Today at the Consensus event in New York, the founder of FedEx, Frederick W. Smith, said that “Blockchain has the potential to completely revolutionize trade across borders.”
The FedEx Chairman has a pedigree for seeing tech potential. In the 1970s he stated that the information about the package is as important as the package itself.
Don Tapscott asked Smith whether it would be best to be a fast follower or a leader in this area. Smith responded: “Any leadership initiative or entrepreneurial venture is high risk, high reward. The people who get out there with the newest product or service, with the most advanced technology, usually create an almost unassailable position. Unless they give it up or make some sort of mistake.”
“So when you stop innovating, or when you stop embracing change, you’re really in the process of commoditization at best, and extinction more probably. Larger enterprises, in particular, find it very uncomfortable to change direction, to innovate. We have worked that issue as hard as we’ve worked the cultural issue.”
“So the internet of things and blockchain, it’s clearly evolving, and we intend to embrace and maintain our leadership in the industry we created.”
Cost, benefit, and scalability
FedEx CIO Robert Carter contrasted the small cost involved with blockchain with the risk of not engaging and being left behind. “I’m constantly amazed by some of my peers in industry at large. They’re talking about straws in the wind and hype and things like that. How do you know? We believe that it’s really important to stay engaged at that edge. And the more we engage in this one, the more real it feels to us.”
The CIO explained the best place to start is the container industry. Primarily because there are far fewer containers to track compared to parcels. FedEx moves 12m+ shipments daily which doubles during peak season. For every 10m shipments, there are 100m transactions inside Fedex alone.
While he believes the technology will scale for parcels, right now the focus is on smaller volume, but higher value containers. He estimated it would impact the logistics sector in the short term, not just the long term.
Container shipping is also FedEx’s focus with BiTA, the transport standards alliance, where they were founder members.
Cooperation and competition
Carter sidestepped the competition question, though Fedex’s BiTA membership shows a willingness to engage. However, he believes in sharing. “There are all kinds of processes that we think need to be shared between customers, carriers, customs authorities. All of those things have a very high need for information sharing, and we’re convinced this is the right way to go.”
Smith, the FedEx Chairman concluded his comments by saying “We’re quite confident it has big, big implications in supply chain, transportation, and logistics.”