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For cross-border merchants, logistics issues can be regarded as a difficult hurdle on the road to going overseas.
Since the second half of 2022, the shipping market seems to have entered a cyclical recession as capacity has recovered and demand has shrunk. Freight rates on multiple routes have continued to fall, and freight forwarders and shipping giants have started price wars. The most direct benefit to cross-border merchants is the significant drop in first-leg freight costs.
However, the delivery end has been experiencing many problems recently. After Amazon upgraded its backend, a large number of freight forwarders were reported to be delivering goods from far warehouses to nearby warehouses. Recently, natural disasters in the United States have caused some warehouses to close suddenly, and many sellers' listings cannot be sold normally. Now, after several days, the warehouse operation interruption problem has not only not been solved in time, but has become more and more serious. Multiple popular Amazon warehouses are closed, and a large number of listings cannot be sold?
Last week, in the article "Will Amazon's massive layoffs affect sellers? Products cannot be delivered and inventory cannot be sold!" , it was reported that due to the major impact of the winter storm that hit central and southern United States, the site structure of Amazon's AFW1 warehouse was damaged and it has been temporarily closed. It is expected to be repaired until April 30.
The long maintenance time has made many sellers anxious because their inventory cannot be sold and delivered normally. However, just recently, more and more sellers have found that many popular Amazon warehouses have suspended operations.
One seller reported that after opening a case, he received official news that the SMF3 warehouse was temporarily closed for internal maintenance, and the goods recently assigned to the warehouse could not be sent. Another seller checked the logistics information and found that the goods delivered to the warehouse were shown to have been delivered, but they were still not on the shelves for half a month.
▲ The picture comes from Zhiwubuyan
A freight forwarder issued a notice that according to the instructions issued by the headquarters, popular warehouses such as GYR3 and SBD1 have recently refused to allow trucks to enter and exit. All pallets and direct deliveries scheduled on January 30 and 31 were rejected. The specific reasons and duration are still unclear.
In addition, the waiting time for pallets and direct delivery of sea cabinets at LAX9 exceeds 36 hours; QXY9 cancelled appointments on the spot and refused to accept them, with the latest appointments scheduled for May; SCK1 refused to accept 5 out of 7 pallets in the past week, and many popular warehouses have begun to cancel appointments in large quantities.
▲ The picture comes from the seller communication group
According to freight forwarders, warehouses currently facing severe operational restrictions mainly include: 1. SBD1, LAX9, GYR3, SCK1 are liquidated. Due to internal maintenance and other reasons, there will be a delay of at least 15 to 20 days; 2. Due to heavy snow, the Dallas, Texas area where warehouses such as FTW1, DFW6, and FTW5 are located has closed all roads and caused power outages in some areas; 3. SMF3 warehouse is now closed for internal maintenance. All appointments are postponed. The specific resumption time is not yet known. 4. QXY9 has operation restrictions. Amazon has not approved reservations so far, and the specific delivery date is unknown; 5. Due to operational restrictions at the KRB7 and AWD satellite warehouses, Carrier Central's earliest scheduled delivery date is from the end of May to the beginning of June, and the pickup date is expected to be 2 to 3 weeks later. It can be seen that a large number of Amazon's popular warehouses are currently unable to operate normally. It is not ruled out that the warehouses are forced to suspend operations due to bad weather, but there are also many warehouses that have not been affected by the disaster. Since last month, they have frequently experienced delays in delivery and shelving time, and suspension of operations.
Some sellers speculated: "The sequelae of the long-distance warehouse and short-distance delivery have emerged. Instead of punishing the seller's account, directly restricting the reservation account will have the same effect."
However, more sellers believe that the main reason is that Amazon’s recent large-scale layoffs have led to a shortage of warehouse labor, which has greatly reduced the efficiency of warehousing and logistics, thus affecting the normal turnover of warehouses. As early as the Christmas promotion after the layoff plan was launched, Amazon’s delivery logistics efficiency was delayed, and a large number of products showed the "delivery after Xmax" logo.
Since the beginning of 2023, Amazon's layoff plan is still continuing, but logistics and transportation problems have not been properly resolved.
Amazon lays off more than 100,000 warehouse employees. Is there no end in sight for stocks being put on shelves?
Amazon's every move affects the sales and operating environment of sellers.
Last week, Amazon released its 2022 and fourth-quarter financial report. Compared with other business branches, its most important online retail business showed a significant decline. In the fourth quarter, which saw several peak season promotions , Amazon's product sales fell 1.2% to $70.5 billion, with online sales falling 2.3% year-on-year to $64.5 billion.
Tracing back to the source of the decline in performance, one reason is that Amazon's operating costs have risen sharply due to continued inflationary pressure, and consumer demand in Europe and the United States has shrunk significantly; the other reason is that the sequelae of excessive expansion measures during the rapid development stage of the epidemic have gradually emerged.
Now, in order to cope with the slowdown in growth and macro-uncertainties in future development, Amazon is, on the one hand, laying off employees and reducing recruitment, increasing revenue and cutting costs, and on the other hand, it is committed to adjusting its e-commerce business.
Therefore, shrinking the scale of logistics has become an important measure for Amazon at present. Since mid-2022, Amazon has continued to lay off warehouse employees. In July alone, the number of employees in its warehouses and distribution centers has been reduced by nearly 99,000. Since the beginning of 2023, FBA employees in many parts of the world, including the United States, the United Kingdom, and India, have continued to be laid off. At the same time, Amazon began to resell and stop renting the previously expanded warehousing and logistics network.
As Amazon shrinks its logistics, sellers are also being affected.
Since last year, the shortage of storage capacity has become a major problem for many sellers in preparing for sales. Many people’s storage capacity has been reduced several times, so that the rhythm of shipments has been disrupted, and they have even fallen into the dilemma of out-of-stock.
Not only that, the efficiency of tail-end logistics is a thorn in the sellers’ side. Due to the sudden drop in warehouse labor, the time from the entry of goods into the warehouse to the delivery of goods has been greatly extended.
"We were out of stock during the peak season, so we had to airfreight restock the products to FBA, which arrived on October 15. Then the long process of signing for and putting the products on the shelves dragged until the end of November. We opened countless cases and filed claims, and finally we were barely able to put the products on the shelves on November 30," a seller complained helplessly.
Some sellers also admitted that they could noticeably feel that the time for listing had slowed down since the end of November, and the efficiency of customer service had also dropped significantly. There was even a situation where no one responded to their opened cases.
While the logistics service is poor, the platform operating costs are still rising. Advertising and promotion fees, warehousing fees, FBA delivery fees and other heavy burdens are weighing heavily on the shoulders of small and medium-sized sellers, eroding their profits.
Of course, the decline in online shopping experience caused by logistics delays has also made more and more consumers lose patience with Amazon. The decline in traffic and the loss of users are also not something that sellers are happy to see.
At the latest earnings conference, Amazon CEO Jassy said: "Although Amazon is reducing its logistics scale, it is also working hard to restore Prime members' one-day delivery service and speed up delivery."
However, given the imminent crisis of operational disruptions at several popular warehouses, it is still unclear when logistics services will truly improve.
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