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Amazon moves to secure the base of the infrastructural stack

2 min read

He who owns the pipe controls the flow:

Ocean freight is cheap right now. As of January 2016, Flexport’s ocean freight customers were paying less than $1300 to ship a 40-foot container from Shenzhen to Los Angeles. More than 10,000 parcels can fit in a single container, so the price for the ocean freight leg could be as low as $0.14 per parcel. Here’s another way to think about that figure: Right now it costs under $10 to ship a flat screen television across the Pacific.

This can only be good news, surely? After all, ocean freight is super-low on carbon emissions, and cheaper shipping means cheaper stuff for everyone!

Buuuuuut...

With ocean freight itself so low, a considerable portion of logistics costs come through labor costs—particularly compliance and coordination of cargo handoffs between different players in the chain. It’s here that automation, something no traditional freight forwarding company can do even one percent as well as Amazon can, becomes the key competitive advantage over legacy freight forwarders. By using software to eliminate additional transaction costs associated with government filings, status updates, pricing, booking and more, Amazon will be able to cut their costs significantly. At the same time, fulfilling products directly from China to consumers in the U.S. will cut handling costs at U.S. warehouses.

Which is a really elaborate and euphemistic way of saying "this'll let them wander through the payroll like combine harvester". Cheaper stuff, then, but even fewer folk with an income that'll let them buy it.

If we’ve learned anything from Amazon’s strategic playbook over the last two decades, we can expect that it will price freight as close to marginal costs as it can get.

And the only way to achieve that goal is to establish an effective organisational monopoly over the core routes of the network across which those transactions flow.

Credit where it's due: the heroes of the Valley make the rail barons look like provincial waterhead gangsters. But then again, if the rail barons had understood network theory... well, we'd probably be living in something like the world of The Difference Engine.

 

A brief note on how I use this Twitter account

1 min read

For the sake of persistent reference: my Twitter account, @PaulGrahamRaven, should be henceforth and in perpetuity be considered to be effectively a broadcast-only channel. I no longer post to it with the aim of starting or continuing a conversation, though I reserve the right to do so on occasion as the mood takes me. I receive notifications of replies and retweets, but you should not assume that they will secure my attention, if securing my attention is your aim. If it is, please use email: paul@paulgrahamraven.com

Note also that all updates to @PaulGrahamRaven are pushed from and back-linked to this website, which also gathers and records replies from Twitter itself -- which is to say the site will retain a record of any and all replies to said updates, regardless of whether they are subsequently deleted by their author. So don't say it unless you want it recorded permanently, OK?

My motivations for the above approach are various, but are partly captured here. You are just as welcome to disagree with my reasons and choices as I am to ignore your opinion. Thanks for your time.

 

The cloud is their avatar

1 min read

"Its physical aspect could not be less cloudlike, Server farms proliferate in unmarked brick buildings and steel complexes, with smoked windows or no windows, miles of hollow floors, diesel generators, cooling towers, seven-foot intake fans, and aluminum [sic] chimney stacks. This hidden infratructure grows in a sybiotic relationship with the electrical infrastructure it increasingly resembles. There information switches, control centres and substations. They are clustered and distributed. These are the wheel-works; the cloud is their avatar."

-- Gleick, James. The Information: History, a Theory, a Flood. London: Fourth Estate, 2011. p396. (Emphases mine. An excellent book all through.)

 

The science of pricing / the pricing of science

2 min read

Nice of the Festival of the Humanities to invite an eminent scientist to be part of the line-up; not quite so nice for said academic to then go on and propagate the problem they're ostensibly trying to remove. Professor Athene Donald, in Teh Graun today:

I may wholeheartedly believe that science is vital, as the eponymous campaigning group says, but that doesn’t mean I think the humanities (or indeed the social sciences) are not. Since science costs more to do than arts subjects, more funding should go to science. That statement does not equate to saying that the humanities should not be properly funded. Somehow, we are constantly being put in opposition, a binary divide that is damaging to both scientists and non-scientists.

The final sentence contradicts the second sentence. The second sentence is also somewhere between fallacy and tautology; science "costs more to do" only because the historical funding patterns have supplied science with a larger budget than the humanities. Speaking as a social scientist, we might not have the capacity to spuff billions of euros on a single piece of basic-research hardware like the LHC (a project for which I have huge admiration, to be clear) -- but I assure you, we could spend those billions easily. It turns out that qualitative research is actually very costly and time-consuming, and we'd be overjoyed at the opportunity to demonstrate just how effectively we could dispose of the budgets our STEM colleagues consider normal. We could consider it an experiment!

To suggest that the humanities and social science spend is somehow limited by the nature of the disciplines themselves is a little insulting, to be honest -- though that's certainly not to say I think Prof. Donald set out with that intent. Nonetheless, to complain of a damaging binary divide between the disciplines after having declared that the STEM subjects are intrinsically more expensive is illogical, if not directly counter to one's stated purpose -- and we get enough of that rhetoric from the state already.