FedEx (FDX) stock is feeling the heat of trade tensions on Tuesday, but its technology focus could be a long-term catalyst.
One of the most prominent focuses for FedEx in terms of technological advancement is in digital ledgers powered by blockchain technology.
“There is an incredible amount of information moving with an international package,” FedEx chief information officer Rob Carter said at the recent Blockchain Global Revolution Conference. “That information moves sometimes in digital forms and sometimes paper forms. As we move toward a more digital world, blockchain is where you piece all that together.”
Carter has long been a proponent of integrating the technology into its supply chain, especially following promising use cases in the supply lines of companies like Maersk (AMKBY) , IBM (IBM) , and Walmart (WMT) in recent years.
“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 wrote in a post on Microsoft’s (MSFT) LinkedIn platform.
He noted that those companies that do not adapt to the changes will “surely be disrupted” and essentially be left behind amidst a paradigm shift.
A white paper released by the company cites specific use cases in parcel tracking, fraud prevention, and smart contracts as key aspects of its bullishness on blockchain.
“A blockchain ledger cannot be hacked or falsified and it creates a secure audit trail,” the paper states. “It is not unknown for criminals to pose as carriers or truck drivers, post false documents to make pickups. Using blockchain this is impossible.”
Thus, the company’s liability for fraud would be necessarily erased and disputes surrounding deliveries would be easily quelled.
Still, the radical transparency that blockchain comes with is not always ideal for sensitive shipments. Additionally, blockchain is not necessarily “unhackable”, a misconception that the MIT Technology Review recently addressed.
Further, McKinsey recently published a study that questioned the returns available to companies assessing the opportunity at this stage.
“Despite the hype, blockchain is still an immature technology, with a market that is still nascent and a clear recipe for success that has not yet emerged,” the report states. “Unstructured experimentation of blockchain solutions without strategic evaluation of the value at stake or the feasibility of capturing it means that many companies will not see a return on their investments.”
Yet, Carter and the team behind the blockchain effort see this as a necessary step towards the future of global shipping and driving down costs in the long term.
“The consequences of investing in this aren’t very high,” Carter said. “The consequences of not investing are extremely high.”