Transport and logistics giant FedEx Corp. is testing blockchain technology for tracking high-value cargo, and sees the software as "the next frontier" for worldwide supply chains, company Chairman and CEO Fred Smith told a technology conference today.
The test is part of FedEx' effort to improve customer service and fend off competition by deploying blockchain and internet of things (IoT) technologies, Smith said at the Consensus 2018 event in New York, according to published reports. Companies that fail to adopt blockchain and other new technologies will face "extinction," Smith warned.
FedEx will initially apply blockchain to tracking applications within its palletized freight segment, and is also exploring tests of blockchain for minimizing disputes and discrepancies by creating a common data language, FedEx spokeswoman Jennifer Caccavo Cordeau said in an email. Those tests aim to resolve issues of custodial control, particularly within global supply chains, and could drive down operational costs by removing friction in communications, she said.
The company is also pushing an initiative to involve the entire industry with blockchain standards, FedEx CIO Robert Carter said in a statement. "Many things moving through supply chains get touched by more than one carrier," Carter said. "So the idea that you can create a blockchain for goods moving within the context of transportation is really powerful."
Blockchain technology enables the secure sharing of data between business partners, using a "distributed ledger" of information that can be accessed by all members of a particular blockchain, but cannot be changed by any individual without approval from the group.
This is not FedEx' first foray into developing applications for blockchain technology. The company has joined industry groups such as the Blockchain Research Institute and the Blockchain in Transport Alliance (BiTA), an industry trade group that serves to unite a broad array of member companies in guiding the development of blockchain-based data-sharing software in the transportation industry.
As a board member of BiTA, FedEx is working closely with other members to develop industry standards, Craig Fuller, BiTA's co-founder, said in an email. FedEx leverages technology to handle the large volumes of information needed to provide its customers with services like fast delivery and visibility into shipment locations, he said.
"FedEx already collects an enormous amount of data that it uses for its own internal performance metrics, but blockchain will be the way FedEx shares that data with its customers on a reliable and secure platform," Fuller said. "If FedEx succeeds in building out its blockchain infrastructure, shippers, and their customers will be 'on the same page', so to speak, and will be able to collaborate on finding further efficiencies in the supply chain."