The boring story of Amazon saving dough
No one really wants to know how the sausage is made.
You might think you do, but once you start to hear it you are either grossed out, appalled or, most often just bored. The truth is that most things are just kind of dull.
But, the more you know, the better off you’ll be. If you’re informed about the nuts and bolts of a company, you can probably do well.
So let’s talk about logistics. Exactly.
Specifically, the logistics of online shopping. We don’t think of it very often. We just click on our screen and then a couple days or a couple months later a package arrives at our door. How it gets there is of limited concern.
Except it should be. Even if it’s just because of that final line on your invoice labeled shipping. A good portion of your bill goes to paying the cost of getting things from one place to another, whether directly in the mail, or by increased costs to the manufactures in the supply chain.
Shipping matters to you. When a company does something to reduce its costs you should be interested. As a consumer and an investor.
So, news this week that amazon (NASDAQ: AMZN) is investing in a Silicon Valley company called Plus that is developing self-driving transport truck technology, is pretty significant. Whereas much of the media attention has been on the retail driver — think a nce Tesla (NASDAQ: TSLA) you and the family could take to the beach — the real action is on the commercial side of things when it comes to self-driving vehicle technology.
If the technology can be harnessed, having self-driving trucks could be the most significant advancement in consumerism since Henry Ford’s idea to create an assembly line. That’s a claim made before by others about different things that didn’t turn out to be true, but I’m serious here.
Right now the supply chain is dependent on the most unreliable factor of all — humans. Those people, with their families, their distractions and need to eat and sleep, are really hard to factor into an efficient business plan. And, they’re expensive. You have to pay them money to do the task you want and more money for stuff that no one wants to do.
Like drive a truck for days on end. It’s estimated that there are 60,000 fewer long haul drivers on the roads in the United States today than the industry needs. Long haul trucking is not a job that anyone seems to want to do. It takes you away from friends and families for weeks on end and it’s dangerous.
Accidents happen all the time, which is bad for business and worse for the people in them.
If you can replace all this with a system that sees automated trucks on the roads for 20 hours a day, seven days a week, regardless of weather, or holidays, or any number of other human factors, then you’re going to save money and get products where they need to be faster.
From Amazon’s perspective self-driving trucks are the perfect worker. Sure, they cost a lot up top (thus the investment in a company making them) but, it’s just maintenance after that — maintenance that will also be reduced since the self-driving truck won’t be driven recklessly by a human trying to meet a deadline after he slept an extra 20 min by mistake the night before.
From your perspective, that savings will get passed on to you, just as savings from the assembly line benefited Ford automobile buyers in the early 1900s. There will also be less accidents (which will save lives, possibly even your own or someone you care for) and, with trucks able to drive all night, maintenance breaks can be scheduled during rush hours to make your commute to and from work less congested.
Think trains without rails and you get the idea.
The first and last kilometer of the drive will still need to be human powered, so what jobs that are lost by a move to automation will likely just move to the shorter routes. Really, the news of Amazon seemingly going all in on Self-Driving trucks is a win for everyone involved.
So, unlike with science fiction has taught us all those years, maybe the robot revolution isn’t so bad after all?