“A digital ledger that is permanent, transparent and shared.”
That is blockchain.
Or, at least, that is the shortest definition of blockchain Dale Chrystie, vice president of strategic planning at FedEx Freight, said he has ever been able to give.
Chrystie, along with Kevin Humphries, senior vice president of IT at FedEx Services, are two of the people identifying blockchain uses for the logistics industry and Memphis-based, global delivery giant FedEx Corp.
FedEx recently joined the Blockchain in Transport Alliance (BiTA) as one of its founding members; it also serves on the organization’s standards board. BiTA was created by tech and transportation executives to create blockchain standards and education for the freight industry.
“The important piece is to develop those data elements where we all agree,” Chrystie said. “This is a unique thing where people who wouldn’t necessarily align around things are now sitting at the same table, aligning on what data elements and how the standards of this will be aligned moving forward.”
He said the board has met a few times and plans to tackle common ground first — foundational items that could connect pipelines such as invoicing or the fact that all couriers deliver to an address.
Chrystie said the BiTA collaboration has been underway for a few months, but it was a year ago FedEx really started to explore blockchain initiatives. FedEx also joined the Blockchain Research Institute, which was launched in 2017 and includes members from the technology and financial industries, global corporations, government and nonprofit organizations and blockchain specific entities.
Blockchain, which is essentially a secure chain of custody, got its start with cryptocurrency — specifically Bitcoin in the mid-2000s — and now other sectors, such as the transportation and delivery industry, are ready to capitalize.
“If you think about Bitcoin as a vehicle and you open the hood, the internal combustion engine inside that car is blockchain,” Chrystie said. “Originally, people only looked at the car and said, ‘Wow, what a really interesting car.’ However, more and more people have pulled the internal combustion engine out and set it by itself and said, ‘What else could we build with an internal combustion engine?’ That is the blockchain piece. You could do a power washer; you could do a lawnmower. … What can the engine do for us? And, the answer is a lot.”
So, how does it work?
A block of data is chained to another block of data. In the delivery industry, that could be a package shipment being recorded. That information would be public and shared on one network that is virtually impossible to alter because, if something is changed on one block, it would have to be changed on every subsequent block. Each subsequent block would be alerted.
“For the blockchain that supports Bitcoin … that particular blockchain is stored over 11,000 times in 100 countries. That is how resilient that blockchain is and how secure it is, because it is stored everywhere all over the world,” Humphries said. “No one country, no one business, no one institution has that under control. It is stored everywhere.”
Humphries said FedEx is past the “exploratory” phase of blockchain and is getting started on its blockchain journey.
Initial FedEx blockchain efforts are focused on the FedEx Freight segment and its customers. The company is also looking at the technical side of how platforms could work both on the public and private blockchain side.
“These pipelines we are talking about within the transport industry are going to carry over our four walls into the broader supply chain,” Chrystie said. “The folks in the financial community are doing the same things, so ultimately, these pipes are all going to have to connect to each other for this free flow of information that is going to be global.”
FedEx has more than 400,000 employees across the world and delivers to more than 220 countries and territories. On average, the company delivers 13 million packages per day. In 2017, FedEx reported $60.3 billion in annual revenue. In second quarter 2018, the company reported $16.3 billion in revenue. FedEx Freight is the less-than-truckload arm of the company. In fiscal 2017, FedEx Freight accounted for $6.4 billion of the total FedEx revenue.