Relentlessly oversimplifying in search of a bigger truth
Are 1,000,000 Containers for Amazon clogging logistics?
Is Amazon responsible for creating a container ship jam this holiday season?
Despite all the news everywhere about…everything for logistics and supply chains, how much of it gives you what you need to know and understand so that your enterprise can act?
EkaLore's Back of the Envelope (BOTE) posts are meant to help you cut through the brush, help leaders develop a clear perspective, and then act. For this inaugural BOTE – we take on the great container ship jam off the west coast of the US. What’s really behind it? How much of this is due to Amazon by itself? And what does the enterprise need to do about it?
News of the container ship jam – (and shortage of shipping containers) has the whole world worrying about the holiday shopping season. There are 70 container ships, and tens of thousands of containers, waiting to get into just the Long Beach harbor in California. The subsequent lack of space, workers, rail transport and trucking gets Presidential attention. How many containers are we talking about? Let’s do some Back of the Envelope calculations to see how many containers Amazon business may be pulling in for the last half of 2021. We’re going to relentlessly over-simplify along the way. Here are estimates based on Amazon’s legal government SEC 10-K and 10-Q numbers:
2020 to 2021 online sales and fulfillment:
1st half grows (28%) from $82.5B to $106B
We’ll estimate that the
2nd half grows (28%) from $114.5B to $147B
In 2020 68% of Online sales were North American - so we’re talking:
But that’s worldwide online sales, so we have to estimate Amazon’s North American Sales
$100 Billion in Online Sales
That's a lot of containers! At $100,000 per container, we’re talking 1,000,000 40 foot containers (or if fussy, 2,000,000 TEUs) assuming most things Amazon gets are imported from China, or other Asian vendors. Add to those containers for Walmart, Target, Home Depot, Lowes, and Costco who are each estimated to have over a $100 billion in annual sales. Once here those containers go by rail or by truck to one or more distributions and destinations. Here are potential Logistics and Supply Chain issues!
If you’d like to follow the series (or comment on our relentlessly over simplified calculations)–
go to www.ekalore.com/ars and leave us a note.
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