News / FedEx teams with Microsoft for a revolution, but is it just playing catch-up?

© Vasile Bobirnac

FedEx founder and leader Fred Smith has promised a revolution – but some claim the firm is merely playing ‘catch-up’.

This week, FedEx and Microsoft announced a multi-year collaboration, combining the global digital and logistics network of the integrator with the tech firm’s intelligent cloud computing and artificial intelligence (AI) capabilities.

They intend to create joint offerings powered by Azure, Microsoft’s cloud-based computing network, and Dynamics 365, it’s cloud-based enterprise resource planning and customer relationship management applications, utilising AI tools.

“We will combine the immense power of technology with the vast scale of our infrastructure to help revolutionise commerce,” declared Mr Smith.

The first fruit of the collaboration will be FedEx Surround, to be rolled out in the summer at no additional cost for customers, providing near-real-time visibility down to the granular level of a postcode.

By plugging into external data points and feeding this input into Microsoft’s AI capabilities, FedEx Surround allows users to factor-in elements like severe weather or natural disasters, mechanical delays or global commerce conditions, so they can respond faster to emerging problems and avoid slowdowns before they occur.

Mr Smith said users could see that their product was not selling in one area but in demand in others and could shift inventory accordingly. The result should be not only a smoother, more agile supply chain but also a more optimised sales process.

“The sales process, which keeps the enterprise in business, is highly distributed,” Mr Smith said. “There’s a lot of guesswork and a lot of extra inventory.”

“With every package that ships, FedEx Surround will analyse past trends to identify future opportunities for streamlining shipping, creating a stronger and more resilient commercial ecosystem,” said FedEx and Microsoft.

They intend to develop other solutions that will leverage more Microsoft technologies, including the Dynamics 365 suite.

“This includes re-imagining commerce experiences for businesses to offer consumers more integrated ways to shop, and faster and more efficient deliveries,” they said.

Chase Flashman, co-founder and CEO of ShipSights, which provides shippers assistance to reduce their transport spend, thinks the new offering will meet a need in the market.

“It certainly looks like a good and useful service to provide,” he said, adding that sees the goal of the FedEx-Microsoft relationship “to provide a rounded e-commerce solution that is plug & play, to compete alongside/against Amazon”.

Both parties are clearly looking to strengthen their position vis-a-vis Amazon, but FedEx also has some catching-up to do in the competition with UPS. And Mr Flashman doubted that the elements of FedEx Surround would amount to a revolution.

“We view it as a catch-up more than a revolution,” he explained. “A number of 3PLs, including UPS, already offer similar capabilities. If anything, this is giving FedEx a means to quickly catch up with its competitors.”

As with the collaboration agreement with Freightos announced in early March, FedEx is teaming with a provider that already has the necessary technology so it does not have to re-invent the wheel, he added.

The drive to mesh improved supply chain visibility with the incorporation of external data like weather, traffic and market information, and leveraging AI to utilise this, is the way the market is heading, Mr Flashman said, noting that several players were working on such solutions.

“And customers may have data privacy and security concerns,” he added. “Pricing for the service has not been announced yet but it could be prohibitive for small-to-medium size customers – those that could potentially benefit the most from such a service.

“FedEx and Microsoft will need to demonstrate what sets their product(s) apart from the rest of the market.”