11 ms·
Amazon Jumps into Freight Brokerage
- jorblumesea 7y agoAt what point does Amazon get broken up? Grocery chains, freight, aws, ecommerce, each of these could be companies on their own. Seems like we're heading to a dystopian future where megacorps own you in every sense.
- mrlala 7y agoWhere is the efficiency in that?
- cheschire 7y agoAmazon probably won't get broken up as long as people continue to get the lowest prices from them. As far as owning you in every sense, that won't happen until these companies start buying up so much property that they rival military bases in family services offered. At that point, once it becomes possible to live cradle to grave on a company's property, that's when you will be owned.
- duxup 7y ago>as long as people continue to get the lowest prices from them. I don't really think that's the breakpoint as to if something gets broken up or not.
- lukejduncan 7y agoCurrently, it's actually the definition of when something gets broken up or not. Anitrust today focuses on consumer wealthfare and not corporate power. However, there are some politicians like Elizabeth Warren who are argueing to change that criteria. This is often referred to as "Hipster Antitrust" https://en.wikipedia.org/wiki/Hipster_Antitrust https://en.wikipedia.org/wiki/Hipster_Antitrust For a great series on the history of anti-trust and the current debates on its application to tech companies check out this short Planet Money Series: Antitrust 1: Standard Oil https://www.npr.org/sections/money/2019/02/15/695131832/antitrust-1-standard-oil https://www.npr.org/sections/money/2019/02/15/695131832/anti... Antitrust 2: The Paradox https://www.npr.org/sections/money/2019/02/20/696342011/antitrust-2-the-paradox https://www.npr.org/sections/money/2019/02/20/696342011/anti... Antitrust 3: Big Tech https://www.npr.org/sections/money/2019/02/22/697170790/antitrust-3-big-tech https://www.npr.org/sections/money/2019/02/22/697170790/anti...
- notfromhere 7y agoHipster Antitrust is basically how antitrust used to function before Bork. Just about the same time when income inequality really started to accelerate
- lukejduncan 7y agoYeah I thought that was super interesting. The podcast covers that too.
- rattlesnakedave 7y agoAll of these services enrich the lives of millions.
- barbecue_sauce 7y agoIf Amazon was just in-housing all of these business lines for the use of their core business (vertical integration), I don't think there would be a case for antitrust. Getting into freight makes sense for the supply chain of a global retailer. However, they insist on platform-itizing everything to the point that the argument could be made that the platform IS the business, and things get murkier. (IANAL or subject matter expert).
- anongraddebt 7y agoI sometimes wonder if there is some power (whatever we want that to mean) threshold at which an invalid antitrust case is brought simply because of the amount of power under discussion. Extreme and improbable hypothetical: Amazon hits ~$2.5T in annual revenue, while the GDP of France stagnates at ~$2.5T. Assuming that there is zero evidence for an antitrust case to be built (again, this is an extreme and improbable and rather outlandish scenario), would the U.S. have an interest in simply brute forcing the break-up of Amazon simply on the grounds that the company itself has too much geopolitical clout/power/influence/etc.? I'm seriously curious.
- nordsieck 7y ago> Extreme and improbable hypothetical: > Amazon hits ~$2.5T in annual revenue, while the GDP of France stagnates at ~$2.5T. > Assuming that there is zero evidence for an antitrust case to be built (again, this is an extreme and improbable and rather outlandish scenario), would the U.S. have an interest in simply brute forcing the break-up of Amazon simply on the grounds that the company itself has too much geopolitical clout/power/influence/etc.? In this hypothetical, how much money a year do you estimate they'd spend on politics? It's not like the country is a body with a single mind.
- anongraddebt 7y agoI'd wager their lobbying efforts would increase roughly in parallel with their revenue (or something like that).
- jonknee 7y agoConglomerates aren't new and aren't by themselves something to consider antitrust action over. Samsung does everything from highway construction to chip fabrication to making appliances.
- ctvo 7y agoWhat's South Korea's anti-trust laws like? Chaebols aren't exactly well regarded, are they? - https://www.nytimes.com/2017/02/17/business/south-korea-chaebol-samsung.html https://www.nytimes.com/2017/02/17/business/south-korea-chae...
- rednerrus 7y agoIt doesn't seem like they have a monopoly in any one area.
- JackFr 7y ago> At what point does Amazon get broken up? They'd have to violate the law. As it stands, they're not engaging in anti-competitive activity. Simply being better at something than your competition isn't anti-competitive. > Seems like we're heading to a dystopian future where megacorps own you in every sense. Literally every business that Amazon has entered has improved my life. Books are cheaper with an enormously larger selection available. Prime Video offers alternative to Netflix. AWS has revolutionized the software industry. Don't get me wrong -- Amazon is in it for Amazon, and I think Jeff Bezo's can be an asshole. But the reason they get my money year after year is that they do such a great job.
- swoongoonz 7y agoit's improve your life because you're probably a highly paid software developer or engineer (guessing because here you are on hacker news). I would like to hear more from the people who work for amazon (not the devs reaping all of the rewards of stock shares) and the retailers selling their goods on amazon to see if the company has "improved" their lives. https://www.theverge.com/2018/4/16/17243026/amazon-warehouse-jobs-worker-conditions-bathroom-breaks https://www.theverge.com/2018/4/16/17243026/amazon-warehouse...
- Reedx 7y agoEngineers are not the majority of Amazon's customers. Nor are they the ones that benefit most from buying there. For example, consider single mothers working two jobs, ordering from Amazon.com to save time & money. And depending on where they live, they might even get the order within a couple hours. That's a new kind of efficiency that many benefit from.
- ethbro 7y agoConsider why that person has to work two jobs, and the contribution Amazon made towards that. Low prices aren't free. Some of it came from efficiency, the rest comes from simply paying labor less.
- chrisseaton 7y agoWhat law do you think they’ve broken to justify breaking them up? You can’t just dismantle someone’s business because you think they should structure it differently.
- jorblumesea 7y agoReconsider the current system and change the laws, obviously. The Consumer Welfare Standard fails to capture forms of market power and forms of dominance that should be relevant to antitrust and do raise competition concerns. What happens when Amazon hypothetically reaches state level income but doesn't break any laws? How much is enough soft power? How much is enough power for one corporation, monopoly or not? It's interesting that I got so much push back for this discussion, seems fairly obvious this can end badly for the average person.
- chrisseaton 7y agoIf you’re making custom laws to deliberately target specific businesses you don’t like then that’s a red flag your new law is abusive.
- jorblumesea 7y agoThis has nothing to do with specific businesses, just the size and scale that businesses are reaching now. This has nothing to do with Amazon, they are just an elegant example of a broken system. Corporations that have serious soft power but have broken no laws should cause us to ask deep questions about what it means to be "anti trust" in the 21st century. The consumer welfare framework is a weak and ineffective framework for today's modern corporations.
- eropple 7y agoBusinesses exist at and only at the sufferance of the society that grants that charter and need only be permitted to exist so long as there is positive social benefit to their existence. One cannot "abuse" a business by requiring them to properly hold up their end of the bargain. We have mostly forgotten--to our detriment as societies around the world--that businesses exist to serve the collective us of citizenry and society. Not the other way around.
- turtlegrids 7y agoI stumbled across this article while searching for something related to Amazon Logistics. This freight service and the article are both wildly interesting. But I still don't know how to do what I wanted to do in the first place -- does anyone know if there's an API that allows querying Amazon Logistics tracking? Basically scan history and estimated delivery date given a TBA######## tracking number.
- duxup 7y ago>Lunak told Transport Topics that in the flurry of reporting earlier in May, some outlets compared Amazon’s spot rates with contractual rates, which she said was not “apples to apples.” Rates are a weird thing in the industry in the sense that nobody pays the up front rate and the "real" rates are heavily discounted.
- kyllo 7y agoYes, and the mathematical reason behind this is straightforward. Capacity planning is the hardest problem in logistics[1]. You have to plan weekly capacity several months ahead of time, and you have a minimum break-even load factor to hit, but you also want enough capacity to not have to leave business on the table when demand is high. Contractual customers commit to give you a steady weekly load, which reduces week-to-week variance in your demand and makes your forecasting more accurate. A more accurate forecast means you need less excess capacity and can run at a higher average utilization. This is very valuable, hence the discounts. [1]Actually route optimization might be the hardest problem in logistics because the traveling salesman problem is a classic NP-complete optimization problem, but in practice it's not so hard to find a good-enough solution and the stakes are lower. Suboptimal routes won't make or break your profit margin, but poor capacity planning absolutely will.
- ThrustVectoring 7y agoThe alternative way of thinking about it is that buying at spot rates includes an embedded option to not use the capacity. This real option has some value, so customers are willing to pay higher rates in the spot market rather than through contracts. There's necessarily some level of contract discount - otherwise, everyone would pay spot rates for the free optionality.
- sturgill 7y agoWhich, at the end of the day, was the original value prop of EC2. Capacity planning is a challenging problem, no matter the industry.
- 7y ago
- sharkweek 7y agoNot mentioned in the article, but this is interesting because Jeff Bezos invested in Convoy, a Seattle startup working to optimize freight brokerage, back in their seed or series A, forgot which. Though I'm sure nobody at Convoy, now valued over 1BN, honestly believed Amazon wouldn't jump into a market this big and ripe for improvement. Then again, there's almost certainly room for dozens of big players. I don't think I even comprehend how big the freight brokerage space is, but I'm sure I'm underestimating it by multitudes.
- duxup 7y agoIt's big, it's technologically really old / behind the times, lots of customization. And a lot of the human interactions are with people who have borderline computer skills, even decision makers. It is a strange space. LOTS of room for efficiency and at the same time so easy to say "oh yeah this could be done better" and then you fall on your face because logic is not how anything / anyone works ;)
- kyllo 7y agoI worked at a major third party logistics company from 2012-2015 and they were less than halfway through a massive project to rewrite their COBOL mainframe systems in Java, and I doubt they're anywhere near being done yet. The industry also runs on FTP transfers of flatfiles and ANSI X12 EDI messages. The most "modern" partner API I saw was SOAP. No one I talked to had even heard of REST. Meanwhile, on multiple occasions I heard senior managers express terror at the prospect of Amazon entering their market and competing with them. Rightfully so, given the size of Amazon's resources. Making money off a logistics network is an economy of scale game.
- duxup 7y ago>Making money off a logistics network is an economy of scale game. And yet there are so many small niche providers.... you'd think that would have gone away long ago... Such a weird world.
- 7y ago
- baxtr 7y agoIs this similar to what FreightHub is doing?
- tschwimmer 7y agoLooks to be different. FreightHub is a forwarder, this looks to be a trucking brokerage. For most trucking within the United States, the company you contract with to move your stuff doesn't actually own the trucks. You're dealing with a broker who matches your order to a trucker on the backend. The truckers are independent owner/operators or employees of large truck lines like JB Hunt, etc. The better comparison would be to Uber Freight and Convoy, who seem to be operating on the brokerage model.
- le-mark 7y agoReally interesting, odd move imo. As others have said, this is a highly diverse industry, with entrenched players and smaller players as well. I think it's interesting to consider 'why'? Clearly Bezos thinks he can make money at it. A lot of money I'd wager.
- duxup 7y agoThey are already "in" it doing it for themselves, like cloud, why not try to sell it to others, like cloud.
- ethbro 7y agoLeveraging a huge amount of organic demand from yourself makes a lot of businesses feasible, that aren't otherwise. Worst case, they lean less on their own brokerage. Best case, they excel and can begin billing everyone else for providing the service. Win/win.
- thrav 7y agoAmazon is always Amazon’s #1 customer when they enter a new market.
- jquery 7y agoHow is this different than the railroads that owned the railways and were broken up in ye olden times?
- ethbro 7y agoIn US law, the key phrase from Northern Securities Co. v. United States, 193 U.S. 197 (1904, "the first railway monopoly case") was "in restraint of interstate commerce." The trust was deemed by the Supreme Court to have been created for the purpose of ceasing active competition between the companies who joined it (there having been recent strife between them in the news, the trust being the negotiated solution, to back this purpose up). So, very different. A similar case would be if AWS, Azure, and GCP decided to create a holding company that combined all their assets. https://www.law.cornell.edu/supremecourt/text/193/197 https://www.law.cornell.edu/supremecourt/text/193/197
- 2_listerine_pls 7y agoI know it's unpopular to talk about limiting Amazon because America is a "free-market" but that's the argument of the dumbest kind, it's short-sighted. You can't compete with them unless you have an advantage they can't replicate, they have all the money and can buy any company they need, they can pay the best salaries for the same reason, they own a lot of relevant data in every industry, they can buy all the patents and license them to third-parties so they sue you, etc... I am an Amazon fan, but looking into the future, these companies will rule every aspect of our society.
- hyperpape 7y agoAmazon currently does just above one quarter the retail sales of Wal-Mart. They’re growing faster, but not enough to overtake them within a decade.
- somatic 7y agoWal-Mart and Amazon are not really in the same industry. Wal-Mart is an old retailer with a lot of physical stores and a well-established business model. Amazon is a young software company with the world’s biggest Internet store, the world’s biggest computer apparatus, and a bunch of other things I probably don’t even know about. But it’s the software thing that’s the important bit. Software is intelligence, intelligence is efficiency, and Amazon is software first. In any “old” industry it wants to enter, it becomes, by default, the smartest competitor therein. It will start out with better logistics than the incumbent industry experts with decades of experience. It’s like Amazon has a 20-point IQ advantage in anything it wants to do. Or more. A scary competitor. Scarier than anything from the Robber Baron era.
- deleted 7y ago[deleted]
- stale2002 7y agoOk, but what about consumers? If everyone else sucks so much that they can't provide a better service, then why is it a bad thing for them to fail? The best thing for consumers is to have quality products for low prices.
- tedmcory77 7y agoI’m honestly surprised Amazon hasnt bought Flexport. They seem to “get” how things should work.
- SomeOldThrow 7y ago> They seem to “get” how things should work. What makes you say that?
- jquery 7y agoThey’re like Uber for Freight? They even have a website that’s a tongue-in-cheek reference to this: https://www.uberfreight.com/ https://www.uberfreight.com/
- FTA 7y agoThat website actually looks to be run by Uber, not Flexport.
- SomeOldThrow 7y agoWhat part of uber do you perceive they emulate? Why isn’t amazon just buying Uber if it’s so desirable?
- jquery 7y agoI was talking about Flexport, not Amazon.
- deleted 7y ago[deleted]
- jypepin 7y agoUber Freight, is... Uber, not Flexport.
- austenallred 7y ago
- blairanderson 7y agosee: https://freight.amazon.com/ https://freight.amazon.com/ also: https://ship.amazon.com/ https://ship.amazon.com/
- mruts 7y agoJapanese and Korean conglomerates' stocks are usually discounted compared to their parts: their P/B is less than one. This is traditionally seen as a inefficiency tax on their underlying value due to their inability to communicate and mobilize internal structures in an efficient manner. Amazon has achieved what many other conglomerates have failed to do: effectively mobilize and monetize every part of their business. This is something that is nothing short of a miracle are is a testament to their organizational structure and managers, most of Jeff Bezos. One would be hard-pressed to find a large diverse company that is as efficient and well run as Amazon.
- kerng 7y agoNow they are heads on competing with Uber. Also heard that they bought a food delivery startup today. Maybe Lyft is next! This will be interesting to watch.
- jquery 7y agoLike Google’s core business gives them the infinite cash to burn to prevent an alternative to YouTube ever showing up, AWS might be that but for Amazon.
- tachyonbeam 7y agoOut of curiosity, has Google bought/killed potential YouTube alternatives in the past?
- jquery 7y agoIs that the metric we should use? Who would even bother trying to start a YouTube alternative? Does Google break out YouTube’s financials in their quarterly? They don’t. How do you compete with a bottomless wallet?
- tachyonbeam 7y agoGoogle has been clamping down on content they don't like and ramping up the ads like crazy. Their recommendation algorithm is also terrible. There is definitely room for competition.
- matchagaucho 7y agoThis is a triple whammy for UPS, who is experiencing pressure from: * Self Driving Vehicles * Amazon Freight * Neo-Luddite Teamsters union resisting new tech