(Unedited) Podcast Transcript 576: The Logistics of Package Delivery

This week we’re joined by Arizona State Professor Benjamin Fong to discuss an item he wrote in Urban Omnibus entitled Where’s My Package? We discuss his work trying to suss out how e-commerce companies like Amazon have built their logistics systems and the difficulties of last mile deliveries. Benjamin also shares potentially beneficial legislation, movements that could benefit workers, and the process of siting warehouses that impact small towns to the benefit of big corporations.

You can find Benjamin at his substack On the Seams

Listen to this episode at Streetsblog USA

Find all of our episodes in the archive.

Below is a full AI generated unedited transcript of this episode:

Obviously the teamsters are interested in it, but if you look at the big employers in the country, you know, Walmart, Amazon, home Depot, target, Kroger, et cetera, they’re all big retail companies. But one could argue that they’re really at their core logistical companies, that they’ve built their power through their logistical operations, and despite this being a great source of their continuing power, it’s actually really difficult to understand these different networks, just like actually where these facilities are.

What the differentiated facility functions are, what kind of automation levels are present, how they’re changing. Yeah. There’s just a lot that we couldn’t see. And so we started digging in a little bit and that really got me, um, yeah, got me on the path that I’m currently on.

’cause on this show we talk about cities and transportation and urban policy, but I feel like in the space that we’re in, we don’t talk a lot about logistics or freight or those types of things, but we had Stacy Mitchell on from ILSR, the Institute for Local Self-Reliance, and she had a piece in the Atlantic last year talking about the Robinson Patman Act and the way that big box stores evolved and the proliferation of food deserts.

And so that got us thinking a little bit about the connections between city planning, the sprawling nature of our cities, as well as like a lot of these logistical questions. And so I’m curious as a start. Where does Amazon and the current batch of big box stores slash online retail fit in this kind of history of the expansion of the stores and commercial space from like the 1970s and 1980s on?

They weren’t really focused on urban areas in the same way as say Amazon is. And so they grew out from Bentonville and spread just out from one single point, and you can almost see the spread through the decades. Uh, it starts in Bentonville and then they build a distribution center, 250 miles out. Once they saturated a certain market, they’d build another distribution center, 250 miles out.

And so slowly spread throughout the country in this way. Again, mainly focusing on non-urban areas, trying to win over the suburban and rural customers. And you know, it’s a story of a really cutthroat corporation. One of the reasons why they were successful is that they were always willing to underprice their competitors.

And so not only in traditional retail, but also in food, they still have some of the lowest prices around, and that’s really been the source of their power, like I said earlier. They brought all logistical operations in-house. This is something that many other big retailers learn from Walmart. That third partying your logistics operations, was essentially a source of inefficiency.

And so they set the template there. You know, they pioneered the lowly barcode. They were the ones that instituted that. And again, every retailer sort of copied their example. So I would say by the, you know, by the nineties, certainly by the aughts, the dominance of these big box retailers was pretty solidified with Walmart.

Definitely on top. You know, Amazon certainly participates in the retail space, but for any number of reasons, the logic of its growth is very different than those of the other retailers. And so. If you just look at the way in which it spread, for instance, it grew almost perfectly according to population density.

So still to this day, if you look at where their warehouses are, they’re always clustered near population centers. They’re starting to develop more of a rural presence, but really it’s focused on where the customers are. And so I would say that Amazon, and really like the whole logic of e-commerce is really different from that of traditional retail.

I mean, a company like Uber, they benefit from the agglomeration of a city. They don’t really work very well in, in rural areas. Yeah, and it feels like similar to like what you’re talking about with Amazon as.

I mean, you can’t get that big and not share a customer base. But Amazon aims, I would say, for more affluent customers, certainly more urban customers. And so yeah, it’s just targeted a little bit differently. There’s also a big difference in terms of just how much people are buying at Amazon and Walmart.

So Walmart’s still a much bigger retailer than Amazon. Just this past year, Amazon surpassed Walmart in terms of overall revenue, but a huge portion of that comes from Amazon Web Services. It’s cloud computing component. Just as a strict retailer, Amazon’s still quite a bit smaller than Walmart. A lot of that has to do with the fact that when you go to a Walmart, I would say this is also true of Costco and Target.

Any big box store, you’re looking to fill up your cart, right? It’s kind of a hassle to get there. There’s a whole bunch of people there. You’re gonna have to wait in line. And so if you’re gonna make the trip, you’re gonna fill up your cart and come home with a lot of stuff. In my experience, that’s especially true at Costco.

Um,

Right. But it’s not necessarily, yeah, they’re not bundling goods in the same way that you’re doing at the traditional retailers. And so, yeah, the shopping experience is just very different at Amazon. What was the second part of the question?

You know, trying to deliver to apartment complexes instead of single family homes can be kind of difficult. So it presents all sort of e-commerce challenges. The city does. But there are all sorts of felicities as well. In most areas of the country. Amazon relies on big package sorting hubs to designate packages by zip code.

And just because of the volume of packages going to New York City, something like half a million packages per day that are delivered in New York City, they can skip the sortation side of the operation and go directly from fulfillment to delivery stations. And so they can fill up trucks basically coming from Connecticut, New Jersey, et cetera, with packages going to delivery stations.

And that allows them to skip a step that might add, you know, seven, eight hours to the package delivery process. So despite the fact that the city presents all sorts of difficulties for which they’ve found very interesting adaptations, um, it also presents certain benefits as well.

Uh, they have e-bikes, which are, it’s kind of a lie to call ’em an e-bike. They’re, they’re basically small electric vehicles. Yeah. I mean, they, they’re kind of annoying for actual cyclists ’cause they fill up the whole bike lane and Amazon drivers will actually just park them there while they’re delivering packages, which totally makes sense.

But, and Amazon of course, bills this as part of its green program, but it’s an efficiency for them. Right. There’s a lot of traffic in New York City bike lanes are not as, uh, full as most roads are, and so it allows them to get around the traffic. In a way.

Just giving someone a route, much like a, you know, A-U-S-P-S mail carrier to sort of walk around the city. The density, I, I would say this is specific to New York City. It’s not really true of anywhere else in the us. The density is such that you can actually have walkers and have that be an efficiency for the company.

But yeah, they’ve, they’ve tried a whole bunch of things in New York City. They build them as green experiments or something with some kind of social benefit. But I would say it’s really just them trying to solve that last mile problem.

How did that come about and what was the general finding of the final result of this initial kind of look into their processes?

And I was like, Hey, do you, do you wanna do this experiment? And, uh, I think they were a little reticent at first. It’s not fun to, uh, to give a stranger your package labels. Um, I also, you know, asked what was inside just because I wanted to sort of know what goods were coming from where. And, uh, the whole idea was to trace the routes of some of the packages to New York City.

Obviously this can’t be a representative sample. I got like about 150 labels in total through that. Uh, I should note also that I’ve continued the project and I’m still accepting package labels from all over the country. So if your listeners wanna submit to that, they’re more than welcome to. But I just wanted to trace certain package arcs and note certain similarities in how Amazon does things.

So again, you can’t get representative volume numbers from doing this, and even if this project of mine was scaled up quite a bit by an order of magnitude, I still probably couldn’t get package volume data in the way that only Amazon has internally. But what you can get is pretty reliable package arc information, which is to say which facilities are packages coming from regularly, where are they going to after that, and what are the links in the chain that get packages to New York City?

You know, there are a few interesting findings. One is that I think 75 plus percent of packages originated in the northeast area, which is to say of those 500,000 packages coming to New York City every day, you know, 300,000 plus are coming from fulfillment centers in the area, which is a huge benefit to Amazon and hasn’t always been the case, especially during COVID when they grew really quickly.

It was sort of a mess for a while. The retail side, and if you were in New York City. And you know, you wanted some Halloween costume that was only in a fulfillment center on the West coast. They would put that on a plane and take a loss to get it to you if you were a prime customer, because that’s their business model, right?

They wanna make sure they can get you everything in their product catalog within a short amount of time. Um, they realized that was a problem. Their operating income really took a hit in 22, 23. And so they said, we have to figure out how to place things around the country right the first time so that when someone orders it, it’s coming from a regional fulfillment center and not from across the country.

Right? Like the last option, the worst case scenario for Amazon is to put something on a plane. Planes are way more expensive than headed on the ground. So they accomplished this large regionalization strategy beginning around 2023. They brought up the percentage of packages that originate within region.

And one of the things that this package data confirmed is that they are indeed doing that. And they’ve saved themselves, no doubt, billions in the process.

And then, for example, I live in San Francisco and I don’t own a car in shipping. You say that placement is more important than speed, which feels similar to this idea of location, efficiency and kind of what you were just talking about. So I’m interested in this idea of placement and mm-hmm. How the packages get sorted and put into the places where they believe that they’ll be needed by people that live in the city.

So, you know, in a huge 3 million square foot warehouse with Amazon Kiva, robots going all around and robotic arms and whatnot, if you click order, that order is probably picked and packaged up and headed outbound on a dock within 15 to 20 minutes. I mean, it is a really lightning quick operation on the outbound side, and every step in the chain from there is really built for speed.

Not like super speed as in FedEx, but within two days and within that sort of Goldilocks window between, you know, sending something in a week versus sending it as fast as FedEx does with Express, Amazon’s gotten really good at doing that. So the, the placement question really matters on the inbound side.

So Amazon, in addition to its fulfillment centers and delivery stations also has what are called inbound cross docks. And these are typically placed close to ports because they’re receiving a lot of international sort of imports from the ports. They’re also receiving inventory from domestic suppliers and they have a few different layers to it.

I won’t sort of bore your audience with that part, but the whole idea of the inbound cross docks is to place inventory around the country where it should be to guess right the first time, so that once an item is ordered, you’re not having to again, put it on a plane, send it across the country in order to get it fulfilled.

That’s really the magic of inbound. I don’t know. Exactly what goes into them, figuring out what needs to be where, but they’re extremely, extremely good at it. There’s a new type of fulfillment center within Amazon’s network. It’s called the sub same day center. Interestingly, they’re not used that much around New York City, and we can talk about the various reasons for that.

But the whole idea with sub same day centers is that as the name implies, they’re going to get you an item in the same day that you order it. In order to do that, they need to be guessing right the first time as to what the highest volume SKUs are in a particular area, so that whatever the most commonly ordered items are, they’re gonna have that in a fulfillment center that’s on the edge of an urban center, like close enough that someone can pick it up in their car and deliver it within, you know, three to four hours.

Interestingly enough, they call ’em ASINs, Amazon something identifier numbers, and it’s just a way of categorizing unique products rather than the amount of things that are in inventory in any given time.

You can have a pretty good idea of who is buying what, at what time in what stores around the country. And you know, we talked about placement a second ago. In order to place inventory at the right distribution centers near their stores, they could use that point of sale data to guess, again, at any particular time of year who’s gonna be buying what and in what quantities.

So I would say the barcode as, yeah, commonplace as it is today. It was really a revolution for retailers because it gave them a really good idea of. What they were gonna need, where and when. This was, I should say also one point of leverage over their suppliers. And so before the introduction of barcodes and the use of point of sale data.

If Christmas season came along, a Walmart would order a certain amount of, you know, snow globes and trees and wreaths and whatnot. And they had a pretty good idea of how much people were gonna buy. But a lot of it was at the discretion of store managers. And sometimes, you know, suppliers would come in and give you a pitch and say, Hey, you know, this holiday season’s gonna be really gonna be really booming.

And so there just, there wasn’t the science of inventory in the way there is today. After the introduction of the barcode and the use of point of sale data, a retailer like Walmart would say, we want this much of this from each supplier and we want it now. And if you don’t, you know, provide that much, then like no deal.

And suppliers just had to kind of go along with it. ’cause Walmart actually knew best in the situation.

I’m curious how much a lot of this change that, you know, in the eighties and nineties and two thousands, you know, kind of precipitated the, like you mentioned, changing the leverage from the suppliers to the big box stores and the Amazons themselves.

I mean, Walmart has been squeezing everyone along the supply chain for a really long time. There’s a great book by Edna Bonacich and Jake Wilson called Getting the Goods in terms of just a comprehensive overview of what. Modern supply chains look like? Uh, I think it’s one of the best. It still holds up, and the book is ostensibly about tracking the movement of goods from the ocean to the ports, to the drayage drivers at the ports, to the warehouse, et cetera.

But the whole book ends up being about Walmart really, because Walmart’s just the, the elephant in the room in every conversation. It’s the shippers, it’s the carriers, it’s the suppliers, it’s everyone along the supply chain. Walmart has been squeezing them for a really long time, and so they’ve been exercising, you know, quasi monopoly power over their supply chain for decades at this point.

But it’s true, you know, I mean, they have a lot of power. I would say that Amazon’s an interesting story here because it’s. It’s taken advantage of a situation within which Walmart, target, home Depot, Lowe’s, et cetera, have that power over their suppliers. And so one new venture by Amazon is called Supply Chain by Amazon.

And what they’re doing is they’re going to, you know, small Chinese suppliers that have traditionally worked with Walmart and are kind of, you know, sick of dealing with Walmart after all these years. And they’re saying, Hey, we’ll give you direct access to the American market. Why don’t you ship with us?

We will store your stuff in Amazon fulfillment centers. And this will be a way around being squeezed by Walmart. Of course, it’s another way of being squeezed by Amazon instead of Walmart. But that’s their value proposition right now in supply chain by Amazon. They’re saying it’s so awful dealing with Walmart, target, et cetera, that uh, we’ll deal with it for you.

They’re, they, you know, through their seller fees and everything, they’re still nickel and dimming the Chinese suppliers as much as possible. But they’ve entered a situation where the retailers have quasi monopolistic powers and they can actually benefit from that situation.

Um, there’s been a number of articles over the last several years about a lot of the impacts to the warehouse, you know, proliferation, obviously this is happening around the country. When I was in planning school in, in the early two thousands, we went to this small town to pitch a transit oriented development called Haslet, which is just south of Alliance.

Mm-hmm. Alliance, Texas. And so at that time, that area was starting to pick up as a logistics center. So these things have been growing and they’ve been impacting the urban environment to the built environment. I’m curious kind of your thoughts on the proliferation of warehouses and their impacts on cities and their ex-urban areas for that matter.

And I think that was because at that time. There were plenty of warehouses around the country, but they were pretty simple operations and people didn’t take them to be a great source of value. Right? It was the heyday of manufacturing. People thought about value as being constituted on the factory floor.

Warehouses were just places where you put things once they were finished and you know, you stored ’em there long enough until like stores or consumers wanted to buy them. Right. I think warehouses have proliferated for a number of reasons. I mean, as America’s de-industrialized, a lot of manufacturing takes place overseas, and so we no longer need these big manufacturing hubs, but instead we have big logistical hubs to deal with imports coming into the country.

And so the story of the growth of warehousing is really the story of America’s deindustrialization. At the same time, I think what’s interesting to me about that transition is not just the number of warehouses, but how sophisticated warehousing operations have gotten over the last couple decades.

They’ve figured out ways to move goods around the country with tremendous efficiency. And that’s, I mean, that’s obviously true of Amazon, which is really breaking boundaries in terms of like the speed it’s able to achieve, but that’s true for all the big retailers as well. One of the reasons that, I mean, I think this is well documented at this point, but one of the reasons why Sears and Kmart floundered while Walmart survived is that they didn’t bring their logistics operations in house.

They just couldn’t control their inventory in the same way. So yeah, I mean, I think that this is a story not just of the proliferation, but of increasing sophistication in warehousing as well.

And so what’s the impact of that?

Amazon will go directly to city governments and say, and just play them off one another and say, okay, we’re gonna cite this warehouse here. It’s gonna create 2000 jobs. What do you have for us? Right, in terms of tax credits or tax breaks or whatnot. Uh, they’re very famous for doing that. They do that very well.

They have a very sophisticated workforce staffing team that plans out all sites for possible development. And you know, Amazon has 1500 plus warehouses around the country. It has many more properties that it’s either scouting or that it owns in preparation for building something and figuring out, not just.

How they’re gonna be able to staff up. So as you said, one of the reasons why these warehouses are on the outskirts of cities, but not in fully rural areas, is that they actually need workers to work there. Right? And so their workforce staffing team is calculating how easily they’re gonna be able to staff up, how long people are gonna drive to work to get there, what the average wages are in the area.

But one big calculation is what kinds of municipal subsidies are they gonna get for building this warehouse? And so that actually ends up dictating a lot of where the warehouses go around any given city.

Yeah. How much of it was like an information extraction exercise rather than actually looking for a second headquarters?

You know, HQ two, it’s a big deal. It’s of national attention. Amazon moving into a particular locality with a warehouse, it just doesn’t get the same kind of press. And so they can kind of do what they want in a way that doesn’t receive the same scrutiny. So I don’t, I don’t know about all the decisions that went into HQ two.

Just one, one example that I, I’m fond of, ’cause it’s in Arizona, just about how easily city councils can be bought off to let a company like Amazon do what it wants to do. Amazon has been piloting drone delivery programs around the country and, uh, I, you don’t have to worry, I don’t think this is coming to San Francisco anytime soon.

I don’t think this will ever be. A big part of Amazon’s delivery portfolio. But it’s an interesting experiment in order to do drone delivery in Tolleson, Amazon bought the low airspace rights for the entire city. Right? And this is important ’cause you don’t wanna fly too high, you’re gonna get in the way of planes.

You don’t wanna fly too low. And so they bought, like, I think it was a few feet of low airspace rights in the city of Tolleson. They, you know, made a big show of giving the city something like $12,000 or something. But in so doing, they infringed upon the property rights of every single person in Tolleson.

And so the, you know, the city council was essentially willing to seize the private property. I mean, it’s low airspace, but still of all of its residents in exchange for something like $12,000.

It’s fascinating.

And Selta’s like, well, where are you gonna land? I’m the person who controls where you’re gonna land.

But second of all, so practically infeasible in most parts of the country that it’s just kind of a joke. And so they really like talking up their sidewalk roamers or their drone delivery program or whatnot, but at the end of the day, it’s relatively cheap for them to pay someone to drop a package off at your door.

And the robotics involved in doing a simple task like that are so complicated in the infinite complexity of last mile that they’re just gonna continue doing what they’re doing essentially. So yeah, the idea that any of these last mile experiments are gonna amount to much strikes me as pretty fanciful.

Again, I’m, I’m not an AB 98 expert, but it seems like it’s going to probably impact California very little in terms of like the Inland Empire build out. I think probably more, more impactful would be local site fights at the municipal level. So if, if, if you can get, uh, city council to be fighting in Amazon.

I mean, just in the last year the site fights have really been around data centers more than warehouses and there have been some tremendously successful site fights. So in those terms, I would say the state level regulation that I know of. It is probably not going to impact warehousing development that much.

The sort of regulatory measure that I’m most excited about, that I think actually will be pretty effective and could be replicated in a number of cities is the Delivery Protection Act in New York City. This is something that has been talked about for a while, but was recently introduced by a city council member, Tiffany Kaban, and the idea is that it’s a safety issue and I think it is for Amazon to outsource its delivery workforce.

Um, so for your listeners who don’t know, anytime someone’s dropping off a package at your doorstep or in your lobby. From Amazon, even if they are driving an Amazon branded van and wearing an Amazon vest, they’re not employed by Amazon directly. These are all third parties. Sometimes they’re flex drivers, so they’re kind of like gig workers, uh, Uber drivers for packages, or they’re employees of what are called delivery service providers.

These are third party, but captive third party delivery service providers for Amazon. What the Delivery Protection Act does is to say that’s an unsafe situation. ’cause the liability for any particular. Delivery driver is not going back to Amazon. Should they have an accident in the city? It’s going to some DSP that Amazon will be quick to cut its contract with, right?

And so as a matter of urban safety, the Delivery Protection Act argues that these should be W2 employees of Amazon, right? If you’re delivering packages for Amazon, you should be a W2 employee and that will shore up liability in the case of accidents or something like that. I think that this, this kind of thing would be tremendously.

Impactful for a company like Amazon, it would certainly get them to take responsibility for their drivers. There was a national labor relations board case, uh, a few years back now that dictated that Amazon should be considered a joint employer of its delivery workforce. And they had something like, I don’t know, seven criteria by which you should judge whether or not someone can be a joint employer and Amazon fulfilled all seven, like Amazon so dictates their work terms that I think it’s ridiculous to say that they’re not their actual employer.

So this kind of regulatory thing, especially in cities like New York, but then, I don’t know, la, San Francisco, Chicago, I think it could be tremendously impactful.

So yeah, I think that we need to figure out ways to reverse the union density trend in the United States. And to my mind, if you just look at labor history, union density didn’t grow gradually in any given period, right? It’s not like there was a 30 year period where it grew by, you know, half a percentage point every year.

Labor grows in upsurge, it grows in big upsurge. And the biggest upsurge in American history was the 1930s when the Congress, uh, of industrial organizations broke off from the American Federation of Labor. And, you know, there are a whole bunch of things that made that moment successful for labor. But one of the big ones was that the CIO leaders, the Congress of Industrial organizations leaders, took the big corporations of the day to be major targets.

So General Motors, Ford, ge, US Steel, et cetera, they said we’re, we’re just not gonna have a seat at the political table until these companies are organized. And I think the struggle to organize Amazon today is something like that fight in the 1930s.

My grandfather was part of bloody Thursday here in San Francisco, which I don’t know if folks are familiar with, but, um, the dock workers strike and the killing of several union members during that, uh,

But, um,

And I just feel like a lot of this stuff that, like I’ve asked you about and the stuff that I like talking about is kind of how cities are systems that impact the way that people live in their quality of life. And so obviously labor is a big part of that, but it’s just interesting to see kind of how Amazon has become such a leviathan in this area and how much kind of they do influence.

And talking with Stacy and talking with others about it, it’s just, I don’t think people realize how kind of thick it is.

We’ve never seen a company quite like this, that it’s been so successful in so many different segments. It’s the second largest retailer by revenue. It’s the largest cloud computing company by revenue. It’s now the largest parcel carrier by volume. It just surpassed, uh, the United States Postal Service actually just earlier this year.

It’s just growing in every direction and now it’s taken on pharmacy and healthcare and grocery. It’s a really fascinating company from that perspective, and I think that it is finding ways into infrastructure in all sorts of ways.

There are real disincentives in the logistics space to pursue too much efficiency or to install new automation and warehouses or whatnot. This stuff is just really expensive. It’s not quite as, it doesn’t, it doesn’t result in the same kinds of efficiency gains as in manufacturing. I think manufacturing, it’s really sort of a closed environment, and so the introduction of robotics is just a win-win and logistics, it’s a little bit tougher, but.

Amazon’s been really pushing the envelope in terms of like what you can do within a warehouse space, dealing with items that are oftentimes not as regular and uniform as in manufacturing. And yeah, watching the ways in which them pushing the whole industry in a particular direction has been really interesting.

I mean, sometimes to the detriment of other companies, Kroger, which is the sort of largest standalone grocer in the country. They introduced these new automated cold chain warehouses that were doing fulfillment for different Kroger brands, uh, around the country. And they were just really committed to it.

And it was kind of unclear why, ’cause it was losing money for many years. They just recently shuttered the program. But to me it’s an example of how everyone wants to participate in this thing that Amazon’s created, even though it might not make sense for them to, like traditional retail and e-commerce are pretty different operational logics and it’s really interesting to see all these companies, you know, follow in Amazon’s footsteps even though you know there’s not a business case for them to do so.

So it really is changing the logistics landscape in so many ways beyond just what it itself is doing.

Uh, and interestingly, the places where that’s not true, you would guess that they’re, you know, rural areas in Wyoming or something, but yeah, exactly. It’s San Francisco. It’s Seattle, it’s technically New York City. So, yeah, I mean a lot of these, like more liberal urban areas are excluded from that. But most of the population lives pretty close to Walmart.

And so initially they wanted to say. Hey, if someone orders something online, we’ll fulfill it in store. Just pick it off the shelf. It’s already there, right? Give it to a Walmart Spark driver, which is their version of kind of their gig work program for deliveries, and we can participate in e-commerce as well.

Well, it turns out there’s all sorts of problems with that. If you are picking a whole bunch of stuff on the shelves, you’re not replenishing at the same rate necessarily, and so the in-store experience is degraded. You’re also asking in-store associates to do essentially double work, both their retail work and their e-commerce work, and so they’re gonna be in back, you know, putting things in packages rather than on the floor, helping customers.

I think that most companies have realized that these two things just don’t work together very well. Like if you’re gonna have an e-commerce operation. You might be able to add smaller fulfillment and delivery operations to the back of the store as many of the big retailers have done. But to just think that you can do e-commerce with structures of traditional retail seems, it seems to be sinking in that that’s just not workable.

The difference between, you know, going to a store, which I needed other things. So, like you said earlier, like I did fill the cart, but you know, it didn’t have the thing that I wanted, so that had to go online to get it.

Lowe’s and Home Depot have also been revolutionizing their last mile strategy and trying to get things like not just leaf blowers, but big appliances and patio furniture and all sorts of stuff to get it to customers within a day or two, which is a really interesting logistical problem. I mean, you’re not dealing with.

Parcel vans and gig drivers, you’re dealing with flatbed delivery drivers and trying to like work out those logistics. So again, it’s, it’s one of those things where Amazon has set the template for so many other companies. And so even in the case of a Home Depot or a Lowe’s where you’re, you’re dealing with things that you should kind of, you should kind of expect to be slower than if you order an iPhone case, right?

I mean, home Depot has spent a ton over the last seven or eight years making sure that it can get its full product catalog, not just the stuff in store, but its full product catalog available for pretty speedy delivery.

You can’t get two cars past each other with the parking lane on both sides. It was a streetcar street originally, but you know, when I, I was actually this room here that I’m sitting in, I, I was renovating it two years ago and to get the floors, I had to order them from Illinois. And so they’re like, okay, well they get it on a s truck, it ships across the country, and then they come and they’re like, well, we have to stop in the middle of your street.

Nothing can get by. All the Waymo’s are going crazy ’cause it can’t get past what’s going on in the street and then unload all of this flooring. And so it’s interesting from like a urban transportation standpoint too, what that impacts all these drivers buzzing around all these big trucks with appliances buzzing around, um, the Waymo’s that are getting introduced into the system.

It’s totally changing, like the city and, and the way that transportation is as well, in addition to like all of the other logistical things that are happening.

Like the flooring that you ordered from Illinois, it’s obviously covering a lot of miles there. But that last mile, getting it from the warehouse and the outskirts of San Francisco to your place, it’s just a logistical nightmare. And again, I mean, Amazon’s kind of a leader here in trying to figure out ways to navigate cities that don’t involve putting more vans on the road.

You know, I think that actually there’s a lot in their last mile strategy for cities that could be good under different circumstances. Trying to figure out alternative routes that don’t don’t apply to the suburbs, for instance, makes a lot of sense for Dent cities like San Francisco or Seattle or, or New York City.

But the way in which they’re going about it is just in their own benefit. And again, oftentimes is a form of labor discipline rather than practicality.

I think that we treat USPS in a contradictory fashion, which is to say it runs as an independent agency and people judge it like it’s a business, but it’s clearly not. It’s a public service and we should fund it like a public service. But the interesting thing recently is that Amazon’s become quite a player in the story of the post office.

Uh, Amazon is the post office’s largest contract. So, you know, in addition to being a competitor to USPS, it’s also their largest customer, which is kind of interesting. They recently cut that contract by 20%. And from what I’ve heard, they’re very intent on cutting it even more in the future. They’ve been rapidly building out their rural delivery network and I said at the beginning that they’ve very systematically built around population centers and that’s ’cause they wanna build around where customers are.

Their whole rural build out. It’s a huge departure from their traditional strategy and you know, one can only guess as to why they’re doing that. Rural customers buy things like suburban and urban customers, and so there’s that part of it. But I think a big justification, I would guess, internally is that they see postal privatization on the horizon, and they want to make a legitimate bid to be able to benefit from that.

You know, 10 years ago, the postal privatization conversation was about UPS, FedEx and DHL, right? Like those were the companies that were gonna benefit from privatization. Amazon snuck in there really quickly. I mean, this is a company that had no outbound transportation capacity whatsoever. It only had fulfillment centers, like no sortation centers or delivery stations.

They had none of that 12 years ago. In 12 years, they’re doing more parcel volume than U-S-P-S-U-P-S and FedEx. I mean, it’s a really wild story, but because of that, they’re now in contention and because of their huge contract with USPS, they’re kind of in the driver’s seat in terms of how to benefit from postal privatization.

So I would say that they’re the company to watch in terms of what they say about it. I’m not sure now is the time to strike. I mean, I would say in general, because postal privatization requires congressional action, we’re unlikely to see something just ’cause legislators on both sides of the aisle get kind of queasy at the idea.

But I mean, we’re at a pretty u unique political time, and it feels like this administration is letting no crisis go to waste. I mean, the news is coming very quickly these days, and so it’s something that I’m watching and I think that, uh, especially if Amazon starts to make noise about the post office, everyone should be quite concerned.

That’s one of their big ideas that they’ve had for a really long time. And make the long distance Amtrak trains, for example, like a public good, but then take the actual value creation engine of the Northeast corridor off the books and then sell it to somebody for parts so that somebody else can make money off of it.

And it seems just. Shortsighted. Also, it gets to this point that I’ve been trying to make about like the value of cities, the value of places, and the value that’s created by places for these companies that they don’t pay back into. This idea that we try to run cities and transportation networks like a business, but they’re not really businesses.

They’re actually, you know, for public good. And so we should treat them differently than say what comes in from a, a revenue standpoint and what goes out from a spending standpoint. It’s not, that’s not how you should look at it because. These companies, their customers are very specific or they’re a certain segment, but cities, everybody’s their customer.

Everybody has to be, they have to serve everybody. And so I don’t understand why we’re thinking about taking away a very, very sound institution that got messed up by a bunch of rules and regulations that Congress put in front of it and making it into something that it’s not. And so I’m frustrated by that too.

I, I, I’m on your team related to this specific thing.

And so it was responsible for its own revenue generation. And you know, the implicit addendum to that was that, yeah, it could be subsidized, USPS is under all sorts of obligations that private businesses are not. But it was a clever ploy because for the last 20 years or something, conservatives have been saying that, oh, this is a failing business.

It constantly loses money. And it’s like, well, you know, we don’t treat other public services this way as an independent agency. And so the idea that USPS is somehow a failing business as if it operates on those terms is just really ridiculous. I mean, for listeners who don’t know, USPS is under what’s called the universal service obligation, which means that it’s required to deliver mail to every single address in the country six days a week.

That is not something that any business can do. I’m sorry. And I, in, in the article that I mentioned, I spell out the precise reasons why, like, not just that it’s not profitable to do, but that literally even Amazon with all its logistical prowess does not have the capability to do what USPS currently does.

It’s a remarkable thing. I mean, we should treat USPS as a logistical marvel. It should be a point of national pride, and it’s, again, logistically capable in a way that no private company is. And so the people who are pushing privatization, I think they’re pushing for the elimination of something that, again, should be a source of national pride.

But when I was saw him at a presentation once, he was talking about like kind of smart growth for logistics and thinking about the ports of Long Beach and others where instead of having the Inland Empire warehousing districts and things like that, where you have to take the containers off the boat, you have to put it on a truck, and then it has to go through Los Angeles to this other space, creating tons of congestion.

Like why is it that we cannot. Make more of these places be at the port rather than inland or in Bakersfield or wherever else they are. I think that’s another fascinating idea too, is like we talk about smart growth for urban development, but we often just kind of overlook the freight or the logistics of everything else.

Mm-hmm. And we think about housing, when we think about moving people to their jobs. We think about, and obviously not all transportations think this way, but from a general standpoint in the urbanism world, we just have been a hands off in terms of this type of discussion.

Mm-hmm. Um, it’s just there’s not the real estate at this point to build out the ports so that you’d have better infrastructure. I mean, there’s from Long Beach in la there’s the Alameda Corridor, which is a, you know, exclusive cargo rail corridor going, uh, ironically into Los Angeles and then out to the Inland Empire.

So there’s little things like that, but I. It’s really difficult for me to see an alternative to the system you described. So, you know, you being in San Francisco stuff’s coming into the Port of Oakland. It’s for the most part, you know, going out to Stockton or something and then coming back to San Francisco.

So there’s certain inefficiencies there. I just don’t know where the space would be, you know, and like the Port of Oakland, where would be the space to build out the local infrastructure to unpack these huge containers at the ports or near the ports as it, I mean, as it used to be. I feel like we’ve maybe lost that opportunity.

I mean, it used to be the case that the warehousing district was across the street from the ports. And one of the reasons why, um, I mean you mentioned Bloody Thursday. One of the reasons why the ILWU is the International Longshore and Warehouse Union is because the longshoremen were looking across the street at the warehouse workers and saying, well, wait a second, they’re, they’re dealing with the same goods that we are.

Like why aren’t they part of the union? So it used to be, yeah, geographically condensed in that way. I would say one of the reasons why these warehouses tend to be on the outskirts of cities and not right next to the ports is for that very reason employers didn’t want to deal with the power of the long longshore unions, which still exercise an enormous amount of structural power to this day.

There are. You know, drayage companies and intermodal companies that feel that pressure every once in a while. And if, you know, the Longshore Union refuses to deliver goods to your warehouse right next to the ports, you’re not doing business. I mean, that’s it. And so to, to just have that geographic distance and to put non-union truckers in between the warehouses and the ports, it’s actually a big benefit to the companies involved.

I don’t know if you’ve, you’ve read that one, but he talks about kind of the, the, the impact on West Oakland from the port, all the, the wealth and the value that’s coming into the port, but skips this neighborhood that’s right next to it and actually impacts it even more So, those types of things. I’m thinking about that and like.

I mentioned earlier all those articles about the Inland Empire and a lot of the same kind of issues coming up as well. So the public health aspect of it, in addition to the negative externalities. So I just think it’s, it’s interesting discussion to have because you do have all these impacts of these companies that are outside of the typical discussion of traffic and you know where you’re gonna put the containers.

Again, the problem is municipal governance, city counselors are willing to do all sorts of things that are against popular interest. You know, in exchange for the promise of jobs. Not even like the actual realization of jobs in their community, but just the promise of jobs. And until that dynamic changes, I mean, at the municipal level, it’s difficult to see much change.

But I mean, my comment wasn’t about the environmental aspects, it was just logistically at this point. Yeah. I mean, it’s difficult to imagine what that would look like. Exactly. I can see better build out of. Intermodal in the us. That’s sort of low hanging fruit to my mind. That is actually much more environmentally friendly.

Things can go on trains, not just for much cheaper for companies, but with much less fuel than individual trucks. So that’s, that’s one thing that I think would be realizable better building out intermodal stations around the ports. Yeah.

Like in terms of just the logistics networks, the warehousing, all the stuff that we’ve seen kind of explode in the us?

Uh, it’s, it’s really like the industrial dynamism of China at this moment I think is. Pretty difficult to describe. I know that people, yeah, it’s a contentious issue, but definitely in terms of the ports Chinese capacity, far outstrips anything that happens in the us there’s just much less constraint around it in terms of like whether the warehousing districts are far from the ports in a way that it’s true on the West Coast.

Certainly that’s a question I don’t know as much. That could be something more specific to the us, but yeah, it’s a good question that I kinda wanna look into. And for all the talk of, you know, nearshoring or bringing back domestic manufacturing and whatnot. If you look at a company like Amazon, something like 80% of its imports come from China.

Still, I mean, it’s like, it’s a pretty direct pipeline with Walmart. I would say it’s similar, 70 to 80% of their goods come from China. It’s a remarkable one-way relationship there, and they’ve really, really built out their port capacity to accommodate it. I mean, I’m sure there’s, there’s bluster as there often is around these things, but just in terms of the sheer container volume that they’re doing, it’s, it’s pretty impressive.

My next column for Phenomenal World is gonna be about trying to spell out concretely why postal privatization would be a social disaster. It’s something I, I feel like I get fired up about very little in life. But, um, this is an issue about which I’m very passionate and I think, uh, anyone pushing postal privatization, I think, uh, is mistaken, very straightforwardly.

And I’m also working on something on broad scale changes in the trucking industry that are happening right now that’s introducing a new labor market tightness, I would argue. So those things are both coming out with phenomenal world.

I read up on a number of your articles and stuff and just like super exciting and interesting how it all kind of connects with this city planning idea. Thanks for joining us. We really appreciate your time.