FedEx's Smith Sees Blockchain as `Next Frontier' for Logistics

(Bloomberg) -- Convinced that blockchain is on the brink of transforming the package-delivery business, FedEx Corp. is testing the technology to track large, higher-value cargo.

“We’re quite confident that it has big, big implications in supply chain, transportation and logistics,” Chief Executive Officer Fred Smith said at a blockchain conference in New York on Monday. “It’s the next frontier that’s going to completely change worldwide supply chains.”

Blockchain uses computer code to record every step of a transaction and delivery in a permanent digital ledger, providing transparency. The ledger can’t be changed unless all involved agree, reducing common disputes over issues like time stamps, payments and damages.

FedEx’s interest in blockchain and the Internet of Things are part of the company’s strategy to improve customer service and fend off competition, Smith said. FedEx is working with an organization called the Blockchain in Transport Alliance that is attempting to set industry standards for using the technology in transportation.

Blockchain has the potential to lower transaction costs, speed up processes and free up working capital, according to the alliance.

FedEx is also experimenting with a small bluetooth-based, low-energy tracking sensor called Tron, Chief Information Officer Robert Carter said at the conference. The company has taken out more patents on Tron than any other technology in the company’s history. FedEx is also part of a team announced on May 9 that will test small drone flights at the Memphis International Airport.

Unless a company embraces new technologies such as blockchain, it will face “probably, at some point, extinction,” the CEO said.

To contact the reporter on this story: Thomas Black in Dallas at tblack@bloomberg.net.

To contact the editors responsible for this story: Brendan Case at bcase4@bloomberg.net, Susan Warren, Tony Robinson

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