The U.S. government’s approach to global trade and labor issues, two of the highest policy interests of FedEx, will be decidedly different under President Joe Biden.
During former President Donald Trump’s term, Memphis’ largest employer weathered a U.S.-China trade war, a scrapped trade pact and Trump’s Twitter crosshairs. However, it supported Trump’s corporate tax cuts and worked with his administration on COVID-19 relief efforts.
The Biden presidency is already undoing many of Trump’s policies. In a statement, FedEx said it is looking forward “to working with the new administration on a broad range of policy issues important to our company and our customers.”
Here are four key political issues FedEx has a stake in and what the Biden administration’s stance is on each.
Countering ‘trade abuses’ by China
China’s influence on the global economy and government-driven approach to trade has been a hot topic for FedEx Chairman and CEO Fred Smith in recent years.
FedEx has been operating in China since 1984. It employs about 9,500 people there, and it operates 220 flights weekly in the country.
Despite its established presence, FedEx has encountered recent friction with China’s government. China launched an investigation into FedEx. It came after the company’s misrouting of packages from Chinese technology company Huawei. Also, a FedEx Express pilot was released from a lengthy detainment in China last year.
During a panel in September, Smith said the U.S. must partner with other free trade-friendly countries. He said they should do so as a “countervailing force” against China. A Center for Strategic and International Studies commission co-chaired by Smith recommended “stronger rules against trade-distorting and unfair activity,” highlighting China’s subsidization of its industrial and technology sectors.
Biden criticizes China on trade
Biden was not shy about criticizing China’s government throughout his campaign, including on the issue of trade.
“China’s government continues its trade abuses and is failing to live up to its commitments,” his campaign website says. It also mentions that Biden aims to bring critical supply chains back to the U.S. to reduce dependency on China for goods production during a crisis.
FedEx Express airplanes flew out of China often in the early stages of the pandemic. They shipped out protective gear to locations across the globe. These include the Baptist Memorial Health Care in Memphis. Smith said in May that much of FedEx’s air cargo efforts focused on shipping equipment from China to the U.S. and Europe.
“On a daily basis we generally have about 15 or 16 flights across both the Pacific and the Atlantic,” he said in a discussion on Washington Post Live. “So, in that sector, we have flown hundreds of hundreds of flights in and out of China all during this period of time.”
The Biden administration cutting back on foreign supply chain dependence would reduce the need for shipments from China in a crisis, his campaign says. In 2019, FedEx said business between China and the U.S. made up 2% of its revenue. An estimate from UBS analyst Thomas Wadewitz said all FedEx business linked to China is roughly 4% of its revenue.
Trade deals under Biden
FedEx’s business is strongly tied to global trade. With this, the company is unsurprisingly an active supporter of free trade between countries without barriers.
“Trade is the lifeblood of the global economy,” FedEx says on its website. “And we believe everyone benefits when it is easier to bring new products and ideas to the global market.”
Smith was a critic of Trump’s approach to trade, especially when it came to his withdrawal from the Trans-Pacific Partnership. That pact, which China was not included in, would have expanded free trade between the U.S. and 11 countries.
In 2019, Biden said he wouldn’t rejoin the Trans-Pacific Partnership “as it was initially put forward” but would renegotiate pieces of it. He wrote in a 2020 article for Foreign Affairs that he wants to remove trade barriers. With this, U.S. businesses can more easily sell globally.
“The wrong thing to do is to put our heads in the sand and say no more trade deals,” Biden said. “Countries will trade with or without the United States. The question is, Who writes the rules that govern trade? Who will make sure they protect workers, the environment, transparency, and middle-class wages? The United States, not China, should be leading that effort.”
Smith also told Washington Post Live that FedEx is “very much in favor of re-embracing” trade agreements between the U.S. and Europe to match China’s marketplace.
New deals aren’t likely to come immediately, however. Biden said in the article he won’t enter new trade pacts as president until more investment has been made in domestic workers.
His administration is holding firm on that approach. White House Press Secretary Jen Psaki said last week she didn’t have a timeline on a U.S.-United Kingdom trade deal, with the administration focusing on the COVID-19 pandemic and economic relief.
Ability to unionize, minimum wage
FedEx and Biden diverge when it comes to unions. His campaign website says his administration wants to make it easier for workers to unionize and to repeal provisions that allow states to have right-to-work laws.
FedEx has a minimal union presence outside of its Express pilots group. It deems a more unionized workforce as a risk factor.
“If we are unable to continue to maintain good relationships with our employees and avoid having labor organizations organize groups of our employees, our operating costs could significantly increase and our operational flexibility could be significantly reduced,” FedEx said in a June regulatory filing.
FedEx has waded into political waters on labor issues before. It opposed part of a bill in Congress in 2009 that would have made it easier for U.S. Express employees to organize – that piece didn’t pass. FedEx has said the higher bar for Express workers prevents a local work stoppage from shutting down an entire network.
Biden has also called for increasing the federal minimum wage to $15 an hour. This comes as part of his $1.9 trillion COVID-19 relief plan. However, that piece could be on the chopping block in order to receive approval by Congress.
On its jobs website Wednesday, FedEx had multiple warehouse workers and package handling job openings with pay of less than $15 an hour. To strengthen its recruiting efforts at its flagship World Hub in Memphis, the company rolled out a temporary pay bump for hub employees to $15 an hour ahead of the peak season.
Bolstering U.S. infrastructure
FedEx has voiced support for investment in U.S. infrastructure, including improved roadways so goods can keep moving safely and effectively.
“America’s roads and bridges are dangerously deteriorated, and our interstate system is over 60 years old,” the company says. “… Our federal and state governments must work toward modernizing our infrastructure and our transportation regulations to keep pace with technology and to maximize competitiveness.”
FedEx says it backs federal highway investment “through both increases in gasoline and diesel taxes and – in the future – user-style fees on the beneficiaries of the system.”
Biden’s nominee for U.S. Department of Transportation Secretary, Pete Buttigieg, said last week that all options are on the table to fund infrastructure investments, including raising the federal gas tax. However, he added that the tax may not be the best long-term approach.
“In the long term, we need to bear in mind that as vehicles become more efficient and we pursue electrification, sooner or later there will be questions about whether the gas tax can be effective at all,” he said.
FedEx has more than 200,000 motorized vehicles in its fleet. It had 2,944 electric vehicles in service as of fiscal year 2019.
Buttigieg said taxation could be based on vehicle miles traveled. Although, he added there are privacy concerns and “technical issues” to that approach.
“It’s going to have to be a conversation not only in the administration but with Congress, too,” he said.
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Source: The Commercial Appeal