Amazon Global Logistics: Conquering the International Supply Chain

When managing FBA logistics for your brand, your goal is to move goods from their production location to their point of sale in the fastest and most cost-effective manner possible. When production and your marketplace are in different countries, these challenges grow exponentially. Add in the current supply chain troubles, and you’ve got a lot of issues without clear solutions. Luckily, there is an option to streamline your international Amazon supply chain: Amazon Global Logistics.

Before Amazon Global Logistics

Traditionally, the process of importing goods from Asia includes many choices. Brands need large amounts of infrastructure or third-party logistics carriers (3PL) to manage goods while in Asia, with associated costs mounting before products have even left the port. Such costs can include prepping, labeling, transporting to the port, the hoops that customs require each container to jump through, and then the long journey across the seas or the high costs of travel by air.

Once products have landed, there is no quick and easy way to get products into Amazon FBA warehouses. Multiple touchpoints are needed stateside to prepare products or store them until they can then be divided and transported to their respective FBA warehouses. The process is long, complicated, and never straightforward. What’s worse, large amounts of inventory are then tied up for long periods of time while out of stock statuses halt sales. Once that ball is rolling, there is no way to hurry it along. You just wait.

The Pandemic’s Impact on the Global Supply Chain

Since 2020 and the start of our old friend the pandemic, these issues have only gotten worse. Ports are backing up around the world, with driver and trucking equipment shortages making it seemingly impossible to get freight moved to the next step in the supply chain. Available logistic solutions are focused on getting products from port to port. Separate solutions are required to get products ready and into FBA.

To make matters worse, Amazon also imposed Amazon Quantity Limits (AQLs), which limited how much inventory Sellers can send into FBA at the ASIN level. Prior to AQLs, brands could send in enough inventory to satisfy whatever coverage they wanted, as long as they had storage capacity. Now, brands can only send in what they are limited to, and cannot replenish until the AQLs will allow. In some cases, this forces out of stock on FBA, which can negatively impact listing ranks, pricing, customer experience, and overall brand presence.

What is Amazon Global Logistics?

This perfect storm has left many brands high and dry. These pre-pandemic challenges are why Amazon decided to take matters into their own hands in 2005, creating a program tailored to the specific needs of their sellers. Amazon Global Logistics (AGL) is Amazon’s import solution, providing sellers the ability to directly import from China to the USA, UK, EU and Japan. In addition to using dedicated charter flights, Amazon has amassed their own fleet of ships and planes to streamline the process.

How AGL Changes The Game

As Kaspien experts explained in this podcast episode, AGL is the first logistics options that is designed for the unique needs of the Amazon supply chain. It was built to make the process quicker and cheaper for many importers. So, let’s explore the ways AGL achieves these goals.

Reduced Touch Points

Once your products reach their final country, traditional methods would require storage facilities to hold goods before shipment and prep services to coordinate the distribution, both of which come with additional time and often exorbitant costs. AGL is a direct path from foreign production sites to FBA, eliminating the need for many of the extra steps along the way. AGL offers end-to-end solutions, including local pickup, palletization, labeling, cargo insurance service, and customs clearance at origin and destination.

Improves Lead Times

This more direct path leads to a reduction in the time inventory is tied up within the supply chain, giving more agility to the complicated puzzle of staying in stock. You no longer need to figure out what happens to your freight when it lands, how to store it, move it, and disperse it. Instead, Amazon’s AGL services get your products directly to FBA’s doorstep.

Eliminates Many Prohibitive Costs

Reduced touch points and lead times equate to reduced costs. You don’t need to have a warehouse to receive products or pay a 3PL to do it for you. In the 6 years that Kaspien has been leveraging AGL, we have seen an average savings of $8–10 thousand per 40ft container. We have also seen AGL shave an average of about 2 weeks off timelines, effectively cutting average lead times down from 45 days to 25 days.

Of course, the current supply chain kerfuffle is affecting these numbers in a big way, making them less predictable. Whatever the lead time would have been through other import methods, AGL is consistently getting products into FBA faster.

As David Rier, Kaspien’s Global Logistics Specialist, explains, “Currently there are delays, sometimes long delays, in getting shipments out of China and delays with shipments arriving at US ports. AGL is seeing these delays as well, but having Amazon control the logistics of an order does save some time in the overall transit of goods. As for cost saving, this will vary shipment by shipment and month by month (as ocean and air freight rates vary depending on a multitude of factors), but in general, AGL shipments are less expensive and sometimes you can save thousands of dollars.”

A Viable Option for Most Categories

For the most part, AGL is not constrained by category. With the exception of temperature-sensitive items, most categories can ship through this program. While cost-effective when shipping most categories, oversized items benefit the most.

Book and Track Shipments in Seller Central

Amazon has made the process very user-friendly and straightforward. Shipments can be booked and tracked from the convenience of your Seller Central portal. We will explain how to get started below.

Amazon Global Shipping Options

Sometimes, you need the most cost-effective mode of transportation. Other times, you need the fastest. AGL allows you to choose which shipping method works best for your goals. Options include:

• Standard Ocean — Ship via standard full container load (FCL) or less than a container load (LCL) with Amazon managed consolidation
• Fast Ocean — Expedited ocean-faring services that are faster than Standard Ocean but cost less than Air
• Air — When time is of the essence, Amazon’s dedicated charter flights see a typical transit time from origin to FBA of only 7 days

AGL also gives you the option to floor load freight that doesn’t make sense to palatize, which Kaspien has found to be a game-changer for many partners.

Potential Drawbacks to Consider

Amazon Global Logistics provides many benefits that cannot be gleaned elsewhere. But there is much to consider when determining the right logistics strategy for your brand. Here are a few points to make sure you understand before pulling the trigger.

Diversification Is Still Key

Be wary of putting all your eggs in one basket. AGL is a powerful tool, but it should be one of many in your toolbox. If there is only one link holding your entire supply chain together, interruptions can be devastating. Instead of eliminating 3PL relationships completely, leverage both 3PLs and AGL to support each other and take up the slack if issues arise in one.

Just-In-Time Just Isn’t Working Right Now

The pandemic has thrown the idea of just-in-time planning out the window. Delays and unpredictability in every aspect of transport are making it immensely difficult to have enough stock in FBA to fulfill all orders while balancing the restrictions of AQLs. If your stock allotment is all aboard a ship or plane, using other fulfillment methods to compensate for low stock during transit becomes a very tricky balancing act. Run out and you run the risk of affecting the listings ranking and more. Send too much and your excess freight may be rejected upon arrival at FBA. Amazon recently reduced the Inventory Performance Index (IPI) threshold from 450 to 400 on January 1, 2022. This has eased the strain on FBA sellers, but there is no guarantee of its permanence. The possibility of future IPI threshold fluctuation and a myriad of other issues still persist at FBA.

Great for Most Categories, But Not All

If your products are in a category that has seasonal FBA storage restrictions, AGL is not the best option. Items such as groceries and meltables will not be temperature-controlled during transit. Add in the challenge of timing shipments precisely for the seasons when storage of these items is allowed, and this endeavor becomes cost prohibitive. Such categories will require the use of a 3PL.

How to Get Started in AGL

You’ve weighed the pros and cons of the Amazon Global Logistics program and have decided to use it! So, how do you get started? Amazon’s website outlines the 3-step process to getting started with AGL:

1. Set Up Amazon Global Logistics Account — As an existing FBA seller, you’ll start by creating an AGL profile.
2. Complete the Onboarding Process — Set up a payment method, provide your importer of record (IOR) details, and upload the required documents.
3. Book and Track Your Shipment — Book your shipment from origin directly to an Amazon fulfillment Center using the send/replenish inventory workflow. Track your shipments all the way to the fulfillment center.

The Future of AGL

Amazon has been busy during the global pandemic attempting to address the influx of inventory to FBA. They have drastically increased their FBA warehouse network to provide more space for sellers. As this trend continues, the hope is that Amazon will be able to ease their AQLs as the storage space increases.

Amazon has also been fervently expanding both its air and sea fleets with continued purchases of more planes and ships. As we discuss in Kaspien’s State of Amazon 2022 Report, “In addition to doubling the size of FBA, Amazon is also making strides in its air fleet. According to a DePaul University study in September 2021, Amazon Air operated out of 42 locations in the U.S., as well as one location currently in Leipzig, Germany. At the time, Amazon had 81 planes in its fleet, compared to 248 for UPS and 467 for FedEx. All of these advancements are part of Amazon’s march to becoming the largest logistics provider in the U.S.”

The more Amazon can control the process from end-to-end, cutting out the reliance on charters, the more Amazon will be able to streamline the process. The global demand for goods is only growing, and Amazon is determined to be able to bring all goods anywhere in the world. As they work towards that end goal, the features and scope of Amazon Global Logistics is only expected to grow.

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