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Overnight Shipping and Networks

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In the day and age of Amazon Prime, 2-day shipping, and even overnight shipping, the instantaneous shipment and delivery of online goods has become commonplace. Statistics show the number of actual physical stores sales declining, while online sales are flying through the roof. In order to keep up with the consumer expectation of “order today, get it tomorrow”, shipping companies utilize a robust system of networks in order to support the high demand of overnight and 2-day shipping.

In a Popular Mechanics article, the infrastructure of overnight shipping is explained. Looking at FedEx as the leader of overnight shipping, this article, and accompanying YouTube video, unpack the network structure of overnight shipping via cargo airplane. As we have already learned in Networks, networks are comprised of nodes and edges. In the case of cargo shipping, we can imagine the nodes being major airport hubs, where packages are shipped, filed and routed to their final destinations. The edges in this cargo shipping network would be characterized by the routes taken by airplanes as they travel from airport hub to airport hub. For FedEx, their “super-hub” in located in Memphis, Tennessee. The reason why Memphis is their largest and busiest hub is not because Memphis receives a high volume of packages, but instead because Memphis is very close to the mean population center of the United States. Having a central shipping hub located near the mean population center allows for FedEx to reach the most people in the quickest amount of time. In essence, Memphis serves as a type of local bridge that connects all the other smaller hubs and end destination nodes with the larger FedEx network that they would otherwise be very far away from.

The incredibly large and complex network of routes and hubs that characterize the overnight shipping infrastructure are almost textbook examples networks. These shipping hubs have directed links that describe the most efficient route from one hub to the other. Local bridge hubs are used to connect smaller, more remote hubs to the whole of the network which allows for the most efficient transportation and goods, as well as the most cost efficient options to get a package from point A to point B. As routes get more complicated aspects of game theory are introduced to the shipping network. Shipping companies face huge competition, FedEx is in direct competition with DHL and UPS, and all these companies are trying to deliver the most packages, in the fastest way possible All this while competing with each other over airport runway space and airplane routing. Being able to identify different hubs and routing options is integral to the efficiency of these companies. If all companies were to route their packages from Phoenix to Memphis to Boston, for example, we would encounter a slow-down, similar to the traffic example of game theory explained in class. However, if FedEx uses game theory to identify which hub UPS would use for a Phoenix to Memphis to Boston route, FedEx would be able to maximize efficiency and discover that a more efficient route would actually be from Phoenix to Fort Worth to Boston.

As we can see, some of the most integral aspects of our 21st century lives rely heavily on systems of networks and carefully calculated game theory in order to maintain the level of efficiency that consumers expect, as well as levels of cost efficiency that companies need. To see near “textbook” application of networks and game theory, we need look no further than Amazon Prime and overnight shipping.




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September 2018