Apple Dominating Shipping Capacity Out Of China With New iPhones

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(Photo: Matthew Panzarino)
(Photo: Matthew Panzarino)

According to several sources, Apple has already begun flexing its supply chain muscles by shipping so many units of upcoming devices from its manufacturing facilities to sales outlets that it is causing delays for other manufacturers.

Apple shipments via major concerns like FedEx and UPS are said to be ‘incredibly high’ for the holiday quarter, pointing to a massive number of iPhones and whatever other units Apple announces for the fall season incoming. The company is apparently flooding its channels with devices, causing shipments for other ‘top tier’ device makers to be delayed to make way for Apple products.

One other manufacturer was reportedly told by shippers that they couldn’t meet some deadlines because they were booked up servicing a ‘very important customer’.

If Apple is displacing shipments from other manufacturers with its volume then it wouldn’t be the first time. An account given by logistics exec John Martin to Businessweek a couple of years ago gives a few examples:

“Apple began innovating on the nitty-gritty details of supply-chain management almost immediately upon Steve Jobs’s return in 1997. At the time, most computer manufacturers transported products by sea, a far cheaper option than air freight. To ensure that the company’s new, translucent blue iMacs would be widely available at Christmas the following year, Jobs paid $50 million to buy up all the available holiday air freight space, says John Martin, a logistics executive who worked with Jobs to arrange the flights. The move handicapped rivals such as Compaq that later wanted to book air transport. Similarly, when iPod sales took off in 2001, Apple realized it could pack so many of the diminutive music players on planes that it became economical to ship them directly from Chinese factories to consumers’ doors. When an HP staffer bought one and received it a few days later, tracking its progress around the world through Apple’s website, “It was an ‘Oh s—’ moment,” recalls [former HP supply chain chief Mike] Fawkes.”

It also points to Apple’s hopes to sell an enormous number of devices in the holiday quarter. Reportedly, those include at least one new iPhone and updates to the iPad — a rumored wearable device is reported to be announced but shipped next year.

Creative Strategies analyst Ben Bajarin estimates (subscription required) that — provided it can make enough of them — Apple could sell in the mid-60 million iPhones in the holiday quarter.

“The other thing that will be interesting to watch is what happens with Samsung’s sales. Last quarter, Samsung shipped 78m smartphones and they stuffed the channel prematurely to mask some of their challenges,” says Bajarin. “I think it is extremely possible, given the sense I get on both Apple and Samsung trend lines, that Apple and Samsung sales in the holiday quarter could be closer than people think.”

Samsung having pushed a lot of phones last quarter to cover up some of its sales slump issues could bite it in the butt if Apple eats up shipping capacity in a way that makes it tough for the company to get the new Galaxy models into the country.

Original Post by Techcrunch

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