UPS at Odds With FedEx Over Trade Deal, Open Skies

U.S.-based global integrator United Parcel Service (UPS) has welcomed the decision by U.S. President Donald Trump to re-examine the terms of the North American Free Trade Agreement (NAFTA), a pact which since 1994, has eliminated most of the tariffs for products traded among Mexico, Canada, and the U.S.

UPS CEO, David Abney
UPS CEO, David Abney

At its recent investor’s conference, UPS CEO David Abney was quoted by Business Insider as telling reporters that his company is “encouraged” by the Trump White House’s decision to look into the terms of NAFTA, which he described as "a little bit old" and "not reflective of 21st century agreements."
In fact, Abney told investors that he thought the Trans Pacific Partnership (TPP) agreement would replace NAFTA, but shortly after taking office in January, president Trump formally scrapped the flagship trade deal with 11 countries in the Pacific Rim, despite the fact that the TPP was never ratified by the Republican-controlled Congress.

22 cross-border packages = 1 job
Highlighting the importance of trade across the southern border of the U.S. Abney pointed out that every 22 packages that cross in and out of U.S. borders creates a job at UPS. He added that while UPS supports free trade and open borders in general, the company also believes in fair trade.
Abney's views on NAFTA are at odds with those of Fred Smith, CEO of FedEx, who has been highly critical of Trump's trade policies, saying that getting rid of NAFTA was "the single worst trade deal ever approved in this country,” which would be "catastrophic for the U.S. economy."
Smith said NAFTA not only is the basis for 14 million American jobs, but also makes the country US$127 billion richer each year. Free trade is "absolutely essential to American prosperity," Smith has pointed out.

Differing views on Open Skies terms
UPS and FedEx also have starkly different views on the contentious battle between America’s three largest legacy carriers - United, American, and Delta - and their rivals from the Middle East - Etihad, Emirates, and Qatar Airways. The US3 have urged the Trump administration to reexamine the terms of the Open Skies agreement, which governs air transport between the U.S. and the Middle Eastern nations.
While FedEx, cargo operator Atlas Air and other U.S. airlines have come out against the uncompetitive actions of the US3, UPS has not taken a side on the matter. In a recent interview with Business Insider, Abney said this position has not changed and that UPS was "monitoring the situation.”
In August 2015, FedEx joined Atlas Air Worldwide, Hawaiian Airlines, and JetBlue Airways in the "U.S. Airlines for Open Skies" to express their opposition to the demands of the US3 related to the U.S. Open Skies agreements with the ME3.
Collectively, FedEx, Atlas Air, Hawaiian and JetBlue transport more than 40 million passengers annually, ship nearly 8 million tonnes of cargo, and employ approximately 350,000 people, 40 percent more people than the US3 combined.

Nol van Fenema

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Comments: 2
  • #1

    UPSer (Tuesday, 07 March 2017 19:27)

    The last sentence is completely inaccurate or downright intellectually lazy.

  • #2

    Nol van Fenema (Wednesday, 08 March 2017 12:11)

    Dear commentator, to be very frank, we have better things to do than reacting to anonymous critics with vague contents.
    So we suggest "UPSer" to get in touch with Kevin Mitchell, chairman of the U.S.-based Business Travel Coalition, who issued the figures quoted in our article.
    We are sure Mr Mitchell at will be most pleased to specify and detail the "completely inaccurate or downright intellectually lazy" sentence.

    Nol van Fenema
    Senior Correspondent Asia
    CargoForwarder Global