FedEx CEO: Beware of protectionism
FedEx founder, chairman and CEO Fred Smith sounded the alarm during the WCS Opening Plenary regarding what he views as the culprit for the slow growth of global trade: rising protectionism. In a speech similar to one he delivered at the Journal of Commerce’s Trans-Pacific Maritime Conference last week, Smith urged attendees to urge their elected officials to push for new trade agreements.
“All of us may wish a return to the halcyon days of double-digit air cargo growth, but the winds are not favorable,” Smith said. “We at FedEx are firmly committed to extolling the demonstrative benefits of world trade and pushing politicians hard to endorse new trade agreements.”
Smith said if political leaders “do the right thing” regarding trade agreements, it could ensure a transformed and more innovative air cargo industry in the years ahead. He said trade laws that could be considered as protectionism are up 23 percent globally since 2009. Argentina alone has passed 168 measures during that period, he said.
“Over the last few years almost every trading nation has instituted policies that permit greater regulatory intervention in the trade processes—often justified by overzealous security considerations,” Smith said. “Unfortunately, in many other cases, the protectionism is overt and politically driven. History shows that protectionism—whatever the justification—stifles competitiveness, innovation, and consumer choice."
“Both Democrats and Republicans are resisting the reinstating of trade promotion authority which gives the U.S. president the ability to negotiate trade deals with only an up or down vote by Congress,” Smith said. “Absent of this, there is no possibility of American leading the way toward more open markets as it for half a century. This is indeed unfortunate. History shows that innovation and investment in larger markets have been the main drivers in improving living standards and reducing poverty levels around the world.”
Smith said the WCS theme of “Transformation through Innovation” is appropriate
because air cargo is in the midst of profound transformation that requires new ways of thinking about the future, which he said is unlikely to be analogous to the “golden age of air cargo” in the 1990s and early 21st century.
Smith said the global air express business continues to grow and so does global sea trade with both sectors “gnawing” at the airport to airport market. He said it’s important to note that express carriers use both “indigenous” aircraft and underbellies of passenger carriers. FedEx often uses the underbellies of American Airlines and other partner airlines.
Smith said restrictive customs regulations in some countries are also a deterrent to trade, citing a recent example.
“Last month, FedEx could not ship pillows that were in short supply to Olympic athletes in Sochi,” Smith said. “They were in short supply because Russian customs restrictions would cause a six-week delay in delivery. No one made them, no one shipped them, no one cleared them and someone did not get a good night’s sleep at the Olympics.”