In hindsight, it was perfectly predictable.
Amazon, which has become the world’s largest e-commerce business, ships a lot of packages.
If you look at the history of the company, a distinct pattern emerges: When it discovers it’s good at something, it proceeds to disrupt established businesses that do the same thing. It did it with books, when its Kindle e-reading platform tore into the traditional paper publishing business. It did it with cloud computing, when it launched Amazon Web Services to compete with behemoths like Google, Microsoft, and IBM.
The formula has repeated itself with hardware, like tablets and streaming media sticks, and digital goods like music and movies.
It’s most ambitious move however, might be its most recent one: Logistics.
Disrupting Logistics
Now, two years after its launch, Amazon Logistics is perched on the edge of disrupting not just one business, but an entire industry, which includes UPS, FedEx, and the US Postal Service.
To meet this challenge, FedEx is responding by digging deep into Amazon’s traditional strength: Digitalization — specifically, robotic automation, and the IoT.
Using the IoT is a natural extension of FedEx’s core business of moving physical objects from one place to another and tracking their progress at every step of the journey. Its SenseAware — a device that provides near-real time data on packages for factors like location, relative humidity, temperature and light exposure — is seen as a key competitive advantage over its rivals.
“We have long known that information about the package was as important as the package itself,” Ed Clarke, Managing Director of Hub Operations for FedEx Express UK, recently told supplychaindigital.com. For customers like pharmaceutical manufacturers, being able to track the temperature of a shipment of vaccines, could literally mean the difference between life and death.
On the robotics front, the company faces a steeper climb. It has been investing for years in automation, but successful automation relies on a consistency of task, a luxury FedEx doesn’t have. “One of the challenge we’ve always had in our world of robotics is that every single package is different in terms of size, shape weight, materials,” Ted Dengel, Director of Operations Technology and Innovation at FedEx Ground, told Diginomica.
Challenging or not, it’s an area FedEx must master. With e-commerce volumes expected to increase between 15% and 18% over the next five to ten years, the alternative is to cede ground to the competition.
“Our digital transformation is underway,” Clarke said. Now all FedEx has to do is deliver.
