It's not often that you can trace the entire foundation of an industry to one trailblazer. Fred Smith, FedEx's founder and longtime CEO, didn't just build a company; he invented the concept of overnight delivery. Smith passed away this week at age 80, leaving behind a legacy that spans 220 countries and territories.
Famously, Smith first conceived of “an integrated air-to-ground system that would ensure overnight delivery” while in college at Yale. He argued that an increasingly automated economy would depend on fast and dependable door-to-door shipping of small packages — particularly ones carrying parts. Ironically enough, he got a C on the paper he wrote on the topic. Yet the seemingly mediocre idea became Federal Express just nine years later. And now, FedEx handles more than 17 million shipments each day, with goods totaling $2 trillion annually.
A decorated U.S. Marine and Vietnam veteran, Smith was cochairman of both the U.S. World War II Memorial project and the campaign for the National Museum of the Marine Corps. In the 1970s, he championed the Civil Rights Movement and equal opportunities for underserved communities. He supported significant regulatory reform in the aviation and trucking industries, as well as environmental sustainability.
Smith's genius laid a path, but even the most revolutionary ideas face new frontiers. Significant challenges now confront supply chain organizations:
- Uncertainty around tariffs is the top pain point these days, as transportation costs vary wildly depending on the country of origin and the frequency of policy changes. Businesses often have trouble solidifying orders when the costs of shipment are unpredictable.
- Ongoing labor shortages also raise costs. Although increasing automation is a sound strategy for combating a shrinking workforce, it’s not feasible in all instances. Plus, skilled workers are needed to control and monitor many autonomous robots.
- Consumer expectations around real-time tracking is another issue plaguing the logistics industry. As Amazon and other big box stores mainstreamed next-day shipping, people want constant updates on order location and delivery windows.
- Although FedEx itself has committed to reaching carbon neutrality by 2040, the logistics industry as a whole faces significant sustainability challenges. Reports McKinsey: “Logistics emissions from freight and warehousing account for at least 7% of global greenhouse gas emissions.” And while many companies use energy-efficient vehicles for last-mile deliveries, others rely on gig workers to distribute those packages, and there’s no regulation around their vehicles specifically.
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