The FedEx-Huawei Case: Key Lesson for Logistics Businesses

The FedEx-Huawei Case: Key Lesson for Logistics Businesses

The ongoing US-China trade war has recently got to its another peak of escalation. The tense relationships between two major players of the world trade arena became even more complicated after FedEx, one of the largest US transportation service providers, missed the delivery of a parcel to the US.

About a month before this incident, FedEx had already diverted two packages which were to be transported through the US territory to Huawei entities in Asia. Hence, it’s rather unlikely just a case-specific mistake. The odds are that we are witnessing the global change of rules and all logistics service providers must prepare for it.

What exactly has happened

PCMag, an American online magazine, decided to update its review of Huawei’s flagship P30 Pro and asked Adam Smith, their writer from a UK office, to ship one smartphone to New York.

Adam did send the Huawei phone and the parcel even got to Indianapolis but was returned to London a few days later. According to the notice on the package, this happened due to “US government issue with Huawei and China government.”

FedEx then admitted that the phone was sent back to the shipper mistakenly due to “operational error”. However, the company claims that its employees will likely continue making similar “mistakes” since there is no other way to avoid negative legal implications in the situation of the trade conflict between the US and China.

Games of governments: export bans and blacklists

In the ongoing trade war, China and the United States have several areas of disagreement. Among others, they include allegations in intellectual property espionage expressed by the US side and accusation in discrimination against Chinese enterprises brought by the state officials in China. In practice, the conflict results in a number of restrictive measures, including the trade blacklists.

On May 16, the US Commerce Department’s Bureau of Industry and Security included Huawei Technologies and its 68 non-US affiliates in the Entity List. This means that the export of products and software to such companies as well as some other business operations with them are subject to the licensing by the US state authorities. Since some major Huawei’s suppliers are located in the United States (Google, Intel, Qualcomm, just to name a few), the restrictions will probably affect Huawei’s leadership position on the global market.

How can other logistics businesses avoid the same fate?

FedEx certainly got caught in a crossfire between the US and China. Now, no one can tell if the company had any chance to avoid such a trap, but it definitely could have had better processes in place. Today, the technologies are advanced enough to help logistics service providers prevent similar situations or at least make their consequences much more favorable. Speaking about the specific features or solutions allowing transportation companies to stay safe in this stormy sea of uncertainties, they are as follows:

Enhanced management tools

FedEx claims that sending the phone back was the “operational error”. The risk of such errors is much lower if a company has a logistics management system that enables visibility of every shipment. On top of that, software solutions of this kind may alert logistics managers in case something goes wrong with a particular operation.

Improved tracking features

In the case at hand, two transportation companies were actually engaged in the delivery process. The first is obviously FedEx and the second is Parcelforce, the UK logistics service provider that is not involved in the conflict. One of the reasons is that the tracking information clearly shows that there were no problems during the first-mile delivery it was responsible for.

Advanced security

Although there were no security issues associated with the failed delivery of the Huawei phone, the whole story with adding the Chinese company to the US Entity List began due to the suspicions of industrial espionage. To avoid information leakages and hackers attacks, logistics companies should pay particular attention to the advanced security capabilities of their software solutions.

Conclusion

The trade war between the US and China may affect any logistics business. As the FedEx-Huawei case shows, even the market giants are vulnerable when it comes to contradictory regulations and global politics. However, it’s also a great reminder for logistics service providers that there is always room for improvement of their systems. Enhanced management tools and tracking features as well as advanced security can help to mitigate most risks related to uncertainties of the modern business environment.