FedEx CIO Looks to Industry Collaboration to Scale Blockchain
Technology is expected to smooth the way shipments are delivered, though the speed at which this happens depends on how well various companies work together
Blockchain is expected within a few years to become an “inevitable and essential” tool in tracking goods and reducing fraud in the supply chain, said FedEx Corp.’s chief information officer—but widespread collaboration will be needed for the technology to really take off.
The CIO, Rob Carter, is an advocate for standards around blockchain’s potential uses in the transportation industry. “We think this is something that radically reduces friction and creates authenticity as things move around our networks,” he said.
Best known as the record-keeping system behind cryptocurrencies, blockchain is a data structure that makes it possible to create and share a digital ledger of transactions among various parties. The data, encrypted and unchangeable, is always up to date on all participants’ systems, making blockchain a potentially powerful tool for say, tracking a package’s movement across multiple parties.
By 2023, blockchain is expected to help support the global movement and tracking of $2 trillion goods and services annually, according to technology research firm Gartner Inc. That includes raw materials, spare parts, finished goods and service-infrastructure for maintenance and repair, Gartner said.
But first, industry players need to collaborate and advocate for new regulations, Mr. Carter said. The Blockchain in Transport Alliance—an industry organization with nearly 500 members, including FedEx and United Parcel Service Inc. —is working on developing common standards around the technology.
While FedEx keeps detailed records of what happens to a shipment using its own databases and internal systems, a blockchain shared across the industry would allow the company to track freight even when it moves to parts of the supply chain it doesn’t own, such as rail lines, CIO Journal has previously reported. Beyond the freight business, Mr. Carter has said before that blockchain could provide more transparency and reliability for shipments of items across the aerospace, pharmaceutical, automotive and health-care industries.
Rival DHL Express also agrees on the need for collaboration and standards. Blockchain’s potential to automatically track, trace and approve the legality of packages at every point in a supply chain could expedite customs clearance and reduce wait times at borders, said Eugene Laney, head of international government affairs for DHL Express USA, part of Deutsche Post AG .
Hours of delays at the U.S.-Mexican border are common for trucks delivering commercial goods, which is costly for DHL Express USA. Currently, the process to get packages through the border requires a mix of paper and electronic authentication of information about the contents of the shipment, its origin and destination, Mr. Laney said.
Blockchain could help consolidate that data, instead of having multiple, disconnected sources of information, speeding up the process and giving customers a better idea of when deliveries are expected, Mr. Laney said. People could also use blockchain to automatically execute many transfers of packages such as those from airlines to truck carriers, and truck carriers to terminal operators and warehouses, he said.
But it’s important that standards and protocols are developed for the use of blockchain in these scenarios, Mr. Laney said.
“Blockchain won’t work in a perfect environment unless everyone is cooperating,” he said. That includes DHL Express, warehouses, terminal operators, ocean carriers, customs brokers, e-commerce companies and manufacturers, he said. “Everyone has to be involved in the process and has to share as much information as possible,” he said.