Tuesday, December 14, 2010

Hub and Wheel Transport

Shipping company FedEx has a very interesting system for achieving shipping efficiency: It all goes through one point. Hub and Spoke seems like a poor model for moving goods, especially considering it can up to double the distance that a given package has to travel. The primary advantage is in the economy of scale.
Let us take the example of mail. I can mail a letter to a faraway country for a mere $5, which will travel by plane and be in the recipient's hands by the end of the day. This could not possibly be so if this were the only letter going, because it costs $40,000 for the plane to even take off, and the plane cost several million dollars to purchase in the first place. However, there are lots of letters going. The plane will be full of letters, and each letter writer has paid $5 to send the letter. The millions of letters have funded millions of dollars for the operation to go through, and so it does, and everyone gets their letters for a reasonable price.
Similarly with the parcels. Lets say that I'm sending Christmas presents to various friends and family members located all over the country. A traditional distributor has to put them all on separate trucks that all race to their respective destinations, but the hub and spoke model can take them to the nearest big city (Houston), which puts them on a train with all the millions of other packages. One big advantage of a train is that once you have one going, adding one more package is so trivial as to be practically free. All of this goes to the center distributor.
And at that center, they have a concentration of expertise. People who excel at making sure the package is definitely on the right train, knowing that "Settle" is a common typo of "Seattle," knowing that people tend to mispell "Jonston Road" or whatever, and being able to fix it. And again, the train going to Seattle has every package in the country that's headed there. One train is way way way cheaper than ten thousand trucks.
This makes me wonder if there would be a way to do this for personal transportation. One very fast subway takes you to a big station at a common location (like the center of a large city), and from there, one can take very fast trains straight to whatever other place you need to go to. All trains would be high speed express trains, and collisions would be impossible because no two trains overlap in any way. You might have to go from point A to point B first, but B to your destination C isn't interrupted by all the people who first want to stop at D, E, or F.

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