Multi-Disciplinary Reading – Book Reviews

Arriving Today, Christopher Mims, 2021 – One-Day delivery depends on a lot of tech that’s recent and the book takes a look at most of it. The author follows the journey of a charger from the factory in Vietnam to his doorstep in the USA in a one-day delivery format. It helped me understand the value several businesses bring – from dredging to synthetic HMPE ropes used in tugboats, to electronics onboard ships to even the quality of paint used below waterline to metrics used in understanding efficiency of ports, port automation, Amazon’s automated warehouses, middle-mile and last mile delivery or even autonomous driving etc.

My notes –

• Amazon increased its frontline workforce by 50% pushing it past a million during the pandemic

• For the first time since 70s, since the oil crisis, we experienced supply shock across goods, something that couldn’t be fixed by rate cuts (like demand can) when there are goods to be had at any price

• Companies like Apple, Nike set up factories in Vietnam that were identical to their ones in China much before the pandemic to cover for a war scenario when manufacturing has to be shifted within days

• The Vietnam was perhaps the most skilfully managed bad idea in history – it gave rise to lot of critical tech used in modern trade

• Supply of material to half a million troops in Vietnam facilitated the military contractors to accelerate the development of the shipping container

• Until Vietnam war, containerised shipping with its specialised cranes, docks, railroad cars, trucks was a chicken-and-egg problem with break-bulk shipping dominating

• Arrival of the internet following the evolution of containerised shipping gave rise to Amazon and eCommerce

• ‘93 to ‘16 proportion of Vietnamese who lived in poverty dropped from 51% to 10%. Contemporary Vietnam, like Japan in the ‘60s and China in the ‘90s is employed by foreign companies (Chinese, Korean & Japanese) to do the manufacturing with its special economic zones and cheap labour

• Vietnam doesn’t use truck or trains but instead barges, hundreds of them (each carries 10-82 40ft containers) – from Mekong delta they carry coffee, flowers, coconuts, durians, cashews, rice, pork and from its factories, hyundai cars, north face, gap, uniqlo and h&m apparel as well as majority of the Samsung phones sold worldwide. Google manufactures phones and Apple its Airpods there

• A 40ft shipping container can carry 25k tons of cargo (2400 cubic feet) and can allow for stacking 8 more containers on top of itself. The wall of the container is less than 3 credit cards thick, watertight and resistant to pests (walls infused with toxins)

• Intermodal transports – shipping container can be transported by rail, road or ship and are hence intermodal

• Drayage – trucks that connect intermodal transport – say between port and warehouse or factory to port or between ports etc.

• Inland freshwater ports like Binh Duong or Dong Nai handle 673k 20ft containers a year – enough to fill a 10k container ship every 5.5 days. Most of it export goods – replacing what the rust belt once was to the US, but for the whole world

• Ship-to-shore crane – as high as a 13 storey building, they load/unload containers from ship to dock or dock to ship. More cranes are used in the dock to consume, sort and stack containers in the yard. Containers typically stay in the yard not more than 3-5 days (at Cai-Mep)

• TEU – 20ft equivalent. The normal container is 40ft so each container = 2 TEU

• There are now only 11 shipping lines, consolidated further into 3 ocean alliances (they share ships and containers). Maerst and MSC alliance 2M controls 25% (Swiss-Italian). CMA, CGM, COSCO, OOCL and Evergreen accounts for another 25%. In 2018 152m TEU was moved in all (Cai-Mep handled 3.7m TEU in 2019. Up from 30% util in 2015 to 100% util by ‘20)

• At some point in their journey 90% of world’s goods travel by ship. Bulk cargo – coal, oil, bauxite, cement, grain accounts for 90% of the 11b MT and just 20% is carried in containers

• The ship OCCL Brussels is 1200 ft long and can carry 6600 containers (40ft) built by Samsung Heavy Industries (biggest in 2013). Algericas today does double that but only ships like Brussels can fit through Panama canal and ships like Algericas can only be handled by some ports in the world

• Flags of convenience – while ships carry flags of the country of whose laws it obeys, countries like Panama offer low tax, low fee and lax regulations so shipping lines prefer it

• The software that manages the containers in the port ensures moving, sorting, stacking is done in such a way that it takes very little time to load the ship when its in dock – as little as 24 hours (vessels used to spend weeks in port before containers)

• Reefers represent 7% of containers and is growing 5-7% a year. These have to be plugged in while on the ship to make refrigeration work

• Slow steaming – Large ships travel at speeds way less than their maximum to save fuel. Across the Pacific traveling at 18 knots can add a week to the journey but save 59% fuel (its the norm across industry now)

• It costs just $2 to ship a TV from China to the US port-to-port. Containerised shipping is the cheapest link the logistics chain

• In transportation predictability matters more than speed (Ship engines are thus built for reliability and efficiency)

• Harbour pilot of marine pilot gets onboard a ship when its few miles off port. He is a local pilot who takes over the ship and knows the dock and environment very well. This is a tradition that is adhered to, to this day (had 1 in 20 chance of dying on the job while boarding the ship)

• Nothing is busier than the ‘South China Sea’ in the ocean

• Most ships carry two kinds of GPS – one US network and another Russian (GPS and GLONASS). An AIS (Automatic identification System) which broadcasts its name, destination, tonnage, heading and speed constantly and an ECDIS (Electronic Chart Display and Information System) and several legacy tech (since all ships don’t have latest or even AIS, pilots still use eyes to navigate)

• Inter-ship communication happens on VHF and UHF radio but not always. Collisions are avoided by sticking to COLREGs (International Regulations for Preventing Collisions at Sea) which has several common sense laws – like not changing speed and heading often and the one of the port-side (left) should always yield etc. (Chinese ships often don’t follow COLREG)

• Modern ships still have steering wheels but they are like toys, small, of plastic and never used

• Outside of ship should continuously have its paint replaced, paint below waterline includes antifouling agents to prevent accumulation of biological matter.

• Total crew of even the largest ships today is just 20-30 people. During every loading/unloading ships have to ensure cargo is distributed with heaviest containers at the bottom and weight is distributed evenly forward and backward, left and right (port and starboard)

• Today’s ships are so immense that they test the limits of the port – requiring more dredging, higher bridges and bigger berths

• Los Angeles/ Long Beach handles 50% of all goods destined to the US from Asia while New York/New Jersey handles 20%

• Tugboats used to use steel ropes to move the ship to and from dock. Today they use HMPE ropes (High-Modulus Poly Ethylene) which is 8x stronger than steel and prevents snapback accidents (steel ropes is very elastic and dangerous when it snaps)

• Trapac – Port of LA has 7 container terminals but its the most automated in the world. At 220 acres, it can store 10k containers per acre making it the densest – all automated (only 3% of shipping terminals are automated, rest use people for everything from ship-to-shore cranes, trucks, sorting and organising containers etc). It can cost a lot to retrofit automation

• Half of longshoremen (people, mostly men who help move cargo on to and off the ship) make at least 6 figure salaries. Special skills like crane operators make even more. Automation takes away these jobs

• Drayage Turnaround time – amount of time it takes for a trust entering the port and leaving. Trapac its 45 mins while most others its 90mins

• LA/Long Beach requires cleaner fuels to be used while nearing port and for ships to be plugged into port electricity and not use ship’s fuel while docked

• Cranes, forklifts etc. are all diesel operated. A switch to automation means switching these to electric as well since its easier to automate electric drive systems

• Its recessions, not good times that accelerates automation – as topline crumbles in recession while wages stay same, necessitating automation to cut costs

• Number of moves a crane can make is a closely watches metric for efficiency in ports. At TraPac, cranes drops containers onto concrete instead of a waiting truck (as it takes times). Instead Autostrads are used to move them on land (made by Kalmar Global) and eventually Gantry cranes move them onto railroad cars or truck

• Stacking algorithms try to ensure the order in which they will be unloaded reflects the position in the stack (Erlang’s Queueing theory used extensively). At worst-performing ports, half of moves made by automated stacking cranes as “unproductive” (re-stacking or grooming). Even best algorithms suffer from unpredictability and randomness

• Dwell time – avg. time a container stays in port. Its usually just 5 days

• Scientific management (Taylorism) by Frederick Winslow Taylor forms the bedrock of modern capitalism and efficiency. Studying the task, breaking it down, specialising tools, training workers, division of labour and responsibilities, timing and efficiency – we use them unconsciously but it all started with Taylor (punching the clock an inevitable outcome of it)

• Our world has become a large factory with methods of production employed not just in manufacturing but also in distribution (automated warehouses and logistics) and also in consumption (like a Amazon subscription for toothpaste)

• Gilbreth’s kitchen island – modern kitchens where sink, stove, countertop and fridge are all intended to be within arm’s reach along with a trash can that opens with foot pedal (epitome of Taylorim)

• Taylorism’s intention was to reduce human labour but it ended up as failure for that as it merely improved productivity which meant now more could be done

• Cross-docking warehouses – With minimal storage, they transfer contents of containers onto trucks when trucks with containers come out of the port

• President Carter’s deregulation of trucking (lowering barriers of entry) made truckers start lot of trucking companies, increasing competition, breaking trucking union. While it reduced costs and increased efficiency, truckers who were paid 6 figure salaries could now barely make wage (extremely interesting case study). This has today led to shortage of truckers (100% attrition)

• Trucking regulation today ensures truckers cant drive more than 11 hours even if they wanted to. The number of hours on the move is electronically logged (caps pay for people who are essentially paid by the load)

• Mississippi river carries lot more tonnage of freight than overland routes because of economics of water transport (we really must use our rivers)

• Invention of tarmac led to explosion in trucks – 10k in 1910 to 2 million in 1940s and turned the fortunes of Cummins which made diesel engines for trucks (and does to this day)

• The “townless highway” with its bypassing of towns, exits, crossings which was still in theory in America was executed in Autobahn giving rise to the modern highway (’World in a grain’ book if interested more)

• CH Robinson – freight broker who acts as middlemen between shippers and trucking companies aggregating demand and supply (to individual drivers and their trucks) – like Uber

• Trucking in extremely fragmented with largest operator not even having double-digit market share. There’s no consolidation possible since there’s no advantages to scale unlike other industries

• Shippers have an edge over truckers as they can see prices on platforms and compare, making this a monopsony (its almost like having just one buyer with all shippers acting like one leaving truckers powerless in demanding higher rates)

• Every trucker is best suited or has affinity for a region, condition, times of day, types of freight and shippers making a Uber-style marketplace for trucking difficult

• AI on trucks (TuSimple) use IMUs, GPS, SLAM, visual, LiDAR and radar. IMUs are used in missiles, aircrafts, drones, satellites etc. and use gyros, accelerometers to determine position through dead reckoning. These trucks can run 24 hours unlike regulated truckers

• Amazon has 200 semi-automated fulfilment centres (Maybe 15% of global warehouses). They use fully-automated palletising robot, pick towers, yellow totes (equivalent of shipping container in Amazon’s warehouse) etc. (implemented by Kiva systems, currently Amazon Robotics)

• Kiva piloted with Staples, one of the earliest companies to offer two-day delivery, the success of which led to deals with Walgreens, Zappos, Gap and Diapers.com. Amazon acquired Kiva systems in 2012 for $775m (now they only service Amazon)

• While retail had to cater to stores, Amazon had to cater to customers, and in that sense assembling an order was closer to a factory than distribution centre – so Amazon adapted to it and built today’s modern fulfilment centres

• Random stow – quickest way to get goods in and out of a warehouse is to stow them anywhere without worrying about an organisational system. (Similar to how a operating system stores info on the harddisk)

• Moravec’s paradox – its far easier for a computer to decide which piece to move than to actually move it (hence human level intelligence will come long before human level dexterity)

• Amazon’s warehouses are intended like a local cache of goods intended for next-day delivery (not unlike a cache in computing). Amazon started charging fees to sellers that didn’t move inventory fast enough (its equivalent of LRU?)

• Turnaround time from order is received to when its on a truck leaving the fulfilment centre is just 45-120 mins

• Consolidating smaller items into as few deliveries as possible is the job of Amazon Fulfilment Engine (AFE). All totes of a single order end up at same rebin station (picking, binning, rebinning, packing are standard warehouse terms used across industry)

• SLAM robot (Scan, Label, Apply, Manifest) works with boxes and applies shipping labels (boxes are automatically chosen by the AFE). From there it goes to a loading dock and gets stacked into a truck which is on its way to a sortation centre

• Bezosism (Amazon’s brand of Taylorism) – mix of surveillance, measurement, psychological tricks, targets, incentives, sloganeering and prop. tech., rank-and-yank (blue-collar equivalent of Jack Welch’s stack ranking)

• Coffee and ibuprofen (!!) are free in Amazon warehouses (available freely in vending machines)

• When six-sigma fell out of fashion with GE going down, kaizen (continuous improvement in lean production) took over the vacuum to fill the next management fad

• Middle mile – UPS founded in 1907 has built its network for over 100 yrs. FedEx founded in 1971 has almost matched UPS (closely matches in revenue and scale). FedEx earns higher margins moving high-value overnight packages (together they have 80% market share and rest is with USPS). Amazon Logistics today is bigger than UPS

• Most middle mile logistics companies buy sorters, conveyers, scanners, tugs etc. from same companies. Middle mile automation is lot easier than a fulfilment centre.

• Sortation centre – takes packages from semi-trucks unloaded from 56 bays and loads onto 240 end-points with smaller delivery trucks (FedEx operations)

• Starship robot (last-mile delivery robot) has 360 deg. cameras, time of flight cameras and can do 3000 miles before needing maintenance (can delivery food, coffee etc. in college campuses and other closed environments) and generates $4/hr in revenue ($15000 in annual wage)

• Enclothed cognition – How what we wear affects how we perceive ourselves, behave, how creative we are and how we process information and how we perform on tests (once you were a UPS driver uniform for eg.)

• UPS drivers make 135 stops a day (max 160) in a single 10-12 hr shift with only one break for lunch

• UPS loads its trucks in such a way that you should never touch a package more than once before making delivery (preloaders do this), stacked in sequential order, labels facing out

• UPS’s On-Road Integrated Optimization and Navigation (ORION) system plots route for driver, minimising turns, ensure routes stay similar everyday (makes drivers happy) etc. (ORION cost UPS $200-300m)

I learnt so much stuff from this book. It is written in a simple language and will definitely help you map out logistics and its tech well. I also liked the fact that the author kept biases to a minimum – celebrating capitalism while also looking at its dark side on human beings through his detailed look on Taylorism/Bezosism and how it has changed how we think and act. It truly is multi-disciplinary since it doesn’t shy away from looking little deeply into the tech of fulfilment centres or delve deeper into psychology and philosophy where required. It was a balance I could relate to. 11/10