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Not mentioned in the article, but this is interesting because Jeff Bezos invested in Convoy, a Seattle startup working to optimize freight brokerage, back in th

Not 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 ago
It'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 ago
  I 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.
    - kyllo 7y ago
      Yes, but the niche providers flourish when the market is good, but they're the first to get killed off when it's bad. The post-2008 economic collapse saw mass consolidation in the industry as smaller players either went bankrupt or got bought up by competitors. There's also a big difference between asset-owning and non-asset-owning carriers. You can start a logistics company with very little capital--just licensing, bonding, and insurance. In that case, you're basically a travel agent for freight. Some of these agents have grown into very large companies, however, because they help big customers allocate freight across many asset-owning carriers and mitigate their risks, and they handle dealing with international customs and compliance regimes. They're like an outsourced supply chain operations department. In air and ocean, the niche asset-owning carriers generally have some statutory protection. A good example is Jones Act carriers--there's a law called the Jones Act that requires that only American flagged carriers can transport freight between any two American ocean ports. That means there are only a couple of ocean shipping companies that are allowed to go to places like Hawaii, Alaska, Guam and Puerto Rico.
      - sokoloff 7y ago
        They are allowed to go to Puerto Rico (or AK/HI/Guam), but they couldn’t then continue to Miami or Norfolk (or Long Beach) or another US port from there, which makes it uneconomical for them to stop in PR/AK/HI due to the Jones Act.
      - Itaxpica 7y ago
        Interestingly, similar laws come in to play with cruise ships - non-US-flagged passenger ships that depart from a US port aren't allowed to return to a US port without first stopping at a foreign port. Almost all American cruise ships are flagged in countries outside of the US. The practical effect of this is that the many cruises that travel between the west coast and Alaska all have to stop over in Canada before they can return to the west coast, which is a major driver of tourism to Victoria, BC - since that happens to be the largest port city between Alaska and the mainland US.
        0xffff2 7y ago
  - sonnyblarney 7y ago
    Can concur. I urge any technical or product manager to dig into this mess of an industry, it defies everything. The way the markets are set up, the inherent localization, lack of standards. In 2019 tons of 1-3 day short hauls are negotiated over the phone, trucker to shipper, and neither of them may have exact understanding of market rates, especially given variables like the ability for the trucker to return with a partial load. And of course the unbelievable lack of tech. It is truly mystifying. That said, it may very well be that Amazon can conquer it, possibly by imposing regular standards for all sorts of things and efficient clearing market, a common tech platform etc. etc. etc.. But I'm far more confident that Amazon will conquer 1 day delivery than actually fix trucking. All of this may be moot by the time autonomous truckers arrive, and I suggest they might hit before cabs as it's possible 'just driving 2000km on a highway no-stop' might be easier than navigating Manhattan. Autonomous trucking may come with a whole new set of systems and procedures which will probably be more advanced. When I did some research with a friend into this industry, we visited some brokers and dealers I swear I was in a Vince Vaughan comedy.
  - tcarn 7y ago
    I work in the enterprise payments space that functions on ftp transfers of xml, edi and text files and it's not necessarily a bad thing, just as long as it works. Much easier to troubleshoot why you got bad data if you have a ftp to look at with a daily xml file that gets posted.
    - microcolonel 7y ago
      Yeah, I've dealt with SFTP + CSV workflows and it's not so bad. I ended up writing a virtual SFTP server which was not backed by a filesystem, and which would prevent malformed data from being written, and make closed/authoritative files immutable. It's obviously not ideal, compared to a well-thought-out purpose-built API and a complete set of tools, but that takes work, and isn't always better faster than the refined hack.
      - cm2187 7y ago
        Wouldn't it be simpler to upload a file with a tmp name and then at the end rename the file if there was no error? Renaming is pretty much an atomic operation.
        mjevans 7y ago
        It would be, but they might not have the latitude to dictate the connection AND it might be multiple-file batches.
    - fragmede 7y ago
      Except that failure modes of ftp (technically not ftp-the-protocol itself, but what the server chooses to do with the file) is not well defined. What happens if the connection dies half way through? Is the partial file processed? None of it? Does the file get moved after the upload is done or after it has been fully processed? Does every single last company in this space's ftp site behave the same in the face of errors? Also is this literally ftp and not anything more recent that includes encryption, but if it includes encryption, what ciphers are supported? Nevermind the files may be in ebdic or something else wonderfully obscure... (I also work in payments. Bank's SFTP sites have under-defined failure modes.)
  - heavenlyblue 7y ago
    >> The most "modern" partner API I saw was SOAP. No one I talked to had even heard of REST. How is REST better than SOAP per se?
    - kyllo 7y ago
      The amount of incidental complexity. Reading through their SOAP service spec and coding up a program to interact with it took several times as much effort as coding against a similar REST API would have.
  - alasdair_ 7y ago
    >I 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. Expeditors International perchance?
- nevir 7y ago
  It's definitely a far more complicated space than you expect at first glance :)
- travisoneill1 7y ago
  I'm in that space right now and yeah, the state of the technology is horrible, but I think there are some real barriers to disruption. At first glance a comparison to Uber disrupting the taxi market seems like a good one. But I would estimate that 75% of the work is responding to something going wrong, so it is going to be very different situation since you are not going to get the real cost savings until there is a system that can start handling the edge cases. Also, the margins are low. Average around 15%. Uber is currently taking 25% and still hemorrhaging money. So it is a harder problem to automate and it needs to be done at a lower margin. I'm sure it will happen someday, but I think it's 5-10 years out or more.
  - ryanmarsh 7y ago
    Yes the software for even intermodal is pretty simple. The complexity comes from the human idiosyncrasies, including those of the customers. The transportation departments of some of the larger shippers can be very demanding, and a total shit show at the smaller ones. Amazon has the power to make them adapt.
  - CriticalCathed 7y ago
    Since you appear to know some about UBER: What is UBER spending money on? They don't own the cars, they skim off of drivers. I presume the only costs they should have are infrastructure maintenance, software development, and insurance (if they do it in house?) On the surface it seems like they have a license to print money.
    - NotSammyHagar 7y ago
      They are subsidizing the fares, for one thing. Every ride costs them a few dollars of loss.
      - csomar 7y ago
        What do you mean by their margin is 25% if they are subsidizing the fares?
- aiisjustanif 7y ago
  Yeah Convoy and Flexport seemed to be the only ones pretty good at it in the startup space.
- notatoad 7y ago
  >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 ;) Sounds like a perfect opportunity for somebody like Amazon to shake things up. Where a smaller entrant might have trouble breaking that mentality, Amazon can do things however they want without worrying about having to attract customers who want to do things the old way.
- SOLAR_FIELDS 7y ago
  I worked for a freight brokerage in 2012 and the only thing I have to say is that there is plenty of money to go around. The company I worked for was a small player and they were doing 30 million a year as a simple middleman
Hydraulix989 7y ago
I do wonder what those terms look like (Right of First Refusal?).
celim307 7y ago
Our company works closely with amazon and every interaction i have with their “enterprise support” team make me wonder how much of their curiosity is there to help build our product better and how much is brain rape
deleted 7y ago
[deleted]
thkim 7y ago
It may be a big revenue business but margins are extremely thin. That's one of the reasons why there hasn't been much innovation. Amazon could be a different story, but the virtue of brokering a standard product is same as retailing a barcoded product. It's the same marketplace story. If Amazon is interested, it's not for the money but for an opportunity to own an important platform in the logistics industry.

duxup 7y ago

It'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 ago
I 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.
  - kyllo 7y ago
    Yes, but the niche providers flourish when the market is good, but they're the first to get killed off when it's bad. The post-2008 economic collapse saw mass consolidation in the industry as smaller players either went bankrupt or got bought up by competitors. There's also a big difference between asset-owning and non-asset-owning carriers. You can start a logistics company with very little capital--just licensing, bonding, and insurance. In that case, you're basically a travel agent for freight. Some of these agents have grown into very large companies, however, because they help big customers allocate freight across many asset-owning carriers and mitigate their risks, and they handle dealing with international customs and compliance regimes. They're like an outsourced supply chain operations department. In air and ocean, the niche asset-owning carriers generally have some statutory protection. A good example is Jones Act carriers--there's a law called the Jones Act that requires that only American flagged carriers can transport freight between any two American ocean ports. That means there are only a couple of ocean shipping companies that are allowed to go to places like Hawaii, Alaska, Guam and Puerto Rico.
    - sokoloff 7y ago
      They are allowed to go to Puerto Rico (or AK/HI/Guam), but they couldn’t then continue to Miami or Norfolk (or Long Beach) or another US port from there, which makes it uneconomical for them to stop in PR/AK/HI due to the Jones Act.
    - Itaxpica 7y ago
      Interestingly, similar laws come in to play with cruise ships - non-US-flagged passenger ships that depart from a US port aren't allowed to return to a US port without first stopping at a foreign port. Almost all American cruise ships are flagged in countries outside of the US. The practical effect of this is that the many cruises that travel between the west coast and Alaska all have to stop over in Canada before they can return to the west coast, which is a major driver of tourism to Victoria, BC - since that happens to be the largest port city between Alaska and the mainland US.
      - 0xffff2 7y ago
- sonnyblarney 7y ago
  Can concur. I urge any technical or product manager to dig into this mess of an industry, it defies everything. The way the markets are set up, the inherent localization, lack of standards. In 2019 tons of 1-3 day short hauls are negotiated over the phone, trucker to shipper, and neither of them may have exact understanding of market rates, especially given variables like the ability for the trucker to return with a partial load. And of course the unbelievable lack of tech. It is truly mystifying. That said, it may very well be that Amazon can conquer it, possibly by imposing regular standards for all sorts of things and efficient clearing market, a common tech platform etc. etc. etc.. But I'm far more confident that Amazon will conquer 1 day delivery than actually fix trucking. All of this may be moot by the time autonomous truckers arrive, and I suggest they might hit before cabs as it's possible 'just driving 2000km on a highway no-stop' might be easier than navigating Manhattan. Autonomous trucking may come with a whole new set of systems and procedures which will probably be more advanced. When I did some research with a friend into this industry, we visited some brokers and dealers I swear I was in a Vince Vaughan comedy.
- tcarn 7y ago
  I work in the enterprise payments space that functions on ftp transfers of xml, edi and text files and it's not necessarily a bad thing, just as long as it works. Much easier to troubleshoot why you got bad data if you have a ftp to look at with a daily xml file that gets posted.
  - microcolonel 7y ago
    Yeah, I've dealt with SFTP + CSV workflows and it's not so bad. I ended up writing a virtual SFTP server which was not backed by a filesystem, and which would prevent malformed data from being written, and make closed/authoritative files immutable. It's obviously not ideal, compared to a well-thought-out purpose-built API and a complete set of tools, but that takes work, and isn't always better faster than the refined hack.
    - cm2187 7y ago
      Wouldn't it be simpler to upload a file with a tmp name and then at the end rename the file if there was no error? Renaming is pretty much an atomic operation.
      - mjevans 7y ago
        It would be, but they might not have the latitude to dictate the connection AND it might be multiple-file batches.
  - fragmede 7y ago
    Except that failure modes of ftp (technically not ftp-the-protocol itself, but what the server chooses to do with the file) is not well defined. What happens if the connection dies half way through? Is the partial file processed? None of it? Does the file get moved after the upload is done or after it has been fully processed? Does every single last company in this space's ftp site behave the same in the face of errors? Also is this literally ftp and not anything more recent that includes encryption, but if it includes encryption, what ciphers are supported? Nevermind the files may be in ebdic or something else wonderfully obscure... (I also work in payments. Bank's SFTP sites have under-defined failure modes.)
- heavenlyblue 7y ago
  >> The most "modern" partner API I saw was SOAP. No one I talked to had even heard of REST. How is REST better than SOAP per se?
  - kyllo 7y ago
    The amount of incidental complexity. Reading through their SOAP service spec and coding up a program to interact with it took several times as much effort as coding against a similar REST API would have.
- alasdair_ 7y ago
  >I 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. Expeditors International perchance?
nevir 7y ago
It's definitely a far more complicated space than you expect at first glance :)
travisoneill1 7y ago
I'm in that space right now and yeah, the state of the technology is horrible, but I think there are some real barriers to disruption. At first glance a comparison to Uber disrupting the taxi market seems like a good one. But I would estimate that 75% of the work is responding to something going wrong, so it is going to be very different situation since you are not going to get the real cost savings until there is a system that can start handling the edge cases. Also, the margins are low. Average around 15%. Uber is currently taking 25% and still hemorrhaging money. So it is a harder problem to automate and it needs to be done at a lower margin. I'm sure it will happen someday, but I think it's 5-10 years out or more.
- ryanmarsh 7y ago
  Yes the software for even intermodal is pretty simple. The complexity comes from the human idiosyncrasies, including those of the customers. The transportation departments of some of the larger shippers can be very demanding, and a total shit show at the smaller ones. Amazon has the power to make them adapt.
- CriticalCathed 7y ago
  Since you appear to know some about UBER: What is UBER spending money on? They don't own the cars, they skim off of drivers. I presume the only costs they should have are infrastructure maintenance, software development, and insurance (if they do it in house?) On the surface it seems like they have a license to print money.
  - NotSammyHagar 7y ago
    They are subsidizing the fares, for one thing. Every ride costs them a few dollars of loss.
    - csomar 7y ago
      What do you mean by their margin is 25% if they are subsidizing the fares?
aiisjustanif 7y ago
Yeah Convoy and Flexport seemed to be the only ones pretty good at it in the startup space.
notatoad 7y ago
>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 ;) Sounds like a perfect opportunity for somebody like Amazon to shake things up. Where a smaller entrant might have trouble breaking that mentality, Amazon can do things however they want without worrying about having to attract customers who want to do things the old way.
SOLAR_FIELDS 7y ago
I worked for a freight brokerage in 2012 and the only thing I have to say is that there is plenty of money to go around. The company I worked for was a small player and they were doing 30 million a year as a simple middleman

Hydraulix989 7y ago

I do wonder what those terms look like (Right of First Refusal?).

celim307 7y ago

Our company works closely with amazon and every interaction i have with their “enterprise support” team make me wonder how much of their curiosity is there to help build our product better and how much is brain rape

deleted 7y ago

[deleted]

thkim 7y ago

It may be a big revenue business but margins are extremely thin. That's one of the reasons why there hasn't been much innovation. Amazon could be a different story, but the virtue of brokering a standard product is same as retailing a barcoded product. It's the same marketplace story. If Amazon is interested, it's not for the money but for an opportunity to own an important platform in the logistics industry.