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Order your Christmas presents by November, Amazon warns shoppers

Order your Christmas presents by November, Amazon warns shoppers
Exclusive: The retailer expects global trade to face major disruption until at least spring 2022, according to an internal document

Amazon will push shoppers to buy Christmas gifts four weeks early and expects supply chain disruption to linger until at least spring next year, according to an internal document seen by The Independent.

The retail giant’s UK arm is expected to ask customers to order as much as four weeks ahead of Christmas Eve in the face of the global supply crunch, according to company planning documents. Even Prime customers, who pay for speedier delivery, may face some delays with their orders.

“There’s an effort to shift the big push of orders that comes through ahead of mid-December earlier,” a person familiar with Amazon’s operations said. “It’s hard to overestimate the level of supply disruption we’re facing, even with our resources. It’s going to be a long, quite painful road to a new normal and air freight can’t take all the strain off of other routes.”

The reminders will start with “shop early” banners on its site and app, ahead of an email campaign as it tries to move the bulk of Christmas orders earlier towards the end of November, versus its usual peak in the second and third weeks of December.

The online store, like other businesses, is grappling with global supply chain disruptions that threaten the post-pandemic economic recovery. G7 leaders pledged on Wednesday to join forces in an attempt to address the problems that global trade is facing.

Images of queues outside some of the world’s largest ports have illustrated widespread disorder. Still, some of the issues challenging the UK are particular to Britain, the planning document suggests.

Its view on the depth and longevity of the supply crunch is especially significant because Amazon accounted for more than a third of the UK’s online retail activity this year, according to the company’s own internal estimates. As one of the biggest companies in the world by revenue, its belief that supply shortages and port bottlenecks will last well into 2022 is also a troubling signal for global growth. Its view has been echoed by the furniture seller Ikea.

Britain’s HGV driver shortage, which has been exacerbated by changes to the UK’s post-Brexit immigration and tax rules, has left Amazon and other companies battling with backlogs at container ports. The increased demand amid strains on delivery networks has also made it harder to secure warehousing space.

“Ports are able to move boxes and load and unload vessels; the problem is moving goods on and off the port,” said Tim Morris, chief executive of the Major Ports Group. “We are having to very carefully manage storage space. Problems start when that fills up.”

Amazon’s planning document underscores how even those companies with plenty of cash to invest in hi-tech logistical capabilities cannot avoid being caught in queues at ports. There is also not enough capacity, in the company’s view, to reroute orders via air freight at enough volume to offset the impact of other transport problems, although this will be used in an effort to meet delivery goals for Prime orders.

Planning permission requests for more warehouse space have also been clogged up by Covid-19 delays in local government, Amazon noted. And despite offering higher wages, Amazon, like other firms, is struggling to recruit enough warehouse workers to staff their operations.

The same person familiar with the company’s operations said that Amazon’s UK management was concerned that negative reports about working conditions at the company’s warehouses had also made it harder to recruit additional staff.

An Amazon spokesperson declined to comment on the detail of the planning document but noted that the company is hiring for 20,000 temporary positions across the UK “during the festive season”.

They added that they offer workers a safe environment and that its “competitive wages start at between £10 and £11.10 per hour depending on location”.

The planning document also notes that some estimates of when supply chain disruptions will ease have been too optimistic.

At an August summit of central bankers, held at Jackson Hole, Wyoming, the US Federal Reserve chair, Jerome Powell, said that “supply problems have begun to resolve” and suggested that these pressures, which have become a major concern in boardrooms around the world, would soon ease.

However, this has not proved to be the case, with the US president, Joe Biden, announcing on Wednesday that the Port of Los Angeles would start a 24/7 operation in a bid to tackle its congestion. Pent-up demand following the pandemic has met with limited capacity in shipping, driving up costs in a market that often needs at least two years to increase capacity, according to Amazon’s planning, and external experts.

“We’ve got stock backed up for weeks,” said Phil Chesworth, managing director of Midland Pallet Trucks, a supplier of industrial equipment. “Containers that came in this week won’t be delivered now until November. It is horrendous.”

There has been a sharp rise in the cost of shipping containers, with one that might have cost £3,000 to ship before the pandemic now costing £20,000. “For us, the goods in one container might only be worth £36,000,” said Mr Chesworth.

Some of Midland’s goods are stuck in China because shipping firms are prioritising low-weight cargo, which is more profitable to ship, said Mr Chesworth. “We are at the back of the queue.” Warehousing problems have added to the growing bill.

Small high-street retailers are feeling the pain too.

Kenny Kaneko, the owner of London Tree House in Notting Hill, London, said he had waited two months in some cases for stock to arrive, while toy prices have also shot up in that time.

He told The Independent: “It has been hard to get things – when I do get it, I get what I want, but it goes very quickly and it’s difficult to get it again. Deliveries have been taking from a week to two months to arrive. Some stuff has not even arrived yet even from big companies.

He said: “I’m a small shop. I have to cater to a wide range of kids. I don’t have storage space so I just order lots of small quantities. I try to order it in advance as much as I can, but you can’t predict how much you need of something.”

Representatives at the port of Felixstowe, which accounts for 36 per cent of the UK’s freight container traffic, told The Independent that containers were spending 10 days on average at the site, close to twice the pre-pandemic average.

Meanwhile, data from shipping statistics company Project44 showed some containers, on route to Europe from China, were being delayed by up to 30 days.

Josh Brazil, vice-president of supply chain insights at Project44, said: “A lack of capacity at the UK’s main port in Felixstowe is adding fuel to the fire as bottlenecks, labour shortages and ongoing Covid-related issues are causing the perfect storm for the transportation sector.

“These supply chain issues aren’t going away, as maritime delays worsen, and rising cargo prices mean shippers won’t be able to buy their way out.

“According to container tracking data, ocean carriers’ schedule reliability continues to decline, with delays of up to 30 days on the worst-hit China-EU routes, and 21.94 days on the worst-hit China-US west coast routes in September,” Mr Brazil said, adding: “If these circumstances hold, we’re going to see many more empty shelves heading into the holiday shopping season and beyond.”

Additional reporting by Ben Chapman, Holly Bancroft and Chiara Giordano