If FedEx gets it right, an average of 110 million packages will be delivered in the U.S. every day this year — that’s more than 40 billion parcel deliveries on an annualized basis.
What’s interesting is that the Memphis-based logistics giant also acknowledged that its previous forecasting abilities weren’t that accurate, as it admitted the digital shift has caused its prior outlook to be far too conservative, noting that it did not expect package volumes to hit that level for another four years. In fact, FedEx said 86% of the growth is coming from the same place: eCommerce.
To manage the surge and meet the needs of consumers and retailers alike, FedEx and Microsoft are collaborating on what they call a cloud-based, cross-platform solution to improve customer engagement while also providing enhanced shipping options.
In short, to meet and better manage the rising tide of packages, the two companies have unveiled a “Logistics-as-a-Service” offering for retailers, merchants and brands.
“More than ever, it’s clear just how critical having a resilient supply chain is for every organization’s success in the modern economy,” said Microsoft Chairman and CEO Satya Nadella in a joint press release.
With the help of artificial intelligence (AI) and machine learning (ML), alongside millions of data points collected by FedEx and the computing power of Microsoft Cloud, Nadella said the two companies intend to help organizations accelerate their digital transformation by offering customers integrated shopping and shipping choices that are faster and more efficient.
While the new logistics tie-up marks the latest step in a multiyear collaborative effort between FedEx and Microsoft, the timing of this offering comes not only amidst unprecedented new demand for delivery, but also amid unprecedented challenges within the global supply chain that have made the so-called “final mile” issue top-of-mind for both merchants and their customers.
“In today’s world of just-in-time supply chains, global trade and accelerated eCommerce growth, speed, flexibility and visibility are critical,” the release stated, noting plans to gather insights from the 17 million packages that pass through the FedEx network each day and integrate them into retailers’ existing eCommerce platforms.
Among the delivery system upgrades being rolled out, the companies said, will be a system that enables brands to deliver “modern, high-value experiences directly to their customers” including near real-time delivery status communications, convenient returns at over 60,000 locations with convenient, printerless QR codes.
First and Final Mile
With the goal of helping merchants obtain a more complete view of their customers, the FedEx-Microsoft logistics platform is also aimed at reducing costly customer service calls while increasing fulfillment and allowing retailers to deliver on their own order promises.
As PYMNTS has reported, 50% of delivery costs occur in completing the final mile of a shipment at a time when 56% of consumers consider free shipping for digital orders to be an important feature for merchants to offer.
At the same time, global payments and order management platforms like Factor are also working to squeeze greater efficiencies out of the “first mile” of the delivery process too, which Factor describes as the process of moving something from design to an actual physical product, including sourcing, scheduling, order status, enforcement of order terms and sending payments.