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Is Prime Air the Google Fiber of the shipping world? A way to put a fire under the ass of UPS and FedEx to get cheaper shipping rates so they can offer lower p

by LAMike 10y ago

Is Prime Air the Google Fiber of the shipping world? A way to put a fire under the ass of UPS and FedEx to get cheaper shipping rates so they can offer lower prices?

sytse 10y ago
I think it is more of an AWS, they'll replace most of UPS and FedEx with their own infrastructure that they'll open up to others later on.
- chx 10y ago
  Maybe -- but the advantages to Amazon are the differences from UPS and FedEx. For example, there are few sources -- the warehouses. If done right, there's no need to sort, the warehouse releases ready-to-go containers. And so on.
- gregpilling 10y ago
  That would be nice - an alternative to the UPS FedEx duopoly. Maybe they can push the shipping rates lower than the evil twins set it at now. The two are doing about 100 billion in business, so it is a large market to go after. I have been shipping daily with both of them for a decade; it would be nice to have another choice with national coverage. http://www.diffen.com/difference/FedEx_vs_UPS http://www.diffen.com/difference/FedEx_vs_UPS
  - widowlark 10y ago
    I would hope that Amazon is introducing competition to UPS and FedEx - but its also possible that they are paving the way for a Vertically integrated Monopoly. Time will tell, I suppose.
mc32 10y ago
Maybe FedEx could at least test the idea of hyperloop for freight --a lot more forgiving in terms of safety than moving people. Of course does not make it that cheaper to build, but right of way with present-day rail
vadym909 10y ago
If they are smart they would raise prices now (for anticipated lower volumes) while they have a small time window in which Amazon needs them while it scales. If they don't they will be toast.
- brianwawok 10y ago
  Risky as they can just speed up their replacement plan. Can't feel good watching your top customer slowly replace you.
petra 10y ago
It seems to be working. Fedex is investing a lot of money in improving their distribution centers, claiming it will make them 25% more productive.
cookiecaper 10y ago
Unlike ISP service, parcel shipping is already dirt cheap. Amazon has already had a large impact in that space by pushing its carriers to optimize and making things like Prime possible, but I'm not sure what they could do for parcel rates at retail. I feel like they're already bottom of the barrel. Automated trucks are probably going to be the next big thing that could potentially decrease retail shipping costs (at the expense of laying off all those truck drivers).
- generj 10y ago
  Which is not really an expense - creative destruction is generally a net positive for the economy.
kuschku 10y ago
Amazon can't really compete with DHL, and likely won't ever be able to. Sending a parcel within of 1 day from anywhere in Europe to anywhere in Europe for about 5$? That's cheaper than Amazons shipping (although amazon uses DHL), and faster. And while DHL is already using drones for deliveries on the coastal islands and testing them on large scale for cities, Amazon is repainting an airplane with another name. I'm not sure Amazon can ever compete on a truly global scale.
- venomsnake 10y ago
  Can you please give example for that 1 day for 5$ from ... lets say Sofia, Bulgaria to Lisbon, Portugal . I had to pay good 30EUR last time I used them.
  - kuschku 10y ago
    Well, I dunno the prices for that - but the 5$ was literally what I paid the last time I sent a package from Germany to Britain, which was surprisingly cheap.
    - lorenzhs 10y ago
      Sending stuff abroad from Germany with DHL is really cheap. Sending stuff from the UK to Germany is a whole lot more expensive (independent of carrier). It was double to thrice the price last I checked. Anyone happen to know why?
      - kuschku 10y ago
        With Deutsche Post DHL it can likely be explained because they have their infrastructure centered in Germany, considering it's their home market.
      - joosters 10y ago
        It could be because there is more space on the planes travelling from UK->Germany than Germany->UK, or perhaps DHL have a German hub that means there are many more routes there? [edit: oops, wrong way round!]
InclinedPlane 10y ago
Yes, but no. It's more the original google fiber, when they started running their own long-haul lines to become a backbone ISP back in the early 2000s. That's how they were able to buy youtube and rapidly ratchet up the video quality offered (remember it was originally 240p!) without loses tons of money on transit fees.
nradov 10y ago
The profit margins for UPS and FedEx aren't huge. Competition from Amazon will have only a marginal impact on prices.
- generj 10y ago
  And it actually could raise prices. As Amazon has expanded into other carriers, they give the easy metro markets to the smaller carriers and give UPS and FedEx the rural areas. Because UPS and FedEx must deliver everywhere in the US for PR/marketing/network effect reasons, they operate many of the rural areas at a massive loss, but subsidize them with metro areas which are profitable. Amazon basically is screwing them over - they might have to either raise prices or exit the market.
DigitalJack 10y ago
They really messed up when they didn't call it Prime Airy.

by LAMike 10y ago

Is Prime Air the Google Fiber of the shipping world? A way to put a fire under the ass of UPS and FedEx to get cheaper shipping rates so they can offer lower prices?

sytse 10y ago

I think it is more of an AWS, they'll replace most of UPS and FedEx with their own infrastructure that they'll open up to others later on.

chx 10y ago
Maybe -- but the advantages to Amazon are the differences from UPS and FedEx. For example, there are few sources -- the warehouses. If done right, there's no need to sort, the warehouse releases ready-to-go containers. And so on.
gregpilling 10y ago
That would be nice - an alternative to the UPS FedEx duopoly. Maybe they can push the shipping rates lower than the evil twins set it at now. The two are doing about 100 billion in business, so it is a large market to go after. I have been shipping daily with both of them for a decade; it would be nice to have another choice with national coverage. http://www.diffen.com/difference/FedEx_vs_UPS http://www.diffen.com/difference/FedEx_vs_UPS
- widowlark 10y ago
  I would hope that Amazon is introducing competition to UPS and FedEx - but its also possible that they are paving the way for a Vertically integrated Monopoly. Time will tell, I suppose.

mc32 10y ago

Maybe FedEx could at least test the idea of hyperloop for freight --a lot more forgiving in terms of safety than moving people. Of course does not make it that cheaper to build, but right of way with present-day rail

vadym909 10y ago

If they are smart they would raise prices now (for anticipated lower volumes) while they have a small time window in which Amazon needs them while it scales. If they don't they will be toast.

brianwawok 10y ago
Risky as they can just speed up their replacement plan. Can't feel good watching your top customer slowly replace you.

petra 10y ago

It seems to be working. Fedex is investing a lot of money in improving their distribution centers, claiming it will make them 25% more productive.

cookiecaper 10y ago

Unlike ISP service, parcel shipping is already dirt cheap. Amazon has already had a large impact in that space by pushing its carriers to optimize and making things like Prime possible, but I'm not sure what they could do for parcel rates at retail. I feel like they're already bottom of the barrel. Automated trucks are probably going to be the next big thing that could potentially decrease retail shipping costs (at the expense of laying off all those truck drivers).

generj 10y ago
Which is not really an expense - creative destruction is generally a net positive for the economy.

kuschku 10y ago

Amazon can't really compete with DHL, and likely won't ever be able to. Sending a parcel within of 1 day from anywhere in Europe to anywhere in Europe for about 5$? That's cheaper than Amazons shipping (although amazon uses DHL), and faster. And while DHL is already using drones for deliveries on the coastal islands and testing them on large scale for cities, Amazon is repainting an airplane with another name. I'm not sure Amazon can ever compete on a truly global scale.

venomsnake 10y ago
Can you please give example for that 1 day for 5$ from ... lets say Sofia, Bulgaria to Lisbon, Portugal . I had to pay good 30EUR last time I used them.
- kuschku 10y ago
  Well, I dunno the prices for that - but the 5$ was literally what I paid the last time I sent a package from Germany to Britain, which was surprisingly cheap.
  - lorenzhs 10y ago
    Sending stuff abroad from Germany with DHL is really cheap. Sending stuff from the UK to Germany is a whole lot more expensive (independent of carrier). It was double to thrice the price last I checked. Anyone happen to know why?
    - kuschku 10y ago
      With Deutsche Post DHL it can likely be explained because they have their infrastructure centered in Germany, considering it's their home market.
    - joosters 10y ago
      It could be because there is more space on the planes travelling from UK->Germany than Germany->UK, or perhaps DHL have a German hub that means there are many more routes there? [edit: oops, wrong way round!]

InclinedPlane 10y ago

Yes, but no. It's more the original google fiber, when they started running their own long-haul lines to become a backbone ISP back in the early 2000s. That's how they were able to buy youtube and rapidly ratchet up the video quality offered (remember it was originally 240p!) without loses tons of money on transit fees.

nradov 10y ago

The profit margins for UPS and FedEx aren't huge. Competition from Amazon will have only a marginal impact on prices.

generj 10y ago
And it actually could raise prices. As Amazon has expanded into other carriers, they give the easy metro markets to the smaller carriers and give UPS and FedEx the rural areas. Because UPS and FedEx must deliver everywhere in the US for PR/marketing/network effect reasons, they operate many of the rural areas at a massive loss, but subsidize them with metro areas which are profitable. Amazon basically is screwing them over - they might have to either raise prices or exit the market.

DigitalJack 10y ago

They really messed up when they didn't call it Prime Airy.