FedEx isn’t worried about competition from Amazon’s mythological drones

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Amazon made a big splash in the media recently with the unveiling of its plans for Amazon Prime Air — a future network of “octocopter” drones that would deliver packages as large as five pounds within a 10-mile radius of a distribution center.

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FedEx CEO Fred Smith

FedEx, for one, doesn’t seem to be taking that as a serious competitive threat. On the company’s earnings conference call this morning, Chairman and CEO Fred Smith made that clear when he was asked about Amazon’s plans.

“Quite frankly I don’t think I’ve seen more mythology in the press about anything than I have about the ecommerce space over the last year or so,” he said, according to a transcript of the call.

He went on to joke about FedEx’s own informal testing of drones.

“There are two enormous transportation networks that are built around moving light packages and freight, and they are FedEx and UPS,” he said. “And the size and scale of these operations are so big that it’s almost amusing some of the comments about delivering items by drones. And we have a drone expert on the staff. It’s Rob Carter, our CIO. He actually owns a drone, and he reported that it can operate about eight minutes and carry four Budweiser beers at his farm.”

Smith then turned a little more serious. Here are the rest of his comments on the topic.

“Now, that’s not to belittle UAS (unmanned aerial system) technology, because we’ve got a lot of studies underway in that area ourselves. But at the end of the day, the intercity transportation networks of FedEx and UPS, and to a lesser degree the postal service, which is designed around delivering very lightweight items. All you have to do is look in your neighborhood, with the small jeeps that drive down the road, and the right hand drive and so forth. That network is designed to move very lightweight things and publications and correspondence or letters.

“Now, the whole issue about ecommerce, at the end of the day, is it’s very expensive to deliver things to residences. Not every residence gets a package every day, and it’s quite unlikely that every residence will start getting an item every day.

“So in certain situations an Amazon.com or some very large etailer, they can unquestionably do local deliveries, should they choose to do so, and I think, in the case of some of them, they use various local delivery options today. But the vast majority of products moved, it’s almost certain that they will, if they’re going to be delivered, be moved by one of those three large networks, and then some of the smaller regional players, as far as the eye can see.”

Read the full transcript of the call here. We spotted this via John McDuling on Quartz.

  • iterate

    “Not every residence gets a package every day, and it’s quite unlikely that every residence will start getting an item every day.”

    Maybe not a new computer every day, but once grocery and consumables are easily available for home delivery, this seems quite likely. At least multiple deliveries per week anyway.

    And guess who’s doing that. Yep, Amazon. It’s not economical yet, but that’s never gotten in Bezos’ way.