Amazon, Food, Postal Deliveries Hit as Australian Lockdowns Bite
(Bloomberg) -- Some of the world’s longest Covid-19 lockdowns are finally hitting Australia’s food and household-goods supply lines.
Amazon.com Inc. said a surge of internet purchases in Australia by people forced to stay at home is putting pressure on its distribution network, and delivery times are lengthening. “We’re working to increase our operational capacity to address this issue,” the company said in a statement late Thursday.
With Sydney and Melbourne both in extended lockdowns, the jump in online shopping has overwhelmed Australia Post, which has a record pile of undelivered packages. From Saturday, the service is pausing some parcel pickups from e-commerce retailers in the country’s hardest-hit states so it can work through the backlog.
Australia’s largest supermarket chain, Woolworths Group Ltd., said Thursday the delta outbreak “has put a lot of extra pressure” on grocery-supply chains in New South Wales state, which includes Sydney, in recent weeks. Covid isolation orders for staff in distribution centers have made it difficult to transfer products to stores, more items than normal are out of stock and home-delivery wait times are longer than usual. Demand is so high that Woolworths is using taxis for some food drop-offs in Sydney.
After largely suppressing coronavirus infections last year with tight border controls, Australia is struggling to rein in the more-virulent delta variant. Supply chains could be squeezed for many more months: Restrictions in Sydney, which has been locked down since late June, and Melbourne are only set to ease once vaccination rates reach certain thresholds.
Here are more details on the pressures facing the companies:
- In its statement, the U.S. technology giant said the increase in online shopping in Australia is exerting “additional pressure on our third-party carrier network more broadly, as well as on our own network.” That’s led to “extended delivery promises,” it said.
- Australia Post plans to stop collecting Parcel Post packages from e-commerce retailers for three days from Sept. 4 until Sept. 7 in New South Wales, Victoria and the Australian Capital Territory, home to the national capital Canberra.
- “This temporary measure will allow us to responsibly clear record parcel volumes in parts of our network,” it said Sept. 1.
- The Sydney-based company said in its Thursday statement that Covid-19 exposures across its western Sydney distribution centers had put “hundreds” of employees of staff in isolation.
- These workers “are beginning to head back to work after returning negative tests and we’re steadily ramping up our distribution capacity once again,” Woolworths said.
- Chief Executive Officer Brad Banducci said in a Sept. 1 statement that product shortages are more due to distribution problems than a surge in demand.
- Banducci told analysts last week that about 5% of products for online orders were out of stock. There are “a lot of stresses and strains” on the supply chain, he said, adding that it can take up to four days to get a delivery in some areas.
Coles Group Ltd.
- Australia’s second-largest supermarket chain said last month that forced Covid-19 isolation for some employees, combined with a jump in demand, is making it “very difficult to guarantee availability.”
- “These lockdowns create quite massive surges for everybody,” Coles CEO Steven Cain said on an Aug. 18 call with analysts.
- “We should all recognize that there will be a drop off at the end of all this, and that what we’re trying to build here is a long-term sustainable business,” he said.
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