Amazon is still understaffed despite hiring more than 625k workers

Amazon says that it is still understaffed despite hiring 628,000 workers globally over the past 18 months.

The company is still searching for 150,000 temporary workers in the US alone, alongside 40,000 corporate and 125,000 logistics and fulfilment workers.

“In Q3, labor became our primary capacity constraint, not storage space or fulfilment capacity,” said Amazon chief financial officer Brian Olsavsky.

“As a result, inventory placement was frequently redirected to fulfilment centres that had the labor to receive the products.

“This resulted in less optimal placement, which leads to longer and more expensive transportation routes.”

Amazon has been forced to change its usual methodical fulfilment system as a result of the global supply bottleneck and labour shortage.

“In short, our operations are normally well staffed and optimized to be in stock and to deliver to customers in one to two days,” Olsavsky said told MarketWatch.

READ MORE: Amazon expects to pay “billions” to prevent shortages at Christmas

“Labor shortages and supply chain disruptions upset this balance and resulted in additional costs to ensure that we continue to maintain our service levels to customers.”

“We made strong progress in Q3 to build and open new facilities and as a result for the first time since the pandemic began, we are no longer capacity constrained for physical space in the network.”

The ecommerce giant missed analysts expectations as the pandemic ecommerce boom slowed, reporting a Q3 profit decline to $6.12 a share.

Revenues however did increase to $110.8 billion.

Amazon gave an update on its supply chain on its corporate site to reassure customers that the busy holiday season will be unproblematic.

“Our teams have been hard at work for months, focusing on capacity and demand planning to balance our customers’ needs against any supply chain or transportation challenges that may occur,” the post read.

“While we are always investing in our supply chain and transportation network, we have done even more this year to ensure we don’t let recent supply-chain constraints impact the Amazon experience for our customers.”

Amazon claims it has over 50,000 trailers to haul freight globally and plans to add 85 more aircraft to its Amazon Air cargo fleet later this year.

It has also increased its entry port network by 50 per cent.

Trust analysts wrote in a note: “With the recently emerging labor shortage in the US, the company is increasingly spending more to add workers, and called out an incremental $2 billion costs from wage inflation, and labor-related productivity losses in 3Q, particularly in August and September.”

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