More than a dozen Amazon warehouses are out of stock, and freight rates to the US are skyrocketing

Many of Amazon's warehouses have been overwhelmed, and long queues have formed in front of some popular warehouses. During this critical period when sellers' goods are being delivered and put on the shelves slowly, some employees have deliberately set fire to Amazon warehouses, which has undoubtedly increased the pressure on the warehouses.

As the import volume in the United States surges, the shipping prices to the United States have soared, and the subsequent overstocking of Amazon warehouses is difficult to alleviate. At the same time, taking advantage of the price increase, many shipping companies have accelerated their entry into the market to grab money.

More than a dozen Amazon warehouses are out of stock

Recently, several Amazon warehouses have been overwhelmed, and problems with slow stocking and warehousing have occurred frequently, causing some sellers to be out of stock.

According to relevant feedback, more than ten warehouses including GYR2, GYR3, LGB8, VGT2, SBD1, SBD2, SMF3, SMF6, FTW1, MDW2, FTN1, IAH3, and IND9 have been out of stock. These warehouses have postponed contracts and refused to accept goods, and the rejection rate of some warehouses is very high, and there are many cases of contract changes.

In addition, CLT2, RDU2, ORF2, ABE8, SWF2 and TEB9 warehouses also frequently postponed and cancelled appointments, which seriously affected the delivery time.

Among these warehouses that have been overwhelmed, the situation at LGB8 is worrying. It is reported that the queue of trucks in front of the warehouse is three blocks long, and it is not certain whether these trucks can successfully receive and unload the goods.

A freight forwarder said that Amazon would transfer goods sent to LGB8 warehouse to LAX9 warehouse during a specific period of time . This is an internal transfer behavior of Amazon and will not affect sellers. Another seller has not started to register the goods sent to VGT2 for more than a month .

At the same time as the warehouse was bursting, an Amazon warehouse was actually set on fire by employees , which undoubtedly made the situation worse!

A former Amazon employee has been charged with setting a fire at an Amazon fulfillment center near Dayton International Airport earlier this month after Amazon video surveillance showed the former employee entering a restricted area and then exiting it moments before a fire broke out at the warehouse.

The former employee, 25, has been held in the Montgomery County Jail since his arrest at the Amazon warehouse. It is not clear what the damage was to the warehouse that was set on fire, but the warehouse will be repaired and restored after the problem occurred, which will bring another wave of delays.

Currently, multiple warehouses are overwhelmed and Amazon's distribution centers are under great pressure. Any chaos may cause unnecessary losses to some sellers and affect their Member Day promotion this year.

According to the current situation, the import volume in the United States continues to improve, and the overcapacity situation in Amazon warehouses may not be alleviated in the future, and freight costs will continue to rise.

The surge in imports has driven freight rates on the US route to continue to soar

On June 10 , the National Retail Association again raised its forecast for monthly imports and said consumer spending is expected to increase by 2.5% to 3.5% this year compared to 2023.

" Consumers continue to spend more than last year, and retailers are building inventory to meet demand, especially as we head into the peak shipping season , " said Jonathan Gold, vice president of supply chain and customs policy at the National Retail Federation ( NRF) .

Global Port Tracker predicts that monthly import cargo volumes at major U.S. container ports will reach their highest level in nearly two years this summer. Specifically, container imports in June are expected to increase by 15.2% year-on-year; imports in July are expected to increase by 9.5% compared to July 2023; imports in August are also expected to increase by 10.6% year-on-year; and imports in September are also expected to increase by 1.7%.

Data released by the General Administration of Customs showed that in the first five months of 2024, the total trade value between China and the United States was 1.87 trillion yuan, a year-on-year increase of 2%. Among them, China's exports to the United States were 1.39 trillion yuan, a year-on-year increase of 3.6%, and the trade surplus with the United States was 911.18 billion yuan, an increase of 7.2%.

Shipping prices have always been closely related to demand. When demand for US cargo is strong, continued price increases are inevitable.

According to the Shanghai Export Container Freight Index ( SCFI) released by the Shanghai Shipping Exchange, the freight rates (sea freight and sea freight surcharges) from Shanghai Port to the West Coast and East Coast base ports of the United States were US$4,393/FEU and US$5,562/FEU respectively on May 10, and rose to US$6,209/FEU and US$7,447/FEU respectively on June 7. In less than a month, the increases were as high as 41.3% and 33.9%.

The speed of price increase has completely exceeded the expectations of many sellers. One Amazon seller lamented: " The price on the US route is rising every week, and it's rising so fast. How high a profit must be to keep up with the rising rate of freight ! " And according to some industry insiders, the freight rate on the US route will continue to rise in July.

On the other hand, the instability of shipping capacity has also paved the way for price increases on the US route . Looking at the recent situation, a major strike may occur at ports in the eastern United States.

On June 10, the International Longshoremen's Association (ILA) announced the suspension of negotiations with the United States Maritime Union (USMX), which means that labor-capital tensions in the eastern U.S. ports have intensified and a major strike crisis may break out .

Previously, the ILA and USMX had signed a six-year labor contract, which covers about 45,000 dock workers on the East Coast of the United States from Boston to Houston, including six of the ten busiest ports in the United States. With less than four months until the expiration of the contract, the union's chief negotiator Harold Daggett said that after the contract expires, union members will not continue to work and hinted that a strike will be held as early as October.

The situation in the Red Sea has caused congestion in ports around the world, and a large number of container ships are still detouring . The loss of shipping capacity is huge, the market is seriously lacking containers, and the situation of "it is difficult to find a cabin" is still happening. At this time, coupled with the peak season surcharges of major shipping companies, the freight rates on the US route are shockingly high.

Not only that, prices on other routes have also been rising. Since May, container freight rates in Europe, the Mediterranean, South America, North America and parts of Africa have soared to their peaks during the epidemic.

Shipping companies enter the market to "grab money"

Due to the continuous price surge, some shipping companies have tasted the sweetness and accelerated their entry into the market to make money.

First, some small ship companies that chose to withdraw from ocean routes after the epidemic have recently rented ships and containers and announced the restart of services on European and American routes.

SeaLead's restarted AWC route in the West Coast will operate irregularly, with two voyages planned for June, the first of which will start on June 16; the second voyage will start on June 26. BAL has restarted the China-Mexico Express (CMX), which the Chinese shipping company suspended after the epidemic ended in January 2023. The restarted route is expected to have two round-trip voyages in June and July. At the same time, several shipping companies such as Ellerman City Lines and TS Lines have also planned to return to long-haul routes.

Smaller ship operators are entering the market to grab money, and larger ship operators are not sitting idle either. It is understood that CMA CGM has not only added a peak season surcharge, but has also innovatively launched a peak season surcharge line on the Europe-Mediterranean route, which is really amazing!

Many large shipping companies, including MSC, COSCO, Hapag-Lloyd, ONE and OOCL , are also focusing their efforts on building new large container ships and launching them into operation in an attempt to obtain higher profits.

With more large and small shipping companies entering the market, the tight shipping capacity situation may be alleviated, but there is still no downward trend in freight rates.

Amazon

Liquidation

US Line