When top executives at high-profile logistics companies share a stage together, it stands to reason that their opinions and insights will be valuable. That was certainly the case earlier this month, when Hamid Moghadam, co-founder, chairman, and CEO of San Francisco-based real estate investment trust Prologis, and Fred Smith, founder and executive chairman of Memphis-based freight transportation and logistics services provider FedEx, took the stage in London at Prologis’s annual Groundbreakers conference.
The two executives discussed various industry trends and themes, with the evolving use of Artificial Intelligence (AI) within logistics drawing significant attention.
Moghadam explained that when thinking about AI and its implications, he categorizes it into several areas, one of the key ones being making Prologis’s existing operations more efficient. However, for a company like Prologis, he noted, AI is used more for capital allocation than for operational purposes, given the nature of the business.
“Our business is about capital allocation—where do we put our capital and how do we invest it,” he said. “It’s about identifying the pieces of land that Fred [Smith, of FedEx] will want to be on three years from now. How do we get there? How do we identify that location? AI is very effective at helping companies figure these things out. But before discussing AI, the most important thing is data—digitizing and organizing it. Without data, no amount of AI can be useful. There are general models everyone else has, but the real value lies in scale and having access to data about your customers and their needs, which puts you in a better position to serve them.”
From FedEx’s perspective, Smith observed that the company has been using AI, particularly in the form of predictive analytics, for a long time.
He described how FedEx leverages AI to the point where the line between its data and digital interface becomes blurred—an important factor in sectors like healthcare.
“During the pandemic, FedEx moved almost 55% of the world’s vaccines, delivering with a 99.8% on-time rate, with the remaining 0.02% delayed only due to weather,” he said. “We’ve increasingly used AI to inform our mission-critical customers, particularly in healthcare. For example, we can now tell them, ‘You don’t want to send this defibrillator or isotope for an operation today because of a weather event.’ AI helps us manage everything from simple consumer needs to more sophisticated logistics for specialized sectors like healthcare.”
Smith also highlighted how FedEx’s global reach—serving over 220 countries, each with its own customs regime—enables AI to help navigate what he called a “cacophony of trade,” translating complex and varied trade regulations into more coherent terms.
Shifting to the topic of bringing manufacturing closer to home, Smith noted that U.S. manufacturing employment peaked in 1979, and that automation has reduced manufacturing jobs more than China’s rise as a global producer. He predicted that in the next five to ten years, automation and robotics will continue to influence this trend.
“There are certain parts of manufacturing that require nearshoring, but in terms of supply chain dynamics, the simple explanation is ‘China Plus One,’ with China handling about 21% of the world’s manufacturing capacity,” he said. “People are concerned about disruptions and China’s relations with the U.S. and Western Europe, which will lead to more production shifting to Eastern Europe and Mexico.”
With the U.S. unemployment rate at 4%, Moghadam pointed out that it remains an open question where the workforce for new manufacturing jobs will come from.
“There are critical areas like semiconductors and certain types of pharmaceuticals, with government policies directing investment into manufacturing in the U.S. due to national security concerns,” he said. “For other products, like toys or t-shirts, we don’t really want those jobs to come from the U.S. anyway; it’s better if they come from elsewhere. If you look at U.S.-China trade numbers—the main area of conflict—these haven’t dropped much since the renewed talk of nearshoring started. They remain at the same levels as five or six years ago when globalization was more dominant. I believe there’s a disconnect between what politicians are saying and the actual data.”
Regarding Mexico, Moghadam added that its role in nearshoring will only increase, given its proximity to the U.S. and a population of 120 million people who are underemployed, creating significant opportunities for both nations.
“I believe both nearshoring and ‘China Plus One’ are real trends,” he said. “But the idea of manufacturing returning to places like Ohio—where will the labor come from? That’s unrealistic.”
When asked about economic prospects for 2025, Moghadam expressed a cautiously optimistic outlook, barring any major geopolitical disruptions.
“With central banks in an easier monetary cycle, unemployment is still hovering around 4%,” he said. “I don’t see how you can have a recession with unemployment at 4% and the Fed easing interest rates. I expect modest growth. However, if tariffs increase and deglobalization’s economic impact continues, it could drive inflation, leading to a tighter monetary cycle and a drag on the economy. Of course, we may also have a new president by then, and that could change the policy landscape.”
Smith, from FedEx, agreed that much will depend on consumer spending, especially as credit card debt and delinquencies rise, coupled with the lack of real GDP growth since 2018. He pointed out that the U.S. borrows about $2 trillion per year, roughly equal to the amount of goods FedEx moves annually, which represents about 6% of GDP.
