FedEx CEO Says Global Supply Chain Shocks to Persist
Raj Subramaniam Cites Factors Including Trump's Tariffs, End of De Minimis Exemption
Key Takeaways:
- FedEx CEO Raj Subramaniam said Nov. 20 that global trade and supply chain shifts driven by technology and geopolitical risks are creating a lasting, more regional pattern.
- FedEx reaffirmed its expected $1 billion hit this year from trade volatility, largely due to reduced China-U.S. shipments, and noted rising flows from China to Europe, Latin America and Asia.
- The company said it is redeploying capacity to adapt to new trade routes as executives at the forum warned that disruptions reflect structural market changes rather than election cycles.
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The changes to global trade and supply chains driven by factors including technology and geopolitical risks are likely to persist over the long term, according to FedEx Corp. CEO Raj Subramaniam.
“There’s a new equilibrium state being formed in this new supply chain pattern and they’re much more regional in nature,” he said at the Bloomberg New Economy Forum in Singapore on Nov. 20. “The industrial economy is going to take a little longer to change. But once it changes, it’s difficult to go back.”
President Donald Trump’s tariffs and the end of an exemption for low-value goods has upended global parcel trade and is likely to continue to weigh on the industry’s outlook next year.
FedEx, one of the world’s largest logistics companies, warned in September that it expects a $1 billion hit from trade volatility this year, with most of that stemming from lower shipments from China to the U.S. — a route that’s been hit particularly hard by the trade war.
Subramaniam reaffirmed that dip in trade and said FedEx has seen more flows from China to Europe, Latin America and other parts of Asia. The company is shifting its capacity, including redeploying aircraft, in response to the changes.
“We can move our capacity far faster than manufacturing can move. So we know from the bottom up, we see these signals and we can react,” he said.
FedEx ranks No. 2 on the Transport Topics Top 100 list of the largest for-hire carriers, No. 3 on the TT Top 50 list of the largest global freight carriers and No. 43 on the TT Top 100 list of the largest logistics companies in North America.
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Speaking at the same panel on designing resilient supply chains, ABB Ltd. Chairman Peter Voser said that trade disruptions weren’t following election cycles, but rather reflect fundamental changes in the market and a greater awareness of the expense that can be incurred.
“Companies across the world, in all industries, are taking much more into account that the disruption effect is much more costly compared to actually keeping your product on the inventory side,” he said.
