FedEx CEO gives his takes on Trump, Amazon
FedEx founder and CEO Fred Smith gave his take on potential threats to the Memphis company’s future — Amazon’s delivery network and President Donald Trump’s views on trade among them — at a business forum earlier this week in Singapore.
Smith touted FedEx’s wide-ranging infrastructure and sheer scale across the globe, which he said gives the company an edge against disruptors in the logistics industry. But FedEx customers are already tweaking their practices due to Trump’s dispute with China, and some workers have soured on the open trade philosophy companies like FedEx support.
Here are five key points Smith made during his time in Singapore on a panel at the Bloomberg New Economy Forum and in a separate interview with Bloomberg on Tuesday. Postal Service, not FedEx, should sweat Amazon
Amazon’s “HQ2” decision and efforts to carve out a space in the logistics industry are gobbling up headlines. But the United States Postal Service should be watching Amazon’s moves more closely than FedEx, Smith said in his Bloomberg interview.
Amazon is expanding its own last mile delivery network via Delivery Service Partners, in which the e-commerce giant provides resources to third party contractors to deliver packages from fulfillment center to customer. It’s more of a competitor to the U.S. Postal Service than it is to FedEx Ground, Smith said.
“The biggest single provider of delivery services to the Amazon fulfillment network is not us — it’s the U.S. Postal Service, and they’re the ones that Amazon’s proprietary or indigenous delivery system will take the most volume from,” Smith said during the interview.
Last mile services are more a part of the U.S. Postal Service’s makeup than they are for FedEx or rival UPS. The two companies sometimes lean on the Postal Service for last mile work.
Still, Amazon is a good customer for FedEx and should become a bigger one in the years to come, Smith said. Analysts have said Amazon makes up no more than 3 percent of FedEx volume. Trump’s trade views ‘quite rare’
A global shipping company like FedEx is unsurprisingly a proponent of global trade. But mainstream economists outside of the FedEx bubble are generally for open trade policies, Smith said.
“The President’s views on trade are quite rare,” Smith said during the panel. “He believes trade deficits are a loss.”
Trump’s argument that the U.S. has been getting the short end of the stick in its trade activity with China, and that U.S. workers witnessing their manufacturing jobs disappear have made open trade a more difficult sell. Smith called a zero tariff, zero subsidy world “the proven formula for success,” with anything at the political level against that “a net drag.”
“So over the last 15 or 20 years it’s broken down first because of China’s activities, and then Trump seizing on that,” Smith said of the global trade conversation.
But Smith said he’s ultimately an optimist on trade’s future. He believes global trade’s benefits will prevail over the pushback it is currently seeing.
“I think people have an innate desire to travel and trade,” he said. “I think that these activities going on at the micro level will overwhelm, eventually, the political resistance.”