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Microsoft and FedEx team up to make deliveries more predictable

May 18, 2020, 1:00 PM UTC

Microsoft has teamed with FedEx to develop technology that would help it and other companies ship products more efficiently.

The first service spawned from the partnership, announced Monday against the backdrop of Microsoft’s annual Build developer conference, lets corporations store different kinds of information—like traffic patterns and product inventory—in one system. Businesses can then use machine learning to predict delays in shipping owing to storms, for example, and then change the routes they use. 

Although FedEx had previously discussed similar kinds of so-called predictive logistics systems, a company spokesperson said the new service created with Microsoft has improved features, including weather alerts and better inventory management tools. FedEx declined to comment on which partners it had previously worked with to create its older predictive logistics systems or why it switched to Microsoft.

FedEx plans to disclose the cost of the new service, called FedEx Surround, at a later date.  

Judson Althoff, executive vice president of Microsoft’s worldwide commercial business, said that both FedEx and Microsoft will share an unspecified amount of money from sales of the new technology. A company spokesperson later clarified that FedEx will pay Microsoft based on how many resources are consumed from Microsoft’s Azure cloud computing service, which powers the upcoming FedEx Surround product.

FedEx president and chief operating officer Raj Subramaniam said the two companies had discussed partnering for the past several months. Coincidentally, the COVID-19 pandemic created a bigger need for the kinds of advanced technologies the two companies were planning on developing to accommodate a general increase in shipping.

“The world has accelerated the trends we expected to see in two to three years happening in two to three months,” Subramaniam said.

FedEx’s work with Microsoft comes after the shipping giant canceled a partnership with Microsoft rival Amazon last year. FedEx had delivered domestic packages for Amazon but stopped after Amazon expanded a rival shipping and logistics business.

FedEx is under pressure to lift its declining profits amid increased competition from Amazon and the impact of the coronavirus pandemic on the economy. Its shares are down 36% over the past 12 months to $107.52.

Also on Monday, FedEx said it will use Microsoft’s Azure cloud computing service and machine-learning technologies internally as part of the partnership.

Story updated on May 18, 11:45 AM PT with comments from Microsoft spokesperson about sales from the product.