FedEx CEO gives his takes on Trump, Ama­zon

The Commercial Appeal - - Business - Max Gar­land Mem­phis Com­mer­cial Ap­peal USA TO­DAY NET­WORK - TEN­NESSEE

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.”

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