Fedex: Blockchain technology needs industry-wide ‘team effort’
Fedex’s blockchain strategist jokes he doesn’t do a very good job of selling the technology, despite industry expectations it will make waves in international shipping.
“To kind of burst the bubble, it’s not our only database, it’s not our best database, it’s not currently very fast or very scalable and it’s not very mature, right?” said Dale Chrystie of the Memphis logistics giant’s use of blockchain.
But the technology could be transformative for logistics if Fedex and its competitors agree on and implement blockchain standards, said Chrystie, who has been Fedex’s blockchain strategist since September. Right now, supply chains are very much fragmented.
Fedex Chief Information Officer Rob Carter agrees with Chrystie. He wrote in April that the company’s peers, both large and small, will need to agree on a blockchain “foundation” before they can unlock its true potential.
“This technology is still in its early days but has immense potential to transform cross border commerce by reducing friction and increasing integrity in how things move around the world,” Carter said.
How can Fedex use blockchain?
Blockchain is a decentralized, transparent and permanent ledger, providing more accuracy and authenticity during an item’s shipment even as it passes through multiple parties.
Fedex is well-versed in tracking packages already, but the blockchain provides “a secure chain of custody” that can make a shipment’s origins easily traceable, Chrystie said.
For example, blockchain could have prevented some of the recall measures taken during the late-2018 E. coli outbreak caused by romaine lettuce, according to Chrystie. “All of us had to remove all romaine lettuce off the shelves until they figured it out,” he said.
In a blockchain scenario, investigators could use the contaminated lettuce’s “fingerprint” to search and determine which farm the product came from at what time, he said. Blockchain could also better authenticate if a product is what it says it is, like verifying if a diamond came from a conflict-free mine, he added.
However, blockchain’s strengths don’t mean much if it isn’t widely adopted in a common way, preventing the creation of a coherent chain, Chrystie noted.
Fedex is currently focused on the “thought leadership” side of blockchain in logistics to push for a uniform adoption, Chrystie said, pointing to its membership in the Blockchain in Transport Alliance. UPS, Google and Target are among its other members.
“Yes, everyone wants to monetize this technology, but we’re all going to have to work together to get it built. That’s why I refer to blockchain as a team sport,” he said. “Once it is built, a lot of people will be able to figure out a business model for it. Right now, it’s not built.”
The industry organization, in which Chrystie serves as Standards Council chair, is aiming to identify what data elements to use for a blockchain standard everyone can use for trade.
“Every one of these countries has their own variation of a customs document or a description for an item,” Chrystie said. “If you think of a common data language that says, ‘This phone is a phone, this dryboard eraser is a dryboard eraser,’ … that by itself significantly reduces friction.”
Should government get involved?
There are numerous players within the global supply chain industry using different systems as they pass through customs. Products must be accounted for using different forms for myriad interactions, according to Chrystie.
“Just the ripple effect of that has grown over the decades,” he said.
Fedex is plenty familiar with cross-border shipments and the hoops each one needs to jump through — the company delivers more than 14.5 million shipments every business day. And Fedex Logistics, a $4.5 billion specialty trade company under Fedex, helps customers with getting goods across borders, among other services.
For international trade, documents — which still often fall on paper — can be put into four categories, per the World Trade Organization: commercial transaction, transport, border procedure and trade financing.
“Not only do these various paper intensive processes increase coordination and administrative costs, they are also prone to errors, losses and fraud,” says a 2018 WTO report touching on how blockchain could digitize trade processes. “Although notable progress has already been achieved, full digitalization of crossborder trade transactions of goods is not yet in sight.”
If U.S. Customs and Border Protection mandated a common blockchain standard, industry-wide adoption likely wouldn’t be an issue. Chrystie doesn’t think the agency would be opposed to the idea, since blockchain would fall in line with its mission (plus, it’s already conducted blockchain tests).
Max Garland covers Fedex, logistics and health care for The Commercial Appeal. Reach him at max.garland@commercialappeal.com or 901-5292651 and on Twitter @Maxgarlandtypes.