Freight forwarder FedEx Corp. has announced a venture with Microsoft Corp. to jointly offer data analytics to customers using Microsoft's Azure and Dynamics 365 platform. The first product, FedEx Surround, will provide real-time tracking and alerts as part of inventory management systems. As discussed in Panjiva's 2020 Outlook, the logistics sector faces the risk of disruption from technology-based solutions providers as well as the opportunity to improve their own efficiency and offer new services to customers.
The combination of FedEx and Microsoft is notable in that both compete with Amazon.com Inc., which has both web services and its own logistics business. The latter is focused on suppliers using Amazon's e-commerce services, though with the expansion in non-store retail sales versus stores recently there is nonetheless a threat to FedEx from Amazon.
Panjiva's data shows that FedEx's U.S. seaborne imports of containerized increased by 1.9% year over year in April after declining by 16.3% in the first quarter. By contrast, Amazon's continued to surge from a low base with a 59.7% jump compared to a year earlier.
On a sequential basis, however, Amazon's forwarding business handling in April increased by 5.8% versus the first quarter while FedEx's increased by 11.6%, partly reflecting the former's higher exposure to China.
FedEx's new deal with Microsoft may also help it compete more effectively with Flexport Inc., which offers technology-oriented freight forwarding and has been diversifying its customer base. In 2018, China represented 75.2% of U.S. seaborne imports linked to Flexport, while in 2019 that had fallen to 62.8% before declining to 47.8% in the first quarter.
Shipments from Asia ex-China have climbed from 13.7% in 2018 to 27.3% in 2019 and 39.0% in the first quarter. Shipments from Europe have also grown to a record, though have not expanded significantly as a proportion of the total. Flexport's performance in April has been similar to FedEx's on a sequential basis with an 11.3% rise in April versus the the first quarter average.
Christopher Rogers is a senior researcher at Panjiva, which is a business line of S&P Global Market Intelligence, a division of S&P Global Inc. This content does not constitute investment advice, and the views and opinions expressed in this piece are those of the author and do not necessarily represent the views of S&P Global Market Intelligence. Links are current at the time of publication. S&P Global Market Intelligence is not responsible if those links are unavailable later.