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In 2022, FedEx created a unit called Dataworks with the goal of leveraging massive amounts of parcel data in its delivery system as a new revenue source.
Dataworks’ mission since then has expanded to develop smarter e-commerce solutions that, in real time, can optimize fulfillment and enhance the online shopping experience by providing accurate expected arrival time for orders, while improving delivery density for parcel carriers.
FedEx (NYSE: FDX) has a gem of an idea that would help online retailers, who are struggling to manage the cost of free shipping offers, and better allow FedEx to play in the fast-growing B2C parcel market.
FedEx founder Fred Smith, who passed away recently, was a visionary who realized long before computers appeared in workplaces that people would care as much, if not more, about the information concerning a delivery than the package itself.
Monetizing parcel data with Dataworks seems to be another visionary leap for the company. However, since Dataworks’ debut more than three years ago, FedEx has not shared any details about the number of customers signed or revenue generated. That suggests its value proposition isn’t gaining traction with the customers.
The best available information suggests that Dataworks has relatively few customers compared to millions that ship with FedEx. Our best estimate for total annualized revenue that can be directly attributed to Dataworks is about $10 million. Compare that with a staff of 600 employees and contractors who cost several hundred million dollars per year.
Based on millions of parcel data, ShipMatrix has deep insight into the service performance of major parcel carriers and visibility into factors that result in a gap between raw on-time delivery (what consumers experience due to factors out of carriers’ control, such weather, bad addresses, etc.) and the adjusted on-time delivery, which only counts factors within a carrier’s control.
A ShipMatrix review shows that FedEx’s on-time performance for Priority Overnight service from January to July has improved, with far fewer weather-related delays compared to the same period last year and to those of competitors in 2025. It is very likely that Dataworks is generating value for the premium service. However, we are unable to find data supporting whether it has contributed to higher revenue.
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For multiple reasons, the time is ripe to monetize the true value of this jewel. Last month, FedEx abruptly announced that Sriram Krishnasamy, chief digital and information office and president of Dataworks, was resigning. No one has been identified as his replacement.
Instead of looking for someone new to lead Dataworks, FedEx may find its value is greater in the hands of a company that doesn’t compete with other parcel carriers.
UPS and DHL don’t have a similar unit because they understand the challenge associated with trying to capture competitors’ parcel data and turning it into a product that can be sold.
As long as FedEx owns this analytics venture, shippers will be reluctant to share data about parcels shipped with other carriers and may even view Dataworks solutions as biased.
Another company can layer rapidly evolving AI and machine learning capabilities on Dataworks to enable e-commerce platforms like Shopify and fulfillment companies like Radial and Shipbob optimize fulfillment and shipping across thousands of e-tailers looking to compete with Amazon and Walmart on shipping charges and delivery experiences.
Helping platforms, fulfillment companies and etailers will also protect more shipping volume from being diverted to Amazon and Walmart, which are using their own delivery networks.
If FedEx keeps Dataworks in house, in time, we may see a sequel to ZapMail. Introduced by FedEx in 1984, ZapMail was based on the idea of using fax machines to transmit overnight documents across the country in minutes instead of flying overnight express envelopes through the Memphis, Tennessee, hub.
ZapMail was a good idea, but FedEx was late to capitalize on the window of opportunity because companies simply bought their own fax machines rather than rely on a middleman. It shut ZapMail down in 1986 and took a write-off of more than $250 million.
Timing is again critical. Dataworks has already lost three years and has a limited window to differentiate itself before other companies, aided by AI, develop their own, possibly superior, version of Dataworks.
Under Sriram, Dataworks ignored the reality that large shippers no longer single-source parcel shipping from FedEx or UPS because of their pricing complexity and extensive accessorial charges introduced in recent years. They now use multiple carriers.
So, with Sriram still available as an advisor until Oct. 31, FedEx should urgently look for a buyer while Dataworks still has tremendous value. AI-driven companies with far-less proven concepts are now valued at billions of dollars. FedEx should take advantage of investor interest in AI-enabled businesses.
(Satish Jindel is president of ShipMatrix and a founding member of RPS (now FedEx Ground).
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