UPS, FedEx find common ground on business-friendly policies

UPS and Fedex trailers

An unlikely alliance has formed between FedEx and UPS over a common problem. Their respective chief executive officers, Fred Smith of FedEx Corporation and David Abney of the UPS, co-wrote an editorial in the Wall Street Journal in an attempt to get the attention of Trump administration and policy makers regarding needed industry reforms, according to a Biz Journals report.

While acknowledging the fierce rivalry between their companies, the CEOs wrote, “While the business community has diverse interests, every company should agree on basic policy priorities if we want to be globally competitive. That’s why we are speaking out together - two fierce competitors, UPS and FedEx, who battle daily in the global marketplace but stand shoulder to shoulder on the need to make government policies more equitable, growth-oriented and simple.”

Both CEOs feel that a 2% annual economic growth is not productive enough. To address this, the editorial mentioned “expanding and launching new technologies.” And they believe laws that proactively establishes these innovations will “innovate and unleash productivity.”

Delays cause millions in losses

In an interview with CNBC, Abney emphasized the need to renovate the roads. Delays due to poor infrastructure caused UPS millions in losses. For a shipping service heavily dependent on time limits, Abney told CNBC, “We have about 100,000 drivers, and if we have a five-minute congestion delay on each of those drivers every day, that’s $105 million a year.”

FedEx and UPS both said that taxes are needed to raise funds for infrastructure, but that the overall corporate tax rate should be lowered by percent. That decrease would be seen as a way to increase the Gross Domestic Product (GDP) by 1 to 2%.

The companies also noted the competition to trade represented by China and India. In India, while trucks are the choice of carriers for agricultural wholesalers to ship their harvest to the cities, the Defence Aviation Post says that options like the bullet train-like technology that Hyperloop Transportation Technologies offer have promise.

In China, the government-funded Belt and Road Initiative infrastructure projects that connect China to its land-locked neighbors in Central Asia hopes to open more trade opportunities to the Middle Eastern countries. Some of the routes expected to improve will be the China-Central Asia-West Asia route, the China-Mongolia-Russia route and the New Eurasia Land Bridge. International transport of goods means better trade opportunities for importers and exporters alike.

This gives staunch competitors to unite for a common goal. The global marketplace is getting more competitive due to the governmental support that China and India has been extending to their infrastructure. With these economic threats noted, Abney and Smith ended their op-ed by asking, “If fierce competitors can agree on these fundamental policy priorities, can’t we all?” It was more of a challenge to how the federal government through the Trump administration can compete globally with the economic boosts that Asian governments have given their transport sector.