Package Deal: FedEx Acquires Logistics Firm Founded by UMD Researchers

The speedy delivery of FedEx packages is “grounded” in part in a company founded by four University of Maryland business professors, led by a graduate and newly acquired by the transportation, delivery and logistics giant.

FedEx had already been a longtime client before its purchase earlier this year of RouteSmart Technologies, which will continue to provide route optimization solutions to newspapers, utilities and waste collection organizations worldwide.

Its products are based on research by the founders—France-Merrick Chair in Management Science Bruce Golden, Professor Emeritus Michael Ball, Professor Emeritus Larry Bodin and former Senior Associate Dean Arjang Assad, all from the Robert H. Smith School of Business—who sold the company over 25 years ago but have remained connected to President Larry Levy ’82, Ph.D. ’87 and his team at the Columbia, Md.-based firm.

“FedEx values the tie with the academic community,” said Levy. It was formally written into a 2019 contract between the two companies “that we must maintain a contact with the academic world, and obviously, University of Maryland is where we do that and Bruce being a key conduit for that. But it tells you something about their understanding of the connection to the research community and good ideas that can emerge from it.”

In 1980, the quartet’s research in vehicle routing and scheduling inspired them to start a company called Distinct Management Consultants. It focused on applications for “arc routing,” finding the optimal routes for delivery and service vehicles along a network of interconnected arcs, in this case, street segments rather than individual houses or businesses.

Golden said that the researchers’ interest in handling detailed street network data “was a very smart move for us because it set us apart.”

A few years later, the company partnered with a New York-based civil engineering company to combine advanced operations research methods with the emerging field of geographic information systems (GIS). Long before the days when people could pull up computerized maps on their phones, the digital street network data available then was based on files provided by the U.S. Census Bureau.

“One application they had was routing garbage trucks,” Ball said. “After working with them for three or four years, we got the idea of forming a subsidiary to make a generic software product.”

In 1989, RouteSmart Technologies was launched; each of the four principals held leadership positions there while continuing their work and research at UMD.

As the company grew, some business and math students began working there part-time and upon graduation landed full-time jobs. The first UMD student hire, Roy Dahl M.S. ’82, is, like Levy, still with the company, as vice president of research and development.

FedEx began working with RouteSmart in 2000, using a customized version of RouteSmart’s vehicle routing product when launching the FedEx Home Delivery operation; its detail-oriented approach addressed routing challenges such as side-of-street routing (to avoid deliveries having to be made across a busy road), an emphasis on safe vehicle movement and a premium on extremely fast solutions.

In 2019, RouteSmart built the next generation routing product for FedEx and rolled it out to the entire U.S. and Canada over the next year. Today, this solution supports over 100,000 routes daily, encompassing all of North America for FedEx Ground and FedEx Express packages; an expansion worldwide will begin in the fall.

“This is yet another step on our journey to make supply chains smarter for everyone as we revolutionize logistics,” FedEx Corp. President and CEO Raj Subramaniam said of the acquisition of RouteSmart. “We will use RouteSmart’s expertise and proven technology platform to accelerate the deployment of a common route optimization capability for FedEx operations that will enable our team members to work safer and smarter as they deliver superior service to our customers.”

Levy said RouteSmart has returned to its roots of “startup” mode. “We’re being challenged in ways to grow this business dramatically and faster than we ever have before.”