Washington may appear to be a den of chaos lately but there is one cause that unites politicians and the business community alike: improving America’s ailing infrastructure.
Just how bad are the roads in the United States? Ask FedEx. The company said its FedEx Ground and FedEx Freight vehicles logged more than 2 billion miles last year and that the country’s roads are tearing up its tires.
“Over the past 20 years, our over-the-road vehicles tire utilization has been cut in half. So we’re using almost 100% more tires to produce the same mileage of transportation,” FedEx’s chief executive Fred Smith told members of the House Transportation and Infrastructure Committee today (Feb. 1). “Why is that? Because the road infrastructure has so many potholes in it it’s tearing up tires faster than what was the case before.”
Smith said he is willing to foot some of bill along with other drivers, by road usage fees and fuel taxes.
There’s a lot at stake. FedEx and competitor UPS are trying to adapt to explosive growth in e-commerce, which is more costly for them than business-to-business shipments because direct-to-consumer shipping often requires more labor to get deliveries to specific residences. They still need to keep costs low enough to retain customers. In prepared remarks, Smith said global business-to-consumer e-commerce will generate $3.2 trillion in revenue by 2020.
So far, Washington appears to be on board with the goal. Elaine Chao cruised to confirmation as the new transportation secretary, one of president Donald Trump’s least controversial nominees.
But change still can’t come fast enough. One of FedEx’s emerging competitors in the logistics world, retail giant Amazon.com, is finding that better transportation networks sometimes have to be built from scratch.