
Will Amazon Kill FedEx? - Jerry2
https://www.bloomberg.com/features/2016-amazon-delivery/
======
dfsegoat
FedEx is both an established airline AND _one_ of the most trusted logistics
companies on the planet. So Amazon can beat them when they can do this on
demand:

[https://www.youtube.com/watch?v=J-qPtWc4heA](https://www.youtube.com/watch?v=J-qPtWc4heA)

For brevity: the above purports to show a time lapse of FedEx's fleet of
DC-10s, Airbus A310s etc - packed with fuel, valuables and people - scrambling
for the Memphis, TN hub and hooking in handily around a massive angry
thunderstorm.

It looks like a perfectly organized, well timed dance - with incredibly high
stakes.

edit: clarity.

~~~
erelde
The Fedex courier in my area has been consistently bad for years and doesn't
get fired. Two weeks ago: doesn't come, doesn't leave a notice, two days in a
row, claiming he came, I had a to exchange some salty emails with customer
service to get my package. Each time I had to use Fedex these last 3 years
I've had to do this cycle.

On the other hand I have developped a "good relationship" with the UPS
courier.

~~~
waterphone
I live in quite a remote area, with UPS and FedEx drivers that are driving
hundreds of miles per day on their route, often starting over 100 miles away,
and yet they're both consistently excellent. They virtually never miss
delivery estimates, and often exceed them. I'm honestly quite impressed with
them, especially considering a moderate amount of their route is also on
fairly poor quality dirt roads.

~~~
erelde
I still "trust" FedEx as a company, but the delivery man in charge of my area
is sh*t.

------
CodeWriter23
I'm surprised this journalist, who apparently has some in-depth knowledge
about the shipping industry, seems to be completely unaware of FedEx's
contract with the US Postal Service. FedEx moves ALL mail that goes by air.
That includes Priority Mail and Priority Mail Express. I don't see Amazon
killing a company with a huge customer like that.

------
ISL
Amazon's edge isn't in shipping. It's in fulfillment.

Fulfillment By Amazon (FBA) is a boon for many businesses, as it combines
warehousing, packing/labelling, and shipping into a single interface at an
attractive price. Let's not forget that they also bring customers and handle
the entire billing operation, too.

If Amazon does harm FedEx/UPS, it won't be by starving them of packages
directly, but rather by sidestepping their business, attracting companies to
FBA, so that they never enter the "shipping" business sector.

I don't expect to see Amazon enter the point-to-point shipping business
anytime soon.

------
fma
Why does Amazon need to kill any service. Even with their cloud platform, rack
space, digital ocean and plenty of other providers are thriving and coming up.

~~~
jhall1468
AWS is infrastructure as a service. Digital Ocean sells virtual private
servers. They aren't even remotely the same product. I host a blog on DO for a
few buck a month. My company hosts their entire infrastructure on AWS for 4
different applications.

Apples and oranges.

~~~
ownagefool
You can do the same on DO, it's just slightly more involved, almost certainly
less resiliant and they supply less PaaS options.

In fact as an IaaS if you throw kubernetes at it, run ceph and put a little
effort into getting autoscaling, then you have a knock-off cloud.

Amazons value is that it's cheaper for a small company than hiring the people
who can do this well and you can hire a generalist to glue it all together.

------
graycat
Gee, for a while I was Director of Operations Research at FedEx. My office was
next to that of FedEx founder, COB, CEO F. Smith.

Poor Smith: One night at about midnight, I was in my office getting in a
little violin practice before heading back to my rented room for some sleep
(my wife was still in her Ph.D. program at Johns Hopkins in MD). As I left to
get some sleep, I saw Smith in his office. He had had to listen to my violin
practice of scales, intervals, etc.!

The first good thing I did for Smith was write some software for scheduling
the fleet. The BoD was seriously asking if such scheduling could be done at
all. One evening R. Frock (he has a book on FedEx) and I used my software and
produced a schedule for the full, planned operation. Smith's remark was
"Solves the most important problem". Our two BoD representatives of BoD Member
General Dynamics said "It's a little tight in a few places, but it's flyable".
The BoD was happy, and crucial funding was enabled.

But by the night of the violin practice, I was working on better scheduling.
Right, I was encountering the question of P = NP. So, I had chatted with G.
Nemhauser about integer linear programming set covering.

Later I went for my Ph.D. in applied math and, in the studies, kept in mind
the problems I'd seen at FedEx. So, e.g., model various cases of arrivals as a
Poisson process -- from an axiomatic derivation of that process or just from
the renewal theorem. Use some stochastic optimal control for some of the
operational issues. Have some much more accurate cost estimating of the
airplane operations and include those in the integer linear programming, etc.

Gee, for the last 10 years, I didn't know that Amazon was doing so much in
such logistics. No way can they be avoiding some optimization problems for
their logistics without wasting significant bucks. For a lot they were doing,
I'd been there, done that, went to grad school for it, written software for
it, etc. Could have helped them!

Scattering warehouses, sort centers, fulfillment centers, ships, airplanes,
trucks, bicycles, drones, etc. all around and changing all that ASAP over time
has to encounter some severe challenges in applied math and corresponding
software, especially having those two keep up with the operational changes.

I know; I know; if assume that the operations will be big enough, then there
are some approaches to those discrete optimization problems that use just some
continuous techniques that are much easier. In that case, maybe for a while,
during the rapid growth period, go ahead and don't try very hard on the
optimization, scatter around, and anticipate that, when reach the target size,
nearly all those warehouses, sort centers, etc. will be close enough to
something optimal.

Then I wonder: What is Wal-Mart doing in response? They have a lot of
warehouses, trucks, and stores and a Web site for on-line ordering? Right,
they bought Jet.com. But anything else?

Fundamentally I begin to wonder about Amazon and airplanes: For FedEx, sure
airplanes are crucial. But for Amazon? I wonder.

Why? What's the difference?

For FedEx, hour by hour, a huge fraction of what FedEx receives and ships is
different, literally never done before, that is, could not have been stocked
in a warehouse. E.g., FedEx may receive a legal brief, some medical samples, a
custom 3D printout, etc. That was the first and last time those particular
items were ever shipped. The variety of what FedEx ships is beyond belief --
stand in the sort center in Memphis and watch the stuff go by and have to give
up on any simple overview.

For Amazon, all they ship is what's for sale on their Web site. So far, next
to none of that stuff is perishable. And, for nearly all of it, the time,
hours, days, weeks, from when it is created by the original manufacturer to
when it is needed in an Amazon warehouse doesn't much matter.

So, in comparison with FedEx, the variety is much less. So Amazon has an
easier time just stocking nearly all their reasonably popular items at each of
their local warehouses and delivering to those warehouses by the cheapest way
possible, typically 18 wheel trucks.

Okay, maybe Amazon is selling some item, expects to sell only 15 of them in
the next month, but has 60 local warehouses. So, can't stock the item at each
warehouse. So, for _slow moving items_ , have to stock in some central
warehouse and ship from there via airplane. So, have 60 planes, and each day
ship from the central warehouse for slow moving items to each of the 60 local
warehouses all the slow moving items that warehouse needs.

Right, maybe have fewer than 60 planes, often have one plane serve more than
one warehouse, on a given day maybe have some planes make more than one trip
from the central warehouse, and each day, given the loads to be moved from the
central warehouse to each of the 60 local ones, decide which planes go to
which warehouses in what order -- back to integer linear programming set
covering again. Okay.

How does that set covering work? Okay, just enumerate all reasonably efficient
trips a single airplane might do. If have several airplane types, have to do
that separately for each type. Assume that if an airplane stops at a
warehouse, then it brings everything that warehouse needs (one warehouse that
needs more than one airplane can carry would be a special case, easier in some
ways). Then take those candidate airplane trips and pick the ones that move
all the loads, within the performance limitations of the airplanes, in the
times required and that give the least total operating cost. That last part is
the _optimization_ and 0-1 integer linear programming.

But, still, the variety for Amazon is much less than that for FedEx.

Actually, FedEx has long had a warehouse in Memphis. So, shipping customers
would use trucks to put their stock in that warehouse, and FedEx would pick
from that stock and ship via FedEx planes the orders that had arrived and
accumulated from end-user customers. So, in that case, a truck was used for
the trip to Memphis and an airplane, for the trip from Memphis.

Airplanes are strange beasts: Generally, if can keep an airplane flying nearly
full lots of hours each day, then can have a license to print money. But if
have an airplane sit on the ground or, worse, flying with not much load, then
have a path to going broke. How much usage FedEx can get from an airplane is
well understood, at least by Smith. But I question if Amazon can get enough
usage out of airplanes.

Of course, maybe by now, beyond what was in the OP, Amazon has plenty of data
to know that they can put a big warehouse there in southern Ohio for their
_slow moving items_ and ship those items to local warehouses and distribution
centers as orders arrive from the Amazon Web site. Maybe. But, again, for
their fast moving items, just stock the local warehouses and distribution
centers by 18 wheel trucks -- no expensive airplanes involved.

Gee, in my Ph.D. program, I took courses in optimization, stochastic
processes, facility location, multi-objective optimization, etc. from world-
class people. I never got a call from an Amazon recruiter! I wasn't that
difficult to find: The guy who taught the course in multi-objective
optimization and was one of my Ph.D. dissertation advisers was, during a lot
of those years of Amazon's growth, President at CMU. The guy who was Chair of
the committee that approved my dissertation research was a world-class guy in
transportation.

Lesson 1: Go get a Ph.D. for some ways to get approximately optimal solutions
to some really complicated NP-complete problems, maybe also with some random
elements, and even if a big business has a lot of need for such applied math
maybe still won't get an opportunity to apply what studied.

Lesson 2: If want to make money with some applied math and, then, some
corresponding computing, then pick own practical problem to solve, do the math
to solve the problem (yes, pick the problem so that can use some math to get
an advantage in getting a good solution to the problem -- that is, pick the
problem and the math together, as a good pair), write the software, and do own
startup where are already the CEO. That is, for own future applying math and
computing, don't depend on some other CEO. And that's what I'm doing -- my own
startup.

~~~
uptown
Can you elaborate?

~~~
graycat
What I wrote is about 8859 bytes and, thus, already "elaborate". What do you
want _elaborated_?

~~~
uptown
I'd be curious to read more about your startup you mentioned at the end. What
problem are you solving?

~~~
graycat
Assumption: There is a lot of _content_ on the Internet, and generally people
have _interests_ and want appropriate _content_. The most effective current
means are based on keywords/phrases; these means can work really well in some
cases but are at best poor for about 2/3rds of content on the Internet,
queries people want to do, and content they want to find.

For more: Generally, _finding stuff_ has long been part of the field of
_information retrieval_. That field long ago divided the whole problem into
pieces. One big division was between (A) content a person knew existed and had
some information about, e.g., keywords/phrases and (B) content that person did
not know existed. The old library card catalog subject index is close to case
(A) and so are the Internet search engines based on keywords/phrases. For case
(B), that is closer to what might be called _discovery, recommendation,
curation, notification, subscription_.

My startup is for being the best for case (B). For case (A), that will remain.
What I am doing for case (B) is very different from what has worked well for
case (A). Very different: E.g., there is no use of keywords/phrases.

So, my work brings together in a coordinated way (i) the unmet part of the
user need to find stuff on the Internet, (ii) a new and very different UI/UX,
(iii) some important new data, and (iv), for processing the data to get the
results for the users, some new applied math (complete with theorems and
proofs, based on some advanced pure math prerequisites) that is the crucial
core of the work, that is, the means of getting especially good results for
the users.

Some of the efforts seem to have taken some simple techniques and simple, old
data sources for _recommendation engines_ and bent the real problem to what
these techniques could do; my view is that this is not very promising.

E.g., I believe that my work will do much better for letting people look for,
say, movies than what Netflix got from their Netflix Challenge contests. Why?
I believe that Netflix formulated the problem poorly, in too narrow a way.
What I have done does not fit what Netflix assumed in their problem
formulation.

Yes, my work is quite new but, still, supposed to be really easy and intuitive
for users. E.g., I hope that a child in a third world country who knows no
English will be able to get good with my work in a few minutes alone or sooner
watching one example of usage. Right, I might put such an example on YouTube
and have my Web site Help page link to that.

There is part of the math that is surprising: One would guess that no such
good thing could be true, but it is. Of course, users will not be aware of
anything mathematical.

To be a little more clear, my math is original and has nothing to do with
anything I've seen in artificial intelligence (AI) or machine learning (ML).
To be a little more clear, the AI and ML I have seen do contain some applied
math but which is apparently quite narrow. In contrast, on the shelves of the
QA sections of the research libraries, there is enormously greater variety,
and my work is not on those shelves. So, instead of AI or ML, I just derived
some applied (applicable) math.

Then I wrote the corresponding software. Currently there is about 100,000
lines of typing, for both the programming language statements and the
documentation in comments in the code. There is much more documentation
outside the code. And there is the math, typed into D. Knuth's TeX.

All the code appears to run as intended. The code appears to be essentially
all that is needed for at least early production. Currently the code is in
_alpha test_. I'm a solo founder, 100% owner.

The next steps are to complete the alpha test to let me be rock solidly sure
the code is correct and ready for production, load some more initial data, do
a beta test and get back comments, maybe tweak some parts of the code, say,
for the UI/UX, maybe load some more initial data, and, then, just go live in a
routine way, get publicity, users, ads, and revenue. Simple.

Right, my math has nothing to do with the social graph, the interest graph,
image processing, semantic processing, the semantic graph, speech recognition,
natural language processing, singular value decomposition, AI, ML, principal
components analysis, support vector machines, collaborative filtering, cluster
analysis, intuitive heuristics, neural nets, classification and regression
trees (L. Breiman's CART), random forests, gradient descent, etc. Instead, I
just derived some new math; I'm supposed to be able to do that; I've done it
before on other practical problems of wide variety. It's just some new math --
it has no name like ML. Some aspects of the math, some provable good
properties, give me confidence the results for the users will be good.

At first, I will concentrate on users and advertisers just in the US. Then
later I may "go international".

If people like my work, then I should have a nice business. Why? From my
understanding and assumptions, I have by far the best solution for the problem
I am solving; due if only to the math there is essentially no chance that
anyone else will do anything at all comparable or competitive; the problem I
am solving is so far at best poorly solved; the problem is important to
essentially every user of the Internet in the world.

But, right, mostly people don't see the importance of the problem or a
solution and are not screaming out for a solution. This is to be expected.

Supposedly Henry Ford said "If I had asked people what they wanted, they would
have said a faster horse.". That is, even if people have a big problem,
usually they don't envision a solution until they can see the possibility. In
Ford's case, that solution involved some cast iron and some gasoline, both
quite foreign to people with horses and the problem.

People don't envision my solution now because they don't see the means or the
possibility. They will easily envision, and I hope embrace, my solution once
they see it. That's what happened when horse owners saw Ford's Model T. It's
also what happened with FedEx. And now, Amazon. And for that matter,
essentially all of the commercial Internet, e-mail, PCs, laptops, smartphones,
etc. For something new, for people to like it, first they have to see it.

Venture capital? Apparently, and I have a lot of evidence, there is nothing in
common between my startup and venture capital. That is, across the table, we
won't be able to shake hands, ever.

The venture capital people would look at the work I have done to date and say
that it and a dime won't cover a 10 cent cup of coffee. They also won't like
that I am a solo founder -- formulate your own reasons why. They will hate
that there is a role for some original applied math with some advanced
prerequisites; they seem to prefer _technology_ that is just routine software.
In the _patterns_ they want to use, they have not seen a successful startup
like mine. Right, they need to find startups that are exceptional, and to do
that they want to use patterns based on successful startups of the past.

They might get interested once my startup has _traction_ (users and/or
revenue) significant and growing rapidly, but by then, with me as a solo
founder with meager _burn rate_ , I will be nicely profitable, already have a
_lifestyle business_ , and have plenty of cash for more servers, etc. So, we
can't shake hands across the table because now they believe I am too early
and, by the time they are ready to shake hands, I will believe that they are
too late.

Is that the _elaboration_ you had in mind?

~~~
uptown
Thanks for sharing more details. Sounds interesting. I'd love to get a look
and provide feedback when you're ready to open it up to more users. My contact
info is in my profile.

~~~
graycat
You are now on the beta test list! Thanks for your interest!

~~~
asimuvPR
Id like to be on the beta list too if possible. :)

pr @ asimuv . com

~~~
graycat
Same for all who so post here. I have the URLs and when ready for beta testers
will return and contact everyone here.

Many thanks to all for your interest.

~~~
jmeister
Please add me to the beta test list too! This sounds awesome.

------
okket

      "I fully expect Amazon to build out a logistics supply
       chain that others can use. Over the next five years? I
       doubt it. Over 10 or 15 years? Oh yeah."
    

From this speculation arguing that Amazon will "kill FedEx" is just nuts,
IMHO. But printing nutty things is part of journalism, so enjoy the ride.

------
draw_down
I expect it. A family member has worked for FedEx ground since it was RPS, and
has been telling me for years how Amazon kept hiring away their execs. And the
company is your typical sclerotic old-style megacorporation mired in
bureaucracy so it moves very slowly on everything.

------
wccrawford
Years ago, Amazon used DHL. I complained once about the service with them, and
they said they had to continue using them in my area until they'd had enough
complaints. (Which I felt was kind of reasonable, I guess.)

Less than a year later, they were no longer using them in my area, and then a
while later I hear DHL basically doesn't exist in the USA.

So yeah, Amazon can apparently kill a mail carrier. Whether they _will_ or not
will depend on how bad that carrier does its business.

~~~
CPLX
That is an extraordinarily loose usage of the principle of cause and effect.

~~~
wccrawford
Obviously Amazon alone didn't kill them. But being dropped by Amazon as a
carrier certainly didn't do them any favors.

------
caseyf7
Just yesterday I had someone from the other coast leave a laptop charger.
Rather messing with the UPS or FEDEX, I just ordered a new one and had it
delivered to their address.

~~~
duaneb
That's like $70 you didn't need to spend. Hell of a convenience fee.

I've only recently hit power cord saturation, though.

~~~
eloisant
Maybe he didn't have a Mac, and the difference between the charger and
shipping wasn't that big.

~~~
gambiting
Where's the notion that non-mac chargers are any cheaper from? Have you seen
prices of genuine HP, Dell or Lenovo chargers? They are just as, if not more
expensive than Apple chargers. Sure, you can buy a replacement charger from
amazon for $20 but then you can't compare it to a genuine apple charger.

~~~
wongarsu
A 90W brand-new, genuine Dell charger goes for about $25 on Amazon [1]. That's
the same price as shipping that charger accross the US with FedEx 2Day
delivery (without pickup).

Generic brands start at $7.

[1]
[https://www.amazon.com/s/keywords=dell+90w+ac+adapter&ie=UTF...](https://www.amazon.com/s/keywords=dell+90w+ac+adapter&ie=UTF8)

------
thegr8gatsby
It has definitely been replacing the need for FedEx with it's super fast
delivery, although some Amazon items still come via FedEx...

~~~
dawnerd
Amazon has almost 100% been using the local Prime Now drivers to deliver boxes
- which is great because they come next day. Down side is drivers are always
new and have no experience delivering mail. It's gotten a little better but I
had to call amazon and request that their drivers not call me to tell me to
meet them at the corner of the block for my package.

I've figured out that if I want something tomorrow, I check the prime now site
and see if it's available there. If so there's a very good chance it'll come
overnight.

What I wonder if how are the drivers compensated for delivering a box vs same
day? Same day you tip them. So does that mean they're getting screwed for
normal deliveries? Knowing amazon, probably.

~~~
ensignavenger
Were they calling because they were having trouble finding your address, or
because they were lazy?

~~~
dawnerd
I don't know how you miss a massive apartment building? It seems their drivers
followed the gps dot exactly (which shows the intersection). Even pizza guys
get it right.

------
optimuspaul
Why wouldn't AMZN just acquire FedEx?

