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Mar. 17, 2014

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10 THE JOURNAL OF COMMERCE www.joc.com MARCH 17.2004 COVER STORY JOC: Mr. Smith, what do you see as the big chal- lenges for transportation and trade globally? Where do you see the biggest opportunities, the biggest problems? SMITH: I think the No. 1 problem is slow growth in global commerce compared to recent history, meaning the last 30 years. I think the reasons for the slow growth are bad policies in the United States and Europe and in Asia, and the re-emergence of a signifi cant amount of protectionism. At the same time, you've got the absence of American historical leadership in trade. The corollary to that is the rise of an awful lot of regulations, based on security con- cerns, in some cases, extreme security concerns, and the use of security concerns to put a lot of friction in the trading system. I think in this country you have a lot of resis- tance to doing sensible things like using the fuel tax to pay for infrastructure. That's become radioactive for some reason. Bill Logue, CEO of FedEx Freight was on Capitol Hill testifying about that the other day. So the premier market-oriented economy in the world, the United States, isn't even doing things to repair bridges and build them and that's very, very worrisome. Clearly, there's a lot of empha- sis on environmental issues — some of it wise, some of it not wise — but I'd put that a distant third compared with the other two. JOC: So, you see protectionism and excess regu- lation as the main challenges? SMITH: Well, I think the fi rst is that we have low-growth policies. The United States and Europe have low-growth policies and you've certainly seen growth go down a great deal in China. A lot of people would say that's due to low growth in the U.S. and Europe, but I also think China created a lot of issues for themselves with their Indigenous Innovation program and increased regulatory require- ments in the trade sector. JOC: You mentioned regulation tied to security. Are there any particular U.S. regulations you fi nd most egregious? SMITH: I think the United States has done a pretty good job of trying to balance the requirement to have a trade environment that facilitates commerce and one that has adequate security, but there are all kinds of things we deal with every day; just the dif- ferent customs regimes in different ports, the disparities in the interpretation of FDA regulations. I think the security focus kind of ebbs and fl ows depending on what's going on in the world. It would be better to have a much more modern system that recognizes that carriers themselves have a lot of capabilities. I think customs systems everywhere, but in the U.S. as well, are way behind the times in terms of facilitating e-commerce. The de minimis charges are too low. You can't get them raised in Canada, you can't get them raised in this country. You've got to question why that's the case. I think some of it is because of the security focus and some of it is because people view it as a threat to their livelihood. That is always the problem with trade. The greater good has always got to be Frederick W. Smith launched more than a company when he founded FedEx in 1973; he created an air express industry that has been crucial to the growth of global trade. Over the decades, FedEx has expanded to embrace ground parcel, trucking and, through FedEx Trade Networks, maritime transportation. FedEx is now a $45 billion company, the second- largest transportation company in the U.S. and third-largest global logistics operator, after UPS and Germany's DHL. Smith, chairman and CEO of FedEx, met with Journal of Commerce editors William B. Cassidy, Peter T. Leach, Bill Mongelluzzo and Mark Szakonyi at the 2014 TPM Conference in Long Beach, Calif., to discuss the challenges of growing protectionism, e-commerce and serving post-recession supply chains. ON THE RECORD FRED SMITH,

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