So this is a rather niche question so I hope it is still relevant to this group, but I was thinking. The big package transport companies(in the US this is UPS and FedEx) make most of their air cargo money on overnight packages, where the business model is pretty straightforward. Have packages fly between a small number of hubs each night so you can relatively economically cover large areas with overnight service, because each plane is as full as it can be. The better question is how the same air cargo operation can transport the same packages in two days while being so much cheaper that they can charge 1/3 the cost of overnight. I can come up with a few ways, such as driving the package to a further away airport so you can put it on only 1 flight, or trying to drive it to a big hub before flying it, but all of these business models seem questionable at best because they seem to apply to niche cases only. Does anyone with more knowledge of the subject know the answer?
I used to work at Amazon, though nowhere near fulfillment so I’m not an expert but can give you a general perspective from within the company. Carriers also charge the seller for shipping services, so what you pay for as the buyer may be different. Costs are also offset by volume of packages. With 2 days the logistics become less tight than with 1 day. Ground shipping becomes more of a possibility, and is much less expensive comparatively.
This next one may be Amazon specific, but they would preemptively distribute some products shipped from sellers in closer warehouses. If they have to hold the inventory anyways, holding it closer to a metropolitan area makes it easier to use cheaper ground shipping methods. With that in mind, I know inventory holding costs were more of a focus for cost optimization internally.
Not an expert as well, but I’ll share my experience. Used to work for a company that contracted with multiple shipping companies mainly for large palletized freight shipments (FedEx, R&L), but not all of them (UPS, other local freight). We had a business contract with FedEx so our shipping rate for both parcel and freight was ~50-60% cheaper than their standard rate if you were to try to schedule/ship something yourself as an individual, but we still used UPS time to time if a client needed it overnight and the FedEx truck already made it’s stop for the day. For example, FedEx website would quote ~$1400 to pickup and ship a pallet shipment standard from your residential address (this would include lift-gate truck service), whereas it would cost our company $450 because they have a regular freight truck that stops by our company twice a day. Of course we ship out much higher volume, so that’s where FedEx would set their discount pricing to ensure they profit in the end over a long duration.
If a pallet needed to go somewhere overnight, that price can easily double or quadruple depending if it was domestic or overseas, but nothing much changes from my end other than changing the shipping label type.
With our FedEx contract, we also had a regional manager contact for support if issues occurred with the shipment that had much quicker response time than going through their standard support routes.