In recent years, FedEx hasn’t been bashful about acknowledging the growing usage of automation in its facilities. When the company released fourth quarter earnings in June, it projected that its capital expenditures would hit $6.8 billion in FY 2023, with investments in “increased automation” listed as a priority.
That wasn’t just talk — FedEx announced on Tuesday, Aug. 2, the expansion of its partnership with Berkshire Grey, the Massachusetts-based technology company that offers artificial intelligence (AI) and robotics solutions to fulfillment, supply chain, and logistics businesses.
Berkshire Grey has already worked with FedEx Ground, one of FedEx’s largest subsidiaries, to robotically sort small packages with its product sort and identification (RPSI) systems. The technology has been installed in eight Ground sort facilities — in areas like Queens, Las Vegas, and Columbus — and it’s set to be placed in additional Ground facilities over the next year.
Now, FedEx and Berkshire Grey have also reached an agreement for new development activities that provide broader AI robotic automation capabilities, to help improve the safety and efficiency of FedEx package handling operations across the globe. And they expect to execute a master system purchase agreement in 2022, which is set to streamline and expedite the procurement process for Berkshire Grey offerings throughout FedEx’s subsidiaries.
“Our growing relationship with Berkshire Grey for robotic automation is a direct response to the growth of e-commerce, which has accelerated the demand for reliable automated solutions throughout all stages of the supply chain,” said Rebecca Yeung, FedEx’s corporate VP of operations science and advanced technology, in a press release. “FedEx believes that continued innovation and automation will improve efficiency, productivity, and safety for its team members as they continue to keep the global supply chain moving.”
Berkshire Grey has granted FedEx a warrant to acquire up to 25.2 million shares of its common stock, which are subject to certain milestones, according to a filing with the U.S. Securities and Exchange Commission (SEC). Those shares will begin to vest incrementally, if FedEx orders at least $20 million worth of Berkshire Grey’s products and services. And the full amount of shares will vest if FedEx’s orders reach at least $200 million of its products and services. No vesting will occur after 2025.
For FedEx, the move comes just over a month after its investor day meeting, where it touted plans for significantly improved profit levels, shareholder return, and efficiency. The company is looking to create 18% to 22% in total shareholder return through FY 2025, based on a set of financial goals for that year, which include adjusted consolidated operating income improvement of $3 billion to $4.5 billion.
For Berkshire Grey, the move comes roughly a year after it became publicly traded via a SPAC deal, at a time when other tech companies had followed the same path to the public markets.
