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So this is a rather niche question so I hope it is still relevant to this group, but I was thinking. The big package transport companies(in the US this is UPS and FedEx) make most of their air cargo money on overnight packages, where the business model is pretty straightforward. Have packages fly between a small number of hubs each night so you can relatively economically cover large areas with overnight service, because each plane is as full as it can be. The better question is how the same air cargo operation can transport the same packages in two days while being so much cheaper that they can charge 1/3 the cost of overnight. I can come up with a few ways, such as driving the package to a further away airport so you can put it on only 1 flight, or trying to drive it to a big hub before flying it, but all of these business models seem questionable at best because they seem to apply to niche cases only. Does anyone with more knowledge of the subject know the answer?

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[-] casualhippo@sh.itjust.works 2 points 1 year ago* (last edited 1 year ago)

I used to work at Amazon, though nowhere near fulfillment so I'm not an expert but can give you a general perspective from within the company. Carriers also charge the seller for shipping services, so what you pay for as the buyer may be different. Costs are also offset by volume of packages. With 2 days the logistics become less tight than with 1 day. Ground shipping becomes more of a possibility, and is much less expensive comparatively.

This next one may be Amazon specific, but they would preemptively distribute some products shipped from sellers in closer warehouses. If they have to hold the inventory anyways, holding it closer to a metropolitan area makes it easier to use cheaper ground shipping methods. With that in mind, I know inventory holding costs were more of a focus for cost optimization internally.

this post was submitted on 09 Aug 2023
11 points (92.3% liked)

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