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Isn't that assuming that all the others in the space haven't spent years and millions of dollars optimizing these things already? Amazon brings a good entry poi

Isn't that assuming that all the others in the space haven't spent years and millions of dollars optimizing these things already? Amazon brings a good entry point for products to the US market from overseas, but I don't think there is any shortage of that capability already. I'm sure I'm missing the greater significance.

BinaryIdiot 11y ago
I agree; as an outsider looking into the space it would seem to me that international freight would be far less to optimize than building a network to ship items out to individual homes. Granted still lots of optimization to be had but I'm not sure Amazon would automatically provide a better way to do it. Most likely this is just more of them trying to own more of the vertical which probably translates into cost savings.
- Zombieball 11y ago
  I would assume what's interesting about companies like Amazon and Walmart is that by being more vertically integrated, they can use the cost savings from their retail businesses to subsidize developing and expanding new infrastructure. The same can't be said for companies like Fedex and UPS.
justicezyx 11y ago
Amazon is like Apple in the selling stuff business. When Amazon decide go in, they have a full-fldged solution that can seldom be matched...
seanlinehan 11y ago
All the big players definitely have spend years and millions (hundreds of millions) optimizing these things. But they are optimizing DOS-based systems built in the 80s. The tech stack that the old guard is working with is unbelievable.
- thedogeye 11y ago
  DHL spent $900M with IBM and SAP, recognized a sunk cost and went back to what they were doing before: http://theloadstar.co.uk/we-are-not-to-blame-for-for-dhls-e345m-nfe-new-technology-debacle-says-sap/ http://theloadstar.co.uk/we-are-not-to-blame-for-for-dhls-e3... Note: the 345M euros is just the amount they wrote off, not what they spent on the project. Maybe they did manage to get the EDI integrations done that were worth the other $600M.
- magicmu 11y ago
  Ah there it is, I was having trouble visualizing Amazon's edge here too. The old "decent-software + shitty-thing = less-shitty-thing".
- kyllo 11y ago
  I work at a large freight forwarder and we still have a whole department of COBOL developers and several million lines of COBOL code in production. If Amazon is serious about being an ocean carrier, they would be the first major new competitor to enter this space since before the invention of the internet. All the competition is still mired in 80s technology. But the technology issue aside, my point was really that Amazon has a more aggressive growth strategy and "become a monopoly" mentality than any incumbent player in this field and would be willing to take a loss in order to take market share. I believe they also have a small army of operations science PhDs who understand logistics network optimization better than anyone else in the field, and they also invest heavily in automation and robotics. They have self-driving forklifts as well as automated systems that feed instructions into the earpieces of their warehouse workers now. If they apply this strategy toward freight forwarding, that industry is going to be shaken up in a big way.
- analognoise 11y ago
  You said DOS like its a bad thing. It's well understood, completely paid for, and does the job. Whats wrong with it, in this case? Even if maintenance costs go up, its still cheaper to maintain than to build a new system, especially if the old system fulfills all the requirements and is proven.
  - 11y ago
onion2k 11y ago
The container shipping industry is still largely paper document driven. There are startups[1] in the industry working to build software products to disrupt it and cash in on the potential optimisations. When you talk to people who know the industry it's a bit like listening to someone talking about the web in 1995 - there's brilliant stuff going on but things could obviously be so much better. [1] E.g https://kontainers.com https://kontainers.com I'm not affiliated, but they did do the same accelerator as my startup.
- markdown 11y ago
  E.g: The author of the article we're discussing: Flexport.
SixSigma 11y ago
Perhaps Amazon is benchmarking the service to use this as a bargaining chip. Lots of big companies run such things in-house less efficiently just to keep their outsourcers on their toes. Last month it was Air Cargo http://www.seattletimes.com/business/amazon/amazon-in-talks-to-lease-20-jets-to-launch-air-cargo-business http://www.seattletimes.com/business/amazon/amazon-in-talks-...

BinaryIdiot 11y ago

I agree; as an outsider looking into the space it would seem to me that international freight would be far less to optimize than building a network to ship items out to individual homes. Granted still lots of optimization to be had but I'm not sure Amazon would automatically provide a better way to do it. Most likely this is just more of them trying to own more of the vertical which probably translates into cost savings.

Zombieball 11y ago
I would assume what's interesting about companies like Amazon and Walmart is that by being more vertically integrated, they can use the cost savings from their retail businesses to subsidize developing and expanding new infrastructure. The same can't be said for companies like Fedex and UPS.

justicezyx 11y ago

Amazon is like Apple in the selling stuff business. When Amazon decide go in, they have a full-fldged solution that can seldom be matched...

seanlinehan 11y ago

All the big players definitely have spend years and millions (hundreds of millions) optimizing these things. But they are optimizing DOS-based systems built in the 80s. The tech stack that the old guard is working with is unbelievable.

thedogeye 11y ago
DHL spent $900M with IBM and SAP, recognized a sunk cost and went back to what they were doing before: http://theloadstar.co.uk/we-are-not-to-blame-for-for-dhls-e345m-nfe-new-technology-debacle-says-sap/ http://theloadstar.co.uk/we-are-not-to-blame-for-for-dhls-e3... Note: the 345M euros is just the amount they wrote off, not what they spent on the project. Maybe they did manage to get the EDI integrations done that were worth the other $600M.
magicmu 11y ago
Ah there it is, I was having trouble visualizing Amazon's edge here too. The old "decent-software + shitty-thing = less-shitty-thing".
kyllo 11y ago
I work at a large freight forwarder and we still have a whole department of COBOL developers and several million lines of COBOL code in production. If Amazon is serious about being an ocean carrier, they would be the first major new competitor to enter this space since before the invention of the internet. All the competition is still mired in 80s technology. But the technology issue aside, my point was really that Amazon has a more aggressive growth strategy and "become a monopoly" mentality than any incumbent player in this field and would be willing to take a loss in order to take market share. I believe they also have a small army of operations science PhDs who understand logistics network optimization better than anyone else in the field, and they also invest heavily in automation and robotics. They have self-driving forklifts as well as automated systems that feed instructions into the earpieces of their warehouse workers now. If they apply this strategy toward freight forwarding, that industry is going to be shaken up in a big way.
analognoise 11y ago
You said DOS like its a bad thing. It's well understood, completely paid for, and does the job. Whats wrong with it, in this case? Even if maintenance costs go up, its still cheaper to maintain than to build a new system, especially if the old system fulfills all the requirements and is proven.
- 11y ago

onion2k 11y ago

The container shipping industry is still largely paper document driven. There are startups[1] in the industry working to build software products to disrupt it and cash in on the potential optimisations. When you talk to people who know the industry it's a bit like listening to someone talking about the web in 1995 - there's brilliant stuff going on but things could obviously be so much better. [1] E.g https://kontainers.com https://kontainers.com I'm not affiliated, but they did do the same accelerator as my startup.

markdown 11y ago
E.g: The author of the article we're discussing: Flexport.

SixSigma 11y ago

Perhaps Amazon is benchmarking the service to use this as a bargaining chip. Lots of big companies run such things in-house less efficiently just to keep their outsourcers on their toes. Last month it was Air Cargo http://www.seattletimes.com/business/amazon/amazon-in-talks-to-lease-20-jets-to-launch-air-cargo-business http://www.seattletimes.com/business/amazon/amazon-in-talks-...