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FedEx CEO optimistic about economic recovery as e-commerce booms

Distribution & Logistics
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By Max Garland
Memphis Commercial Appeal

FedEx’s business-to-business traffic fell significantly in the U.S. as COVID-19 lockdown measures across the country took effect, Chairman and CEO Fred Smith said in a livestreamed discussion with the Washington Post last week.

However, the Memphis logistics giant is keeping busy with “a prolific amount of flights” delivering protective gear and heavy home-delivery volume during the pandemic, he said.

Smith expects FedEx’s industrial shipments to pick back up as economies reopen.

“I would say that we saw the lowest point, we believe, in mid-April, and there is a resurgence of some industrial shipping now,” Smith said in his discussion on Washington Post Live. “China is almost fully back online with enormous backlogs both to North America and to Asia.”

FedEx's Fred Smith has expressed optimism about the economy recovering from the coronavirus outbreak. (Mike Brown/The Commercial Appeal)

FedEx’s international business has been in a prolonged slump since 2018 as trade tensions between the U.S. and China swelled and economic activity in Europe slowed. Much of FedEx’s air cargo activity of late has focused on shipping personal protective equipment — the company has moved about 17,000 tons of PPE, Smith said, with much of that being done as part of public-private partnership Project Airbridge.

“On a daily basis we generally have about 15 or 16 flights across both the Pacific and the Atlantic,” he said. “So, in that sector, we have flown hundreds of hundreds of flights in and out of China all during this period of time."

On the ground, FedEx Ground has been the main beneficiary of the jump in e-commerce deliveries and its independent contractors are hiring “about 4,000 drivers a week,” Smith said.

Worker safety during COVID-19

FedEx is among the companies employing a large amount of essential, frontline workers who can’t do their jobs from home. Smith called FedEx’s frontline employees “the heroes out there” during the pandemic.

Host Michael Duffy, The Washington Post’s Opinions Editor at Large, asked Smith what steps have been taken to keep employees at FedEx Express’ Newark hub safe since five of its workers died of COVID-19, which an investigation by The Commercial Appeal and The Bergen Record revealed.

Debbie Hyman is the sister of Pamela Pope, a FedEx worker in New Jersey, who died after contracting COVID-19.

Smith said FedEx’s experience at the Newark hub “is actually slightly better, as best that we can tell, than what the community itself is experiencing” in terms of COVID-19.

He added that the company is following all the recommendations by the Centers for Disease Control and Prevention and the World Health Organization.

“Obviously, our hearts go out to everyone who’s been affected by COVID-19,” Smith said. “My best friend died of it three weeks ago, so it’s hit all of us. But I think as an essential business, there’s no way we can be divorced from the community issues that we work in, but I think that our folks have done everything humanly possible to keep our teammates safe.”

When asked about automating more of FedEx’s operations to lessen workers' potential exposure to disease, Smith said FedEx will continue to automate more of its operations over time. Still, FedEx Express operations require “more manual intensity” than the heavily automated FedEx Ground facilities as its cargo moves between airplanes and ramps, he said.

Smith optimistic about economic activity

The FedEx founder said he’s optimistic about an economic recovery because FedEx has seen economic activity still occurring “at a very high level” — just at home. People are ordering many goods online which allow them “to live unchanged” outside of social activities, according to Smith.

E-commerce deliveries had already been a growing piece of FedEx’s business, and the company has expanded its Ground home delivery schedule to include Sundays and allowing FedEx Express to hand off some of its last-mile deliveries to Ground.

Despite the growth in online orders, millions in the U.S. have lost their jobs and the Federal Reserve Chair said there’s a risk the pandemic could cause “prolonged recession and weak recovery,” USA Today reported. Smith said he’s optimistic there is enough business activity for the economy to build on going forward, but he isn’t sure if the economy’s recovery will be U-shaped (a slow recovery) or L-shaped (a prolonged downturn).

“That’s why I’m a bit more optimistic, perhaps, than other people are because we’re seeing that economic activity at a very high level continuing,” Smith said.

Max Garland covers FedEx, logistics and health care for The Commercial Appeal. Reach him at max.garland@commercialappeal.com or 901-529-2651 and on Twitter @MaxGarlandTypes.

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