
The Dual Optimization of Air Freight: How Many iPhones Fit in a 747? - thedogeye
http://learn.flexport.com/how-many-iphones-can-fit-in-a-747/
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NamTaf
The good news is that Apple certainly isn't just shipping iPhones and nothing
else. It wouldn't surprise me (if we hold the assumption that Apple charters
planes themselves for freight) that Apple also mixes their freight (i.e.:
heavy iPhones and lighter 'other stuff') precisely to optimise this problem.
That's Cook's bread and butter, after all.

For other operators of lower volume, of course outsourcing that problem
represents a win-win for both customer and supplier. The customer gets overall
lower costs of freight and the supplier leverages their breadth of sources to
make a cut of the difference they can save. It's a good example of where
outsourcing certain tasks can make sense for some parties but not others.

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zachrose
I wonder what the lighter 'other stuff' would be from Apple. Store window
displays and boxes of software? Do they still sell software in boxes?

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floppydisk
Little things like cables, headphones, and other accessories that don't take
up a lot of weight but could be packaged voluminously to fill the remaining
space.

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bigiain
Traditionally, in the airline industry, the answer was "tulips". Out of China
it looks like it might be roses:
[http://www.nytimes.com/2006/09/25/business/worldbusiness/25f...](http://www.nytimes.com/2006/09/25/business/worldbusiness/25flower.html)

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bigiain
This is, of course, just The Knapsack Problem:
[http://en.wikipedia.org/wiki/Knapsack_problem](http://en.wikipedia.org/wiki/Knapsack_problem)

It's proven to be NP-Hard, but with a well known "good enough" approximation
("the knapsack problem has a fully polynomial time approximation scheme
(FPTAS)")

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millstone
It's not the knapsack problem. The task is similar: maximize (some relation
between) the carried volume and weight. But instead of a finite collection of
different items, you have an essentially infinite set of a few items. Also,
the weight and volume of each individual item is negligible, so you don't have
to worry about the integer nature of the problem, i.e. it's sufficient to give
a fractional answer and round down. (That's what makes the knapsack hard - the
fact that you can't add fractional items.) This seems like a straightforward
linear programming problem, solvable via the simplex method.

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MrBuddyCasino
Yeah linear programming was my first thought, too. How is that "one of the
best kept secrets in the air cargo industry"?

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raverbashing
> How is that "one of the best kept secrets in the air cargo industry"?

I guess it's only part of the problem, solving for one plane.

In practice you would want to solve for varying demand, for multiple
customers, for planes that eventually are delayed, crews that get
sick/delayed, for different planes, for routes that pick/drop different cargo
at different places.

And of course, you want to price all of that in a way that makes you money.

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tempestn
So at the scale of Apple, I wonder if it would make sense to actually _own_
747s and sell the remaining space themselves.

I guess the problem is that they must have a large spike in demand around
launch dates; perhaps not enough the rest of the time to make all the overhead
of operating the fleet worthwhile.

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peteretep

        > So at the scale of Apple
    

I suspect Apple's "scale" is a rounding error of air freight volume, and
unlike - say - retail, there's very little consumer value-add for owning your
own freighting service.

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ubernostrum
The unit used in the air cargo industry is the RTK -- revenue tonne-kilometer.

On PVG-ANC, the route by which iPhones enter the US, a single 77-tonne load of
iPhones (what the article estimated) is around 530,000 RTK. Boeing estimates
that in 2013, worldwide air cargo was 208 _billion_ RTK. In other words, that
plane-load of iPhones is around 25 ten-thousandths of a percent of global air
cargo capacity.

So yes, iPhones are absolutely a drop in the bucket. Just saturating the
existing scheduled cargo capacity into the US for a few days would probably
exceed Apple's manufacturing capabilities.

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thedogeye
Are you sure there are 100 freighters operating on the PVC-ANC route daily?
60% of air cargo is flown in the belly of passenger planes. There are not a
huge number of dedicated freighters out there.

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ubernostrum
A 77-tonne load would represent about 6% of the capacity of the scheduled
_freight-only_ flights that ran PVG-ANC today (Wednesday). Depending on final
aircraft arrangements, it would represent at most 4.8% of tomorrow's
(Thursday's) scheduled _freight-only_ flight capacity.

~~~
thedogeye
Very cool. Where do you get your data?

Apple is flying 1.4 full freighters per day just for the iPhone (well, maybe
it's like 1/3 of 4 freighters). So they are a significant percentage of
transpacific cargo.

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ubernostrum
Plenty of flight-tracking sites let you look up scheduled flights on any route
and see how many flights and what type of aircraft.

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hydrogen18
>Airlines consolidate heavy freight with light freight to get the ideal mix
that lets them charge the companies with heavy goods by weight and the
companies with light freight by volume. The result is called “free margin,”
and is one of the best kept secrets in the air cargo industry.

This assumes that the cost of fuel doesn't increase with the mass on the
aircraft. It does. But the cost of fuel doesn't increase with the volume of
the payload because the fuselage is statically sized. In other words, they
aren't losing money if they are shipping around a bunch of lead bricks that
only take up 15% of the available cargo space.

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repiret
The fuel use increases with weight, but not as much as you might think, for
two reasons:

1\. Even at max weight, the cargo is only half the mass of a 747; put another
way, you only decrease the mass by 50% when going from full cargo to empty.

2\. Reducung weight reduces induced drag (the drag that you get in exchange
for lift) but leaves parasitic drag unchanged. I don't know for sure, but I'd
be willing to bet the parasitic drag dominates.

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hydrogen18
I don't know the specifics of the 747 mass characteristics, but you are
correct in saying that a good chunk of the mass is the plane itself. Not the
cargo. But of the plane's mass, a huge amount of that is just fuel. Whenever
they take on fuel, they measure it in thousands of pounds (in the US at
least). So by reducing the cargo weight, you reduce the fuel weight as well
because you can takeoff with less fuel.

In other words, removing a pound of cargo can reduce the total weight of the
plane by several pounds. For extremely short trips this would be irrelevant,
because fuel costs are dominated by takeoff, landing, and waiting for
clearance for those two things.

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repiret
> In other words, removing a pound of cargo can reduce the total weight of the
> plane by several pounds

Thats only true if a significant amount of fuel is used to overcome induced
drag when in cruise. If most of the fuel is used to overcome parasitic drag,
then reducing your weight doesn't significantly affect how much fuel you need
to carry.

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TorKlingberg
Am I the only one who finds this a bit grating?

> If it was any company besides Apple I’d probably say 10% inefficiency, but
> they are pretty much the best at everything they do.

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zaroth
I think the impressive bit is not just having the scale to be able to afford
to be worrying about that level of detail. There are a lot of companies that
would benefit from the 5% of reduced waste in packing their devices into
crates, but it does seem like Apple is uniquely adept at achieving fringe
optimizations which turn around incredible ROI.

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jheriko
i am very skeptical that they use air freight. having worked in large scale
logistics, its like the very last choice you use when you are going to be
guaranteed a lot of money because it is expensive. there are not that many
planes, they are tiny and relatively expensive to run. i can imagine that
apple plan ahead, and make sure that the long boat journeys are factored into
their plans.

is there any evidence of what they actually do? i'd put my money on boats.
iphones don't magically devalue in transit afaik and the lead time is short
enough to be practical... it just makes no sense, from what i understand, to
use planes unless its an emergency.

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thedogeye
The cost of bulk shipping an iPhone by air from China to the U.S. should be
around $0.25-$1.00 and by sea would be about 1/5th that price.

Assume they can earn 5% on their cash hoard with smart, conservative
investments.

If they have a $600 phone (they sell them all for that price) at sea for 1
month they would have earned about $2.50.

They sell the phones as fast as they can make them, and if they don't have a
phone in stock and someone desperately needs a phone, they may buy an android,
so that's revenue they'll never see again.

When we're talking about $0.40 savings to have to delay $600+ in guaranteed
revenue by a month. That's all I need to see to know do air every time.

Of course we also know that Apple manages their entire supply chain with just
5 days of inventory in stock at any give time. Much harder to do that with
ocean freight.

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jheriko
this only works if there is a delay. part of organising this sort of thing is
doing it upfront to avoid the delays, the deliveries can all still arrive at
the same time. the trade off is that you can not react to supply/demand change
so quickly... even then surely you would use planes to fill that gap only, not
for everything...

one thing that probably skews me is time... air freight has probably gotten
cheaper continuously over the last 15 years..

given the problems when there is a lack of supply of phones, i'm still dubious
that air freight is the standard option... such shortages last longer than a
week.

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callesgg
How is that a secret...

You would have to be a complete moron to not realize that solution when faced
with the issue.

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thedogeye
Ask any friend what the secret to making money in air freight is and see if
that's true. Even people who ship cargo by air every day have no idea the game
being played on the other side of the transaction.

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callesgg
Well that answer to that question could be anything.

I would say the secret is to have people pay you for shipping cargo....

If i ask some fright company to ship some cargo from point A to point B i
assume the freight company wont waste money doing it.

They don't know exactly how stuff is done cause it does not mater to them.

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thedogeye
Do they know they are being charged by weight if their product is dense, and
by volume if their product is not-dense?

