Supply Chain Matters provides highlights an interview held with FedEx Founder Fred Smith in conjunction with the 50th anniversary of the MIT Center for Transportation and Logistics.

 

Event

This Editor had the opportunity to attend a special event that kicked-off the 50th anniversary of the Massachusetts Institute of Technology’s Center for Logistics and Transportation (CTL) held at the MIT campus. The event was MIT Professor Yossi Sheffi conducting an on-stage interview with FedEx Founder Fred Smith before a packed auditorium.

The conversation was far reaching, insightful and informative since Fred Smith has a lot of wisdom and far reaching experience in the parcel transportation and logistics segment along with global wide supply chain developments.

Biggest Industry Change

One of questions posed to Smith was how he viewed the biggest change that has occurred in the industry over the last 20 years. Smith specifically pointed to China’s growing presence as a go-to manufacturing supplier for multiple industry supply chains. He noted that FedEx was one of other companies that supported China’s efforts to formally join the World Trade Organization (WTO). However, the effort was only to discover in the subsequent years that there were many hurdles to overcome in trying to gain a license to serve various provinces and large cities among a vast number of localized logistics companies across China at the time. China’s bureaucratic agencies elected to align FedEx initially under China’s postal agency, which Smith described as a challenge in promoting both global and domestic parcel transport services. Eventually, FedEx garnered its presence and the government permitted the carrier to establish its airlift presence at the country’s Shenzhen airport.

Future of Globalization

Regarding his views on the future of globalization, Smith indicated that the benefits of global trade on economies and on people are clear and that he felt protectionism was not in the best interest of the global economy.  Lower cost products have been a benefit that U.S. and other countries consumers have become accustomed to. Smith did acknowledge the challenges that have transpired across China over the past two years and of late, with the adoption of the countries Covid-19 zero tolerance policies

Effects of Global Warming

Responding to a question by Sheffi on the effects of global warming, Smith was clear that companies need to do their part and that FedEx is actively working on accelerating the company’s carbon consumption remediation efforts. He further indicated his observation that the United States has made a lot of progress in flatting out carbon consumption.

Impacts and Benefits of Technology

Addressing a question on advanced technology, Smith expressed enthusiasm for the future benefits of artificial intelligence and machine learning capabilities being applied across the industry. He indicated that FedEx itself has developed very sophisticated capabilities and will soon provide such capabilities as a service to its customers. He further mentioned that the use of Internet-of-Things enabled sensors in the recent global wide distribution of Covid-19 vaccines has provided the industry with significant learning that will continue to be provided for other types of movements.

Amazon as a Direct Competitor

When asked if he viewed Amazon to be an eventual direct competitor to the likes of FedEx and UPS, Smith was emphatic is that while he has a lot of respect for Amazon’s capabilities as an online retailer and of a Cloud technology provider, he does not view the online retailer as a direct competitor. The stated reason was that it would take billions of dollars of direct investment to be to replicate the global wide networks and supporting equipment that either carrier currently leverages. He even threw out a number: $150 billion for a company seeking to replicate such a global-wide network. “It would be a fool’s errand to do so,” and added: “If they wanted to do so, I think they would have had to do an acquisition.”

 

Overall, this Editor was quite impressed with Smith’s perspectives and far-ranging viewpoints on the supply chain industry. He is clearly an icon, and this will be a memorable kickoff event for MIT CTL.

 

Bob Ferrari

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