workers with higher pay to pick up the slack and use more machines. But locals are generally not interested in what they consider “dirty, dangerous and demeaning,” Bloomberg reported.

Myanmar’s coup leaves Thailand short of laborers

In neighboring Thailand, factories and farms that once hosted over 1 million migrant workers from neighboring Myanmar have been hit by a double whammy.

Hundreds of thousands of them have left because of the pandemic, according to Frontier Myanmar. And Myanmar’s military coup earlier this year has injected uncertainty and caused delays in work permit renewals, reported the Bangkok Post.

Thailand is a major manufacturer and exporter of vehicles, car parts, electronics, and food, and the labor crunch is hitting the supply chain, particularly in lower-end segments like farming.

The Thai labor ministry is looking to fill these positions with local workers, reported Bangkok Post.

But as with Malaysia’s palm oil industry, Thailand may find the mission a tough order.

“They are jobs that Thai workers don’t want to do,” said Labour Minister Suchart Chomklin in a July interview with Reuters.

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A European cruise line has canceled its 2022 around the world cruise due to an ‘unavailability of ports’

The MSC Magnifica by a port in Auckland in 2019
The MSC Magnifica in Auckland in 2019.

  • MSC Cruises has canceled its 2022 world cruise and will instead sail two global cruises in 2023.
  • The cruise line attributed the cancellation to the “current unavailability of ports.”
  • MSC says it’s an issue regarding pandemic-related restrictions at ports.

MSC Cruises has canceled its 2022 world cruise due to the “current unavailability of ports” and will instead sail two global cruises in 2023, the company said in a press release on Wednesday.

“It would not have been possible to carry [the 2022 world cruise] out due to there being too many ports still facing restrictions as a result of the pandemic,” the company said. MSC did not immediately respond to Insider’s request to elaborate on said “restrictions,” but ports around the world are currently facing congestion issues amid persistent and crippling supply chain delays.

To address the ongoing demand for world cruises, MSC- which is owned by logistics and shipping group MSC Mediterranean Shipping Company – has moved its 2022 global cruise to the following year aboard the MSC Magnifica. This sailing will then accompany MSC’s sold-out 2023 world cruise aboard the MSC Poesia, which first went on sale in 2020.

The two global cruises on the Magnifica and Poesia will sail with different itineraries, the former with the same plans as the initial 2022 world cruise. The ships will begin embarkation from January 4 through 7 in four European cities. And from there, the cruises will sail on different paths.

Passengers who were initially set to sail on the 2022 world cruise will receive priority booking for the new 2023 world cruise aboard the Magnifica. Guests who move their now-canceled cruise to 2023 can also book a free sailing between January 1 and May 3, 2022.

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Moody’s warns of ‘dark clouds ahead’ for the global supply chain as 77% of the world’s largest ports face backlogs

port of la congestion ships
Container ships wait off the coast of the congested ports of Los Angeles and Long Beach on September 29, 2021.

  • Moody Analytics warned on Monday that there is no easy fix for the supply-chain crisis.
  • Data shows 77% of major world ports have seen an uptick in turnaround time this year.
  • Record backlogs in Southern California ports are the most significant port delays in the world.

Historic delays and product shortages are threatening to topple an already tense global supply chain.

On Monday, Moody Analytics warned that the disruptions “will get worse before they get better,” citing delays at key US ports, as well as the national labor shortage.

The credit rating agency said there are “dark clouds ahead” for the global supply chain as there is no clear solution to work out kinks between subsections of the supply chain around the world. In particular, Moody’s identified the “weakest link” in the supply chain as an alarming shortage of truck drivers – a problem that has left shipping yards swamped with shipping containers and caused equipment shortages.

“As the global economic recovery continues to gather steam, what is increasingly apparent is how it will be stymied by supply-chain disruptions that are now showing up at every corner,” it said.

The supply-chain crisis has caused shortages of everything from food and household goods to computer chips, cars, furniture, and electronics. Automakers have repeatedly slashed production goals, while companies like Nike have warned customers products will be harder to find over the holiday season due to the bottlenecks.

Apple may also cut production goals for its iPhone 13, Bloomberg reported Tuesday.

Analysts at RBC Capital Markets agree with Moody’s concerns. In a report this month, the bank analyzed the 22 most influential ports in the world and gauges how long it takes for cargo ships to enter and unload.

They found that 77% of ports have experienced above-average wait times this year. Of the 22 ports, the ports in Los Angeles and Long Beach (which are often accounted for as a single port due to their proximity) had the most inefficient wait times of any other top port in the world.

Several tractor trailers wait to depart a port with shipping containers stacked behind them

The turnaround time for a container in the ports nearly doubled in 2021 as compared to averages seen in 2017 through 2019. Turnaround time jumped from 3.6 days to 6.4 days – nearly five days longer than several ports in Asia which operate 24/7.

On Wednesday, the White House announced the Southern California ports would move toward 24/7 operations and the dock workers were working to extend their hours, but Mike Tran, RBC’s managing director for digital intelligence strategy, told Insider extended hours alone will not be enough to solve the issue.

RBC’s data found that the most significant difficulty at Long Beach and Los Angeles ports was the lack of foot traffic which remains 28% below pre-pandemic levels, despite a 30% increase in the goods going through the ports.

“The issue is non-linear,” Tran told Insider. “It’s not just about getting people to work or extending hours. The issue has spread throughout the entire supply chain, each leg of the journey is delayed.”

Outside of port delays and worker shortages, backlogs at warehouses and railroads also add to the delays, which have caused equipment shortages of key items including shipping containers and chassis.

Earlier this month, Gene Seroka, executive director of Port Los Angeles said the issue will not be solved until everyone within the supply chain gets “on the same page” – a near-impossible proposition, considering warehouses and trucking companies are fractured into a multitude of small to mid-sized companies.

The White House also announced on Wednesday that some major chains, including Walmart will extend their working hours to help ease the shipping crisis.

Do you work in the supply chain? Reach out to the reporter from a non-work email at gkay@insider.com

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Ikea says product shortages will last well into the summer of 2022

Ikea
Prepare for ongoing delays and shortages at Ikea.

  • Ikea said supply chain problems continue to cause delays and shortages at its stores.
  • These shortages would likely last well into 2022, the CEO of its parent company told the FT.
  • Experts also say that the supply chain shows no sign of recovery.

Swedish flatpack giant Ikea is expecting product shortages and delays to last well into the summer of 2022.

In an interview with the Financial Times, Abrahamsson Ring, CEO of Ikea’s parent company, Inter Ikea, said that supply chain challenges had lasted longer than expected. Shortages would likely continue “for the better part, if not the whole” of Ikea’s financial year, which ends August 2022, he said.

“This is here for a longer period than we thought of at the beginning of the crisis,” he said.

The global supply chain network remains in crisis, and experts are in agreement with Ikea that next year is unlikely to be any easier.

“There is no indication that it will get better by 2022,” Dave Marcotte, longtime retail and supply chain expert from Kantar Consulting, said in a recent conversation with Insider.

“Things are really bad … it’s like a huge rubber band that keeps getting stretched further and further,” he said.

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Companies are mentioning the words ‘supply chain’ more than ever before during earnings calls

A crane at a shipping yard lifting a shipping container
Companies have relied on lean supply chains until the pandemic disrupted things.

  • The term “supply chain” has been reference about 3,000 in investors’ earning calls this year.
  • A supply chain crisis is expected to slow down retail operations, especially during the holidays.
  • President Biden met with retailers to tackle alleviating supply chain pressures across the country.

Companies from Apple to Costco are echoing the same words in their third-quarter earnings calls, which could foreshadow major delays in the retail industry in the coming months.

S&P 500 executives have mentioned “supply chain” and related terms almost 3,000 times on company investor calls as of Tuesday, Bloomberg reported, surpassing last year’s tally of about 2,000 mentions.

“Supply chain is taking center stage on earnings calls as the supply chain is a disaster,” Scott Mushkin, an analyst at R5 Capital, told Bloomberg. “Honestly, there is a chance the system breaks down during the holidays.”

Supply chain disruptions caused by COVID-19 continue to strain retail schedules, especially as the markets head into the holiday season. Big retailers like Walmart, Ikea, and Home Depot have resorted to chartering their own bulk shipping vessels to sidestep shipping delays, while companies like Amazon and Lululemon invested more on their air freight delivery operations.

Meanwhile, executives are telling their customers to brace for continued shortages and imminent price hikes.

McCormick & Co. CEO Lawrence Kurzius cited “additional pressure on our supply chain due to strained transportation capacity and labor shortages and distribution” in an earnings call in September, which “negatively impact sales.” Pepsi CEO Ramon Laguarta said in an earnings call that the company pulled back some perimeter inventory in the summer “voluntarily” because of “supply chain constraints.”

However, companies can also use global supply chain issues as reasons to explain poor quarterly performances, some market experts say, using the term as a PR cushion to soften the impact of a company’s pandemic-era performance.

“Any company missing earnings can and will now freely employ the supply chain excuse,” lead market strategist and founder of NorthmanTrader Sven Henrich said in a tweet.

President Biden met Wednesday with officials from the Port of Los Angeles, which is facing a large onslaught of incoming cargo vessels stuck at port, to expand hours of operation to off-peak and night hours and hopefully lessen the stress of supply chain woes. But the discussions about the effects of supply chain problems isn’t going away.

“Holiday goods are waiting at the ports,” Stephanie Wissink, an analyst at Jefferies who covers retailers and consumer-product companies, told Bloomberg. “For retailers and brands alike, it’s a race against the clock.”

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Psaki says the Biden administration can’t ‘guarantee’ holiday packages will arrive on time because it’s ‘not the Postal Service’

Jen Psaki
White House Press Secretary Jen Psaki speaks during the daily briefing at the White House on October 13, 2021.

  • Jen Psaki said the administration can’t “guarantee” holiday mail will arrive on time this year.
  • She said the administration “is not the Postal Service,” despite the fact that USPS is a government agency.
  • Biden is moving to address the pandemic-related global supply chain backlog, which has inflated prices.

White House press secretary Jen Psaki said on Wednesday that the Biden administration can’t “guarantee” that holiday mail will arrive on time this year due to coronavirus-related supply chain issues.

Psaki insisted that the administration doesn’t have full control over the United States Postal Service, despite the fact that USPS is a federal government agency.

“We are not the Postal Service or UPS or FedEx. We cannot guarantee. What we can do is use every lever at the federal government’s disposal to reduce delays, to ensure that we are addressing bottlenecks in the system,” she said.

Psaki said the administration will urge ports to operate with longer hours to speed up shipping and would “continue to press” workers, unions, and companies to “take as many steps as they can to reduce these delays.”

A spike in demand for goods, COVID-19 restrictions, and worker shortages are among the reasons for the shipping delays.

President Joe Biden is moving to address the pandemic-related global supply chain backlog, which has resulted in good shortages and higher prices. Earlier on Wednesday, Biden met with senior administration officials and industry leaders to discuss how to tackle the problem ahead of the holiday season. In a speech, he announced several steps to mitigate the crisis, including that the Port of Los Angeles will begin operating 24/7, seven days a week to help reduce the backlog, joining the Port of Long Beach, which expanded its operations last month. Those two California ports are “on track to reach new highs in container traffic this year,” according to the White House.

Biden also touted his domestic agenda, saying that passing an infrastructure bill would help address supply chain issues.

“In order to be globally competitive, we need to improve our capacity to make things here in America, while also moving finished products across the country and around the world. We need to think big and bold. That’s why I’m pushing for a once in a generation investment in our infrastructure and our people,” he said.

Biden’s legislative priorities have stalled in Congress as lawmakers continue to hammer out two massive separate bills, one targeting infrastructure and the other targeting social policy and climate.

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Amazon is reportedly shopping for used cargo jets that can fly from China, an effort that would help the company side-step major port delays

Amazon Prime Air plane parked at Kentucky hub
  • Amazon wants to buy used long-range cargo planes that could haul goods from Asia to the US, Bloomberg reports.
  • Sources close to the issue told Bloomberg the retailer wants to buy over 10 of Boeing and Airbus’s largest converted passenger jets.
  • Amazon is one of many major retailers looking to avoid weeks of delays at Southern California ports.

Amazon is looking to buy used cargo planes that would be able to travel long distances, according to a report from Bloomberg on Wednesday.

The company is shopping for 10 refurbished Airbus’s A330-300 aircraft and an unspecified number of used Boeing 777-300ER cargo planes, sources familiar with the issue told the publication. The company is also looking to fill crew positions for the planes. The planes represent some of the largest cargo versions of twin-engine passenger jets in the world, Bloomberg points out.

The move would be a major step in allowing the e-commerce giant to move goods from Asia to the US on its own and it would help the company avoid supply-chain bottlenecks at key US ports. The aircraft would be able to fly goods directly from China to the US, within a few hours’ drive of their final destinations – evading port delays that could tack on over a month to the goods’ delivery date, as well as backlogs at warehouses and railroads.

It is unclear whether Amazon will buy or lease the long-range cargo planes. It is also unknown where the planes will be bought or when they plan to begin using the cargo planes. But, it could be a major step to simplifying supply-chain issues for the retailer and could help them avoid future hurdles. Experts predict supply-chain bottlenecks will continue well into 2023.

A spokesperson for Amazon did not immediately comment on the report.

In January, Amazon expanded its transportation fleet by purchasing 11 Boeing 767 airliners to use as cargo planes. Amazon plans to use a refurbished version of Boeing’s 777 plane next year, Bloomberg reported. The passenger plane-turned-cargo plane will hold about 25% more goods than existing air freighters, the publication said.

Amazon employees load cargo onto Amazon Air plane at new cargo hub

If the converted jets are obtained, Amazon will be one of many major retailers to take extra precautions to side-step supply-chain constraints. Earlier this month, Coca-Cola announced it was chartering bulk-shipping vessels that are usually reserved for hauling raw materials like coal, iron, and grain. The month before, Target and Costco also revealed that they had begun chartering container ships in an effort to side-step the shipping delays.

Other companies, including Home Depot, Lululemon, and Peloton, have begun relying more heavily on air freight as well. Though, air shipments are significantly more expensive than transporting goods by sea. A $195 ocean shipment can cost $1,000 by air, according to Freightos. Companies’ movements toward air cargo can also cause backups at airports.

Amazon Air was first launched over five years ago. Since, it has grown to encompass about 75 planes which operate primarily in North America and Europe. Amazon’s further expansion into air freight will also help it compete with the UPS and FedEx.

Read Bloomberg’s full report here.

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