Former Founder, Chairman & Chief Executive Officer, FedEx
FedEx CEO says company not looking at federal aid unless cargo industry "gets bad"
Frederick Smith says the shipping company is "doing everything we can" to stop the spread of coronavirus.
About Frederick Smith
Frederick Smith, founder and former CEO of FedEx, has continued to comment on trade, economic policy, and supply chain issues in public appearances. In a January 2023 conversation at MIT, Smith said he was personally disappointed by China's shift toward a "state directed Mercantile path" after he had pushed for its entry into the WTO. He also stated that "work is now optional" in the U.S., attributing inflation and slow growth to a lack of blue-collar labor willing to work. Smith expressed support for a carbon tax and said FedEx does not view Amazon as a direct competitor. In earlier appearances, Smith advocated for infrastructure investment, calling the 2021 bipartisan infrastructure bill "a step in the right direction." He said the U.S. should not abandon the Trans-Pacific Partnership but improve it, and warned that withdrawal from NAFTA would have "massive repercussions." Smith has repeatedly called for lowering the U.S. corporate tax rate and adopting a territorial tax system, arguing that the current code discourages investment. He also stated that 85% of U.S. job losses over the past 25 years were due to automation, not trade.
Transcript (9 segments)
✨ AI-enhanced transcript with speaker attribution
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Interviewer0:00
Thanks to the chairman and CEO of FedEx, Frederick Smith, who is in Memphis, Tennessee this morning. Good to see you. Thank you for joining us. Good morning. Our latest reporting is that this bill Congress is still negotiating contains about eight billion dollars in rescue money for carriers. Will your company be seeking any part of that federal aid?
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Frederick Smith0:22
I don't think so at this point in time. It would only be available or needed by FedEx and the all-cargo industry if things really get bad, and then only in the form of loan guarantees. Now, the passenger carriers which have a fifty billion dollar package, that's a different story. They're in very dire straits with significant lack of demand. That's not the situation with us. In certain cases our business is actually increased because of this situation; in others it's declined. So I doubt that we'll need it, but it's a good thing to have there so we don't have to shut down long-term projects like facility construction and purchase of airplanes and trucks and things of that nature.
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Interviewer1:11
It provides some certainty for your planning. But you're CEO of one of your divisions, FedEx Express, signed on to a letter yesterday that was released. He signed alongside some of those passenger carrier CEOs and it urged Congress to swiftly pass this bill. They're still negotiating or saying there will be mass furloughs, there will be mass layoffs. What size are layoffs we talking about? What is your company expecting?
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Frederick Smith1:38
Well, FedEx is not expecting any layoffs at all. Quite the contrary, our people are working very heavily on both the business-to-business side, moving things for hospitals and diagnostic labs, picking up specimens and getting them into the various locations where they can be tested. The passenger carriers are again that's a completely different story. They have very little demand at the moment for their services, and if they don't get this fifty billion dollar relief, and I think that's mostly loan guarantees as well, they will begin massive layoffs. They have no option.
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Interviewer2:23
For you and the cargo side, you are still able to function, to deliver things around the world, but there are significant travel restrictions. What are you seeing in terms of supply lines staying open?
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Frederick Smith2:36
Well, we began to deal with this problem in our operations in China in January, and there we took extraordinary measures to protect our people and our pilots. Just last week for instance, we flew 246 flights in and out of China, so we've been dealing with this for a long time. China's now actually back mostly in production, about 90% of their big factories are open, their smaller businesses less so, but about 70%. So with the shutdown of the passenger operations across the Pacific, we have significant backlogs coming into this country and a significant amount of traffic going back to China. More recently, the same thing is true across the Atlantic. Our purple tail airplanes are carrying a lot of stuff both ways. Passenger planes, which carry a lot of cargo in the underbellies, including some for us, they're all but gone from the market.
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Interviewer3:42
But it sounds like you're saying trade can continue though passenger travel is restricted. I want to ask you about the safety of your employees as well here. I mean, there are reports that we saw in the New England Journal of Medicine recently saying that this virus can survive on different surfaces for different periods of time, on cardboard it can survive for about 24 hours. How do you protect delivery workers who are literally going to Americans' front doors?
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Frederick Smith4:10
Well, we have massive efforts underway in all of our facilities to try to socially distance folks in their work stations. We're providing gloves and all kinds of antiseptic swabs and things of that nature. For people that are receiving packages, the CDC says not too much risk, but if you've got concerns, take a little alcohol and rub it across the package after it's left on your door, which is what we're doing. We suspended the requirement for signatures in certain cases. So I think that the risk is low, and we're doing absolutely everything we can, cleaning our facilities prolifically. The place I'm talking to you from, one floor up, we had an employee last week that tested positive for it. We cleaned the building, we have lots of people working from home. So you just have to work through the issue using every measure at your disposal. We're moving a prolific amount of hand sanitizer for instance in our freight company at the moment.
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Interviewer5:19
I'm sure you are. Fred Smith, thank you for joining us and giving us your insight.