long distance logistics profitable?

[Finklejag]

I work for an airline and every morning we load a few thousand pounds of mail on our morning Houston flight. I say over 3/4 of it is Amazon and Target items. The kicker is 1/2 of those boxes are going to San Juan, Puerto Rico. You would think a warehouse closer to the Caribbean would be utilized compared to one 3,400 miles away. Today I saw this, a box of paper towels bought from Amazon. The final destination is St. Thomas, US Virgin Islands. Even if this customer has Prime, how much is Amazon eating with the shipping cost?

 

[rstcso]

They make it up in volume?

 

[IndyIan]

I guess air freight is better at hauling boxes of air, than a 400lb dumbbell set!
I'm curious what is the heaviest cheap chunks of metal or jugs of fluid you have loaded from amazon?

 

[JeffKeryk]

Actually, it reduces costs across the board.
Amazon warehousing uses algorithms that bundle like sized items rather than all items in a warehouse. This allows for efficient storage, packaging and far less inventory overall. Bins, tools, aisles, etc. are optimized.

Inventory is evil. Effective inventory can use "best fit worst fit", ABC value and other algorithms. Amazon expands this to, put it in any open storage bin and have the bins move to the pickers. Amazing to see the tall cylindrical robots running and spinning around the warehouse levels.

 

[AZjeff]

If you knew what Amazon pays for shipping compared to what we pay you'd cry. Where I worked we made medical products for large companies and shipped to their dock on their UPS accounts. They were paying 25% what we'd pay to ship the same box. Amazon probably pays less than 10%. (WAG)

 

[mk378]

The cargo hold of a scheduled airline used to be one of the least expensive ways to ship something. Of course you still have to get it to and from the airports. But the plane is going there anyway and the airline's incremental cost is only a little more fuel and the labor to load / unload.

 

[PandaBear]

If you knew what Amazon pays for shipping compared to what we pay you'd cry. Where I worked we made medical products for large companies and shipped to their dock on their UPS accounts. They were paying 25% what we'd pay to ship the same box. Amazon probably pays less than 10%. (WAG)

I used to work at a company that spin off from Mitsubishi, and they typically paid 1/3 of what retail UPS / FedEx in shipping due to volume discount. I would imagine Amazon probably pay even less as you said.

As to why not just ship to San Juan or US Virgin Island instead of on a plane. I guess due to economy of scale they can ship things easier on air (idle cargo space from passenger flights) than a large enough volume to ship on boats. They are not an entire continent so they may not have a big enough dock build for cheap stuff in the economy of scale to compete with air.

 

[Finklejag]

I guess air freight is better at hauling boxes of air, than a 400lb dumbbell set!
I'm curious what is the heaviest cheap chunks of metal or jugs of fluid you have loaded from amazon?

I handled many 24 packs of bottle water. You know it’s easier to order bottle water from Amazon, than leaving your house and buying it down the street at the market.

 

[IndyIan]

I handled many 24 packs of bottle water. You know it’s easier to order bottle water from Amazon, than leaving your house and buying it down the street at the market.

I guess its a cheap way to get just enough money spent for "free shipping" My favorite items to add is either the silly apple charger cables, or bags of my favorite cereal, and they kind of act like packing material anyways in the standard boxes.
Water at amazon.ca is about 4-8 times the price in the grocery store, but I see on amazon.com its $6/case of 24...

 

[Hall]

and shipped to their dock on their UPS accounts. They were paying 25% what we'd pay

How do you know ? UPS doesn't tell you or show you their rates even when using their account #.