Amazon says supply chain issues will cost it “billions of dollars” in Q4 despite new delivery ports

Fri 29 Oct 2021
Posted by: Noelle McElhatton
Trade News

Amazon shares dropped more than 4% yesterday after weaker-than-expected results for Q3 as the company takes steps to shore up its supply chain. 

The company expects to take on “several billion dollars” of extra costs in Q4 due to labour shortages, higher wages, global supply chain constraints and increased freight and shipping costs.

Amazon CEO Andy Jassy said the additional costs would be incurred in “managing through labour supply shortages, increased wage costs, global supply chain issues and increased freight and shipping costs - all while doing whatever it takes to minimise the impact on customers and selling partners this holiday season".

He added: "It'll be expensive for us in the short term, but it's the right prioritisation for our customers and partners."

Ports, planes and people

Amazon has added new shipping ports as it wrestles with supply chain issues, Business Insider reports.

It is looking to hire 275,000 permanent and seasonal employees in the US, resorting to offering $3,000 sign-on bonuses and launching new perks like free college tuition.

Despite the fact that the company is looking to add 50,000 more extra workers than last Christmas, throwing money at the problem won’t necessarily work, claims to FT

According to Bloomberg, Amazon could lose $6bn on not being able to move technology goods such as iPads and iPhones in time for Christmas.

Driver gap

In the UK, it will take another two to five years to train all the HGV drivers the UK needs, Chris Parker, director of capacity and commercial at logistics giant DFDS told Radio 4’s Today programme this morning.

“The UK has a shortage of drivers - 100,000. Drivers are moving from one company to another - from HGV to [driving for supermarkets] but the sector workforce isn’t growing,” he said.