Tech

Amazon Building Pipelines to Deliver Packages Direct to Living Room

Jan 08, 2015
amazon_pipeline_delivery

Photo: Thinkstock

Online retail store Amazon has unveiled plans for a new delivery service that uses pipelines to carry packages directly to consumers across the United States

Unveiled at this year's Consumer Electronic Show (CES), the service -- dubbed  “Tüb Prime” -- combines a system of pneumatic tubes with experimental magnetic levitation technology to float boxes thousands of miles in a matter of minutes.

The e-commerce behemoth began its plans on its ambitious series of tubes after being denied permission by the Federal Aviation Administration (FAA) to use flying drones to deliver products.

The Tüb Prime central hub in St. Louis has already been completed as the company begins building the delivery pneumatic tubes from coast to coast. Smaller Tüb lines will branch off and is similar to laying down new internet cable or telephone lines. Substations will be placed en route to ensure the tubes function properly.

The estimated cost of the entire pipeline system is $894 billion, which CFO Thomas Szktuak says will be financed by a highly dilutive rights issue and the largest corporate bond offering in history.

“You gotta spend money to make money,” he told Bloomberg this morning. “It may seem foolish to spend close to a trillion dollars on an unproven technology without a demonstrable market. But I’m sure our shareholders will understand the long-term vision.

“People laughed at the idea of the flying car and shopping malls on the moon. But look where we are now.”

“Amazon prides itself on looking forward,” Amazon CEO Jeff Bezos told the crowd at CES. “We don’t mind the initially loss of constructing the expansive tube because of the revenue the delivery pipeline will bring in over the coming years. It’s the next great engineering feat and who better to do it than Amazon.”

The Amazon Tüb will be included in a standard Amazon Prime subscription.

The company believes it will eventually save money by eliminating fees to traditional delivery services such as UPS and FedEx. In the long run, construction costs will be offset by delivery fees.

“You’ll be able to track your package mid-tube,” said Bezos, “and one day, an Amazon Tube will go to everyone’s house. Drones aren't the future; pneumatic tubes are.”

According to Bezos, the American Tub Prime pipeline is just the beginning. Amazon’s next ambition is to Asia. Named “Tüb Fire,” construction to Asia will be completed by 2021 and will serve to eliminate ocean freight cost.

With Chinese online marketplace, Alibaba, on Amazon’s tail, growth in Asia is a top priority for the $140 billion company. Amazon is also developing technology to de-materialize and re-materialize products, but “that’s a few years down the pipeline,” said Bezos.

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