Fred Smith on FedEx response and experience with COVID-19

FedEx’s Fred Smith has been describing how his company has been doing business during the COVID-19 outbreak. Far from needing a bailout from the US government like the passenger airlines, he said that “in certain cases our business has increased” although “in others it has declined”.

Speaking on US television, he commented that FedEx’s strength meant that “we should not have to shut down long term projects like facilities construction and purchase of aeroplanes and trucks” and he contrasted FedEx with the state of the airline industry; “FedEx is not expecting any lay-offs at all, our people are working very heavily on the business-to-business side, moving things for hospitals and diagnostic labs, picking-up specimens and taking them to various locations that they can be tested, the passenger carriers is a completely different story”.

Fred Smith pointed out that FedEx has been dealing with the problem for some time; “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 example, we flew 246 flights in and out of China so we have been dealing with this for a long time.”

Importantly he commented that “China is now back most in production, about 90% of their big factories are open and their smaller businesses less so but about 70%. So with the shut-down of passenger operations across the Pacific, we have a significant backlog coming into this country and a significant amount of traffic going back to China”.

He also went on to note that even on trans-Atlantic routes “our purple-tail aircraft are carrying a lot of stuff both ways, passenger-planes, which carry a lot of stuff in the underbellies including some for us, they are all but gone from the market”.

Fred Smith did not quantify the impact of the crisis on FedEx, however, he did confirm what appears to be the structural issues, namely the ability of non-passenger aircraft to exploit the market as well as the boom in life-science logistics. He did not discuss the sudden leap in demand for last-mile deliveries and it is a good question how much of this FedEx can capture. None-the-less it illustrates that the news in the logistics sector is not all bad.  

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Source: Transport Intelligence, March 24, 2020

Author: Thomas Cullen