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On November 19, 2016, CaptainKoloth commented on Where’s my box? :

What an interesting innovation. Railroads have long struggled with a similar problem- how to track the many hundreds of thousands of cars in their network so as to properly optimize their scheduling and track their progress? They first experimented with optical tracking of bar codes on freight car sides before moving to low-power RFID tags, which are now fairly universal throughout the industry [1]. But container shipping is that much more dominant for international trade and faces the added challenge of having long periods at sea with access to minimal communications infrastructure. The satellite communication they use which you discuss seems like the logical answer to this problem.

You raise a good question about costs- would shipping companies view the costs of these devices as worth the savings in time and increased information flow they would yield? I would think so, especially as it would seem to help significantly with the bullwhip effect, but there is an extremely large number of containers that would need to be retrofitted, and as we know, companies often make short term money-saving decisions at the expense of their long term interests. While the Baltic Dry Index (the main shipping price indicator) has risen somewhat in the aftermath of Trump’s election [2], it is still historically very low and I wonder if shippers might make the calculation that it’s easier for them to just throw in a few more containers at these rates rather than make the enormous investment necessary to upgrade containers. Don’t get me wrong; I think this is a fantastic innovation and the fact that MSC/CMA CGM are investing in it is a very good sign in my mind; the point I’m making is rather that, if I were Traxens, I would try very hard to make the case to my customers that the long-term cost savings and increased information on the location of my shipments is easily worth whatever the relatively small upfront costs of installation are likely to be. As we saw in the Barilla case, even if the benefits of a change in the supply chain are very clearly and easily demonstrated, you still have to demonstrate that value to each stakeholder in the chain before you can make the change; this is the challenge that Traxens will now face.

[1] Thompson, Keith. “AEI Data Tags and Readers”. Trains Magazine Online. 1 May 2006. Retrieved 19 November 2016.
[2] Dieterich, Chris. “‘Shipping Gets Weird’: Shares Surge as Analysts Struggle for Explanations”. The Wall Street Journal. 16 November 2016. Retrieved 19 November 2016.

On November 19, 2016, CaptainKoloth commented on Tractors & Technology: John Deere’s Self-Driving Tractors :

I think this raises several really interesting issues. First, to the last point of the cost of the tractors, I wonder if John Deere could invest in IoT technologies in its factories or supply chain to produce their tractors more efficiently and be able to reduce the end price to farmers. Also, assuming that autonomous tractors and other farm equipment would enable farmers to reduce head counts at their farms, I think John Deere could pitch the equipment as paying itself back partially in the salaries the farmers save on the workers replaced by autonomous tractors. I think an argument could also be made that the autonomous driving software for tractors could be (slightly) less robust than that for cars since they presumably will largely be used in areas nearly devoid of people or obstacles to run into.

There has recently been something of a boom in investment in UAVs (drones) for agricultural use [1] and I wonder if there is a way that John Deere could integrate aerial robotics with its autonomous tractors, either through feeding data to the tractors on where they should go next, or performing some sort of subsidiary navigational functions. You raise an interesting point also re: subscriptions- is the future for John Deere in selling autonomous machinery, or in selling the software that goes with it along with analytics capabilities? This article [2] (which starts with discussion of a self-driving John Deere) discusses some of the applications of data analytics as it is being applied to farming, and I wonder if John Deere’s value add in the long run lies in the provision of the equipment itself or in the creation and sale of the software run by that equipment.

[1] Anderson, Chris. “Agricultural Drones”. MIT Technology Review. Retrieved 19 November 2016.
[2] Satariano, Adam, and Alan Bjerga. “The Weather-Predicting Tech Behind $62 Billion Monsanto Bid.” Bloomberg. 9 June 2016. Retrieved 19 November 2016.

On November 19, 2016, CaptainKoloth commented on Domino’s Pizza: A Quick Service Restaurant Chain or a Tech Company? :

Much as I detest the waterlogged crackers that Domino’s tops with some ketchup and stale cheddar and calls a pizza, I do think they are making a strong effort to progress in the digital space. You mention autonomous delivery- and indeed, just a few days ago I noticed an article describing how Domino’s has just made the world’s first pizza deliveries by drone [1]. As autonomous vehicles continue to receive enormous investment I think that autonomous food and especially pizza deliveries might be one of the first and most obvious (due to it simplicity and need for quick delivery) applications of the technology. You point out that UberEATS might take some of their delivery business- I wonder if this ultimately is a good thing for Domino’s as it’s a current cost of business they might not have to bear as the world becomes more “uber-fied” and Uber-like services continue to “figure out” package delivery.

Re: their apps, I would like to see them invest more in data analytics so that, for example, if a given location can expect a certain number of pepperoni pizzas to be ordered each night, they can already be making them before they’re ordered to shorten delivery time even further. As the delivery business continues to face heavy competition and new entrants, it seems to me that the quality of their product will become more important than ever before, as low-cost delivery will now be available effectively anywhere, so people will have to order a Domino’s pizza because they want a Domino’s pizza and not simply because they offer delivery. I found an interesting article describing how they are in fact taking some steps in this direction and integrating information from, e.g., their app, Twitter, Amazon, and the USPS in an attempt to better customer behavior and preferences [2].While I truly despise their “pizza”, I have a hard time faulting their efforts in trying to address these challenges to their business model.

[1] Hongo, Hudson. “Incredible! Domino’s Completes First Delivery of Terrible Pizza by Drone”. Gizmodo. 17 November 2016. Retrieved 19 November 2016.
[2] Marr, Bernard. “Big Data-Driven Decision-Making at Domino’s Pizza”. Forbes. 6 April 2016. Retrieved 19 November 2016.

On November 19, 2016, CaptainKoloth commented on The Washington Post: An Innovative Force in the Digital News Industry :

I find this a fascinating example of digitization, as the founder of arguably the most successful internet company of all bought a flagship of one of the industries under the most pressure from the internet. Given the drastically declining readership and revenues of traditional print papers, despite their online efforts, I don’t think it is too controversial to say that the newspaper industry has yet figured out the best way to monetize its content in the digital age, especially as it struggles with the mix of free vs. paid content and quality and accuracy of reporting vs. being first to report against intense internet competition. I suspect that the star power of Bezos in and of itself is helping to attract more high-quality web engineers to the Post [1]. Amazon has several powerful tools at its disposal that it could use to try to improve the Post’s performance, not least of which is its famed set of data analytics capabilities [2] which can help it determine what content is resonating most with readers and which is less effective.

It seems to me that the most important elements that will ultimately determine the success of failure of the Post in this venture are whether they can simultaneously grow and monetize its digital presence – a challenge that has eluded, e.g., the New York Times [3] – and whether they can take a larger share of the mobile news space, which other competitors like the Wall Street Journal are investing heavily in [4]. Despite the great challenges ahead, I wouldn’t bet against many ventures heavily backed by Jeff Bezos, and as you say the availability of effectively infinite private capital from his and Amazon’s very deep pockets will give them a great deal of time and space to experiment and fail on a much more relaxed timescale than some of their competition may be facing.

[1] Kim, Eugene. “How Amazon CEO Jeff Bezos reinvented The Washington Post, the 140-year-old newspaper he bought for $250 million.” Business Insider. 15 May 2016. Retrieved 19 November 2016.
[2] Taylor, Harriet. “Amazon Super Powers Web Services with Data Analytics”. CNBC. 7 October 2015. Retrieved 19 November 2016.
[3] Ember, Sydney. “New York Times Co. Reports a Loss, and a Fall in Digital Ad Revenue”. The New York Times. 28 July 2016. Retrieved 19 November 2016.
[4] Lichter, Joseph. “Why The Wall Street Journal is Cutting Print Sections and Refocusing on its Core Coverage.” NiemanLab. 14 November 2016. Retrieved 19 November 2016.

On November 19, 2016, CaptainKoloth commented on OverDrive and the Digitization of Public Libraries :

As someone who until recently used OverDrive rather extensively through a county library system, it had not occurred to me that book publishers would view this as a fundamentally different type of product from regular library offerings. I find it particularly interesting that book publishers view the effort of going to the library as a differentiating factor that ultimately will get them more sales because people will want to avoid the extra effort of that trip. It makes me wonder how publishers’ margins on physical books sold to libraries (better, presumably, than digital, but still perhaps costing them retail sales) compares to digital books rented through the library, or if that data actually exists. Similarly I wonder why they have not tried to crack down slightly harder on the used physical book market.

I think more generally as the book industry becomes more digitized and tablet/phone devices become increasingly thin and convenient for reading, it seems almost inevitable that the publishers (and libraries) will continue to be under enormous pressure from these developments. A few years ago we saw the very public debate between Amazon and Hatchette over e-book pricing [1] and I suspect services like OverDrive exacerbate the problem for the publishers. I wonder if OverDrive could leverage and perhaps even sell back the data it gets on the identities of users reading the books- for example, could it provide demographic information that certain books are being read by given age groups, in certain chunks of pages at a time, etc.? Perhaps this information would be valuable to the publishers and could serve as an additional source of revenue to OverDrive. I wonder also as traditional bookstores like Barnes and Noble continue to struggle [2] if they will be caught in the middle as they cannot count on either the public funding and subsidization of libraries, nor on competition from Amazon ever lessening in the future.

[1] Trachtenberg, Jeffrey, and Greg Bensinger. “Amazon, Hatchette End Publishing Dispute”. The Wall Street Journal. 13 November 2014. Retrieved 19 November 2016.
[2] Alter, Alexandra. “At Barnes & Noble, Chief is New, But Earnings Woes are Old”. The New York Times. 9 September 2015. Retrieved 19 November 2016.

I found this to be a fascinating piece. In discussions of climate change, the ability of nuclear power to provide clean, nearly-zero-emission base load power is nearly always glossed over or relegated to quick mentions. As you point out, without the ability to provide clean base load power, it’s not clear to me how one is supposed to substantively reduce emissions without at the same time drastically decreasing quality of life for those populations who depend on the grid for power (i.e., nearly everyone).

I find NuScale’s business model very attractive as it is able to both provide this base load power while also contributing to fighting climate change with a near-zero-emissions source of energy. Their operating model goes to the core of a major problem with building new nuclear plants, that of what some authors have called “regulatory ratcheting” [1] – the constant tightening and adding of ever more regulations that make economic construction of nuclear plants nearly impossible, even though it can be shown that most of these regulations have a minimal impact on safety at best [1]. By focusing on simplified, modular reactors to gain quick regulatory approval, NuScale is attacking the heart of the problem. Modular reactors in particular have been identified for some time as an effective approach to dealing with regulatory barriers [2].

As you point out, the true challenge to NuScale is likely not technical or regulatory, but ultimately one of public perception. Even though the danger from coal is still far greater than nuclear even in the wake of Fukushima Daiichi [3], the public perception for whatever reason is disconnected from a quantitative assessment of risks and still views nuclear as especially dangerous. This, then, is the one area I would disagree with you on; if I were NuScale, I would try to launch a PR campaign, perhaps in conjunction with larger industry partners or advocacy groups, in an attempt to educate the public on the true risks and statistics behind nuclear power vs. the other alternatives.

[1] Cohen, Bernard. “Costs of Nuclear Power Plants: What Went Wrong?” The Nuclear Energy Option. Chapter 9. University of Pittsburgh. Retrieved 6 November 2016.
[2] Fares, Robert. “3 Ways Small Modular Reactors Overcome Existing Barriers to Nuclear”. Scientific American. May 19, 2016. Retrieved 6 November 2016.
[3] Wanjek, Christopher. “Nuclear Danger Still Dwarfed By Coal.” Live Science. April 26, 2011. Retrieved 6 November 2016.

I find this analysis interesting and well-researched, but I’m not sure I fully agree with your conclusions. The DoD certainly is undertaking major efforts to attempt to better cope with the effects of climate change, as you point out. It has invested heavily in solar energy in an attempt to lighten the physical load that soldiers must carry and in order to reduce the logistics strain introduced by needing to transport enormous quantities of fuel to isolated battle zones [1]. Additionally, the Air Force is making similar investments in renewable biofuels to power its aircraft and the Army is attempting to make its bases emission neutral in energy usage [2].

However, I would disagree that the DoD needs to “take the offensive” and “evangelize”. The operating model of the DoD is, as I read it, to carry out the orders of the commander-in-chief and civilian government to protect the security and commerce of the United States. As admirable as a certain political view may be, I think it is far outside the DoD’s function or core competency to strongly advocate for it in the public domain. While DoD personnel will always have views- for example, they surely have advised Presidents over the years as to their views on the appropriate numbers of nuclear weapons during arms negotiations with Russia/the Soviet Union- I think expression and advocacy of those views in public would be inappropriate, even if we might happen to agree with them. This was the mistake made by Douglas MacArthur and Stanley McChrystal. As you point out, the Pentagon has already been fairly vocal about its view on this subject [3], and I would not expect or want them to turn into an advocacy organization except inasmuch as it makes it views known to the other branches of government in an advisory capacity.

[1] Erwin, Sandra. “Army, Marines Face Uphill Battle To Lighten Troops’ Battery Load”. National Defense Magazine. May 2011. Retrieved 6 November 2016.
[2] Zaffos, Joshua. “US Military Forges Ahead With Plans To Combat Climate Change”. Scientific American. April 2, 2012. Retrieved 6 November 2016.
[3] Werrell, Caitlin, and Francesco Femia. “On the Record: Climate Change as a National Security Risk According to U.S. Administration Officials”. The Center For Climate and Security. February 20, 2014. Retrieved 6 November 2016.

On November 6, 2016, CaptainKoloth commented on Brave New Ocean: Opening Arctic Waterways Pose Challenges for US Navy :

Chad, I find this a very interesting perspective that I am largely in agreement with. The “icebreaker crisis” has long been simmering just beneath the surface, and I’ve noted articles pointing out the large gap between US and Russian icebreaking capabilities for years; e.g. [1]. The Russian government has for nearly a decade been making particularly aggressive moves to “claim” portions of the Arctic in order to secure access to its rich oil and gas reserves, such as the notorious 2007 incident in which a Russian submarine dropped flags and pennants on the Arctic Ocean floor [2].

I agree that a new program of icebreaker construction needs to be undertaken to close this gap and bring American icebreaker capabilities up to parity. I’m not sure I agree that UNCLOS will contribute substantially to the resolution of territorial claims in this area. As we have seen in the case of China, they have basically ignored the UN panel ruling against them on UNCLOS in the Philippines dispute and, indeed, have essentially strengthened their claims with the cooperation of Duterte [3]. Further, Denmark and Russia have both ratified UNCLOS but maintain conflicting claims to different parts of the Arctic Ocean [4]. I’m not sure exactly what the best regulatory solution might be, but I think it would need to be something with more teeth or a better enforcement mechanism than UNCLOS.

[1] Thompson, Kalee. “Where Are America’s Badly Needed Icebreakers?” Popular Mechanics. December 7, 2012. Retrieved 6 November 2016.
[2] “Russia Plants Flag on Arctic Floor” CNN. August 4, 2007. Retrieved 6 November 2016.
[3] Wong, Chun Han. “Philippines’ Duterte Not Planning To Raise South China Sea Disputes in China Visit”. Wall Street Journal. October 19, 2016. Retrieved 6 November 2016.
[4] “The Arctic: Frozen Conflict”. The Economist. December 20, 2014. Retrieved 6 November 2016.

On November 6, 2016, CaptainKoloth commented on Coal blows an ill wind :

Sander, I find this a very interesting and well-reasoned perspective that illuminates a key point which is often missed in the climate debate. As you point out, investors concerned with optics- especially extremely wealthy, high visibility ones like Norway and Calpers- are extremely loud voices in the argument that coal is essentially evil and should be replaced or divested from immediately. While the climate change impact of burning coal is indisputable, there is a clear and very direct relationship between energy usage per capita and measures of economic development and quality of life such as HDI (the human development index) [1]. While the relationship trails off at very high energy usage quantities (due in large part to the US skewing the graph), there is a very strong correlation between energy usage and HDI at lower development levels [1] . The IEA has pointed out that the UN’s goals for reduction of poverty cannot be met without additional provision of power to developing areas of the world [1], where the more expensive and advanced energy solutions may not always be realistic.

For these reasons, I think a more useful approach to take would be to focus on phasing out coal usage in more developed areas of the world, while continuing to use it to help electrify poor populations in developing countries. In the long run, coal could be phased out in these areas also, but I think a blanket approach to immediately banning coal everywhere would have significant adverse effects on these poor populations. In the short-to-medium term, as you suggest, companies like Rio Tinto can invest in cleaner coal technologies, such as carbon capture [2] or coal gasification [3] so that in those developing areas of the world Rio Tinto can provide cleaner and less-polluting coal power solutions without completely removing coal from the mix.

[1] “World Energy Outlook 2004”. Chapter 10. International Energy Agency. Retrieved 5 November 2016.
[2] “What is CCS?” Carbon Capture & Storage Association. Retrieved 5 November 2016.
[3] Anderson, Richard. “Coal Gasification: The Clean Energy of the Future?” BBC. 14 April 2014. Retrieved 5 November 2016.

On November 5, 2016, CaptainKoloth commented on Tesla talks Climate change :

I am significantly less optimistic about Tesla and I think Tesla’s actual contribution to combating climate change is questionable. When we consider the net carbon cycle required to power a Tesla vehicle, it is true that the car itself has very low emissions due to the battery, but the battery still needs to be charged off of the electric grid, which is quite heavily polluting. It is exceedingly difficult to pin down exactly how much CO2 is emitted per mile of car movement due to all the steps involved [1] (do you count initial mining of the coal that goes into a power plant to power the grid that charges a Tesla battery? The carbon expended in the manufacture of gasoline? The carbon used to manufacture the car?). But depending on exactly how you do this accounting, the fact that Tesla cars ultimately run off the grid can lead to the conclusion that there is at best a minimal net saving of CO2 emissions vs. a regular car [2] (Tesla, of course, disputes this). The production of the Tesla batteries and of the SolarCity panels are also extremely CO2-intensive processes [2].

Furthermore, I would dispute the notion that the merger with SolarCity is to promote vertical integration. The idea that every house will have a SolarCity solar panel powering a Tesla car is a compelling story, but the actual, real-life linkage of producing solar panels at a mass scale, somehow ensuring that all Tesla cars on the grid are being powered only by solar energy from these same panels, and how that in itself lowers the cost of producing cars and makes Tesla more cost efficient in production sounds more aspirational than practical to me. Investors have had the same reaction, with major criticism of the deal as both Tesla’s and SolarCity’s stock prices have dropped significantly since the deal announcement and observers have derided the deal as a way to try to save the badly floundering SolarCity by shifting cash from Tesla’s shareholders to SolarCity. [3]

While Tesla cars are definitely cleaner than their gas-burning cousins and promote admirable ideas, we should carefully examine their claims and the full life cycle of the cars and now solar panels involved in the business before becoming overly optimistic about their contributions to fighting climate change.

[1] Oremus, Will. “How Green is a Tesla, Really”? Slate. September 9, 2013. Retrieved 5 November 2016.
[2] Wade, Lizzie. “Tesla’s Electric Cars Aren’t As Green As You Might Think”. Wired. March 31, 2016. Retrieved 5 November 2016.
[3] Assis, Claudia. “Tesla-SolarCity Deal: ‘Thinly Veiled Bailout’ or ‘Necessary Step’?” MarketWatch. November 4, 2016. Retrieved November 5, 2016.