FedEx in Partnership to Use Facilities as Cloud Service Hubs

FedEx delivery trucks sit outside the company's warehouse facility at SkyHarbor Airport in Phoenix.
FedEx delivery trucks sit outside the company's warehouse facility at SkyHarbor Airport in Phoenix. (BCFC/Getty Images)

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Dell Technologies Inc., FedEx Corp. and Switch Inc. are building a U.S. network of data centers, offering businesses an alternative to maintaining their own server farms or using major cloud providers such as Inc. and Microsoft Corp.

The network’s technology hubs will be based in FedEx facilities, feature Dell hardware and connect to existing Switch computing centers, the companies said Nov. 12 in a statement. The service will differ from the Amazon Web Services public cloud, in which information from various clients lives side-by-side in large centralized buildings. Instead, the partners will have locations throughout the country that are closer to clients for greater computing speed. And customers will use the service to host their private clouds, which is more akin to storing applications and data behind a corporate firewall.

The initiative marks another step toward Dell becoming a hybrid-cloud provider, after missing out on the initial cloud services wave, in competition with International Business Machines Corp. Dell’s offering with Switch and FedEx will let clients pay for the service based on how much they use, a core trait of online computing. Round Rock, Texas-based Dell has undertaken a broad effort to move its products toward a consumption business model, which generates recurring revenue and gives clients more flexibility.


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“This is a novel approach that other people haven’t done yet,” John Roese, Dell’s global chief technology officer for products and operations, said in an interview. “It really is an easy button” that gives companies access to new technology without the need to build it themselves, he added.

FedEx will be an inaugural user of the service, and the first hub is being developed in its home city of Memphis, Tenn. The cloud setups will be based at existing FedEx facilities. Rob Carter, FedEx’s executive vice president and chief information officer, said the shipping company will use the network to process data generated by its delivery robots that are currently being tested.

The three partners say their system would be good for supporting an autonomous vehicle network and a modern manufacturing plant — places where computers have to make real-time decisions with machine learning and artificial intelligence. The service is an example of edge computing, a term for moving processing power outside of massive server farms and closer to where it’s needed.


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Rob Roy, the CEO of Las Vegas-based Switch, said large companies are storing more information on major public clouds and he expects thousands of corporate data centers won’t be needed in the next several years. Some of Switch’s 1,000 clients have already started expressing interest in the new service, he added.

“Edge is a buzzword today,” Dell’s Roese said. “There won’t be one model of edge and we haven’t worked out the perfect answers. This is a new model. We think it’s grounded in the reality that every enterprise is going to have a hybrid- or multicloud environment.”

FedEx ranks No. 2 on the Transport Topics Top 100 list of the largest for-hire carriers in North America and No. 15 on the Transport Topics Top 50 list of North America’s largest logistics companies.

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