On Wednesday of last week, FedEx founder and president Fred Smith was testifying to a House committee on the then-pending airline-relief act, to the effect that the transport monolith which he heads will be affected Ð- as it was in fact affected during the several days that followed the terrorist attacks on New York and Washington - by any general across-the-board shutdown or slowdown of air traffic.
But, Smith added, the climate of uncertainty which might govern a commercial or recreational traveler probably would not extend to the shipment of cargo. Even so, Smith felt that the relief bill was needed and supposed that there might, at least ultimately, be provisions of special application to a transport carrier like FedEx.
In Memphis, company spokesperson Jess Bunn was echoing his bossÕs essential optimism and making it clear also that FedEx would be joining the ranks of military enlistees. As Bunn put it: ÒWe are an active participant ina program called Civil Reserve Air Fleet, which identifies mission-ready aircraft in the civilian, commercial air fleet that can be called into service in the event of a national emergency. The government can requisition the use of a certain number of aircraft.Ó
The amount of air stock which FedEx commits to such potential use is in the vicinity of 100 aircraft Ð mainly MD-11s and DC-10s -- out of a total fleet of 650 to 700. These are not mothballed planes, but part of the companyÕs in-service fleet. During the Desert Storm and Desert Shield operations a decade ago, FedEx flew 576 cargomissions to the Gulf War theater of operations, from August 1990 to June of 1991. ÒWe committed more lifts, operated more flights, and airlifted more tonnage than any other U.S. carrier,Ó said Bunn.
What would the economic impact of this be on FedEx? And would that impact be positive, negative, or break-even? Bunn was asked. ÒItÕs hard to say,Ó ansered Bunn. ÒIt depends on such variables as what happens to fuel costs, how many missions are called for, how far the flights are, and so forth.Ó The company would certainly be compensated by the government, but perhaps at a rate which would not compare to what FedEx could charge a private customer. And flights in the service of a military effort would, of course, be planes not available to make civilian deliveries.
Another effect which the company might experience would be in the sphere of military-reserve callups. So far there has been no special (or least measurable) impact on FedEx,but Ð since this is a company whose flight and support personnel include a good many military reservists , the impact upon the companyÕs workforce could turn out to be considerable.
And, of course, the company would be subject to the same economic turndowns as other industries if the war should bring with it recessionary tendencies.
In general, however, the issue of economic impact is, for FedEx, the same riddle-wrapped-in-enigma-inside a mysetery that the nature of the as yet unwaged war is for almost everyone else.
You canÕt say that Marc Jordan, the president of the Memphis Area Chamber of Commerce, isnÕt upbeat.
Inevitably, the vigor and optimism of his Ð and the ChamberÕs Ð response to the terrible events of September 11th come as a reminder that this is a man whose own ravaged vital center has recently been rebuilt. Jordan,who for years had been on the verge of death from the effects of a damaged heart, was the recipient during the past year of a heart transplant. Since then, he has rarely stopped moving, nor did the September 11th terrorist attacks on New York and Washington, bring him to a halt.
Talking to Jordan, you get a sobering dose of the Bad News first: ÒThe most immediate impact on Memphis was in relation to commercial air service,Ó he confides. ÒWe had marketed ourselves as a hub of Northwest Airlines, and we know weÕre going to see some changes there. So weÕve got to adjust. ItÕs hard to quantify the impact in terms of what it means in [business] expansions and relocation.Ó
But quickly he segues, ÒAir service is a relative thing. The whole country has been impacted for the foreseeable future, and, relatively speaking, Memphis should come off better than most.Ó And then Jordan is off into a chronicle of Ð relative Ð good news. ÒWeÕre a distribution center, after all. You have to remember that Memphis International Airport has beenthe Number One cargo airport for nine consecutive years, and we donÕt see that changing. Our traffic cocntrol operation was ranked Number One two years ago by the F.A.A..Ó
The bulk of the airportÕs transport is, as Jordan notes, generated by home-grown FedEx, the monolith which has its international headaquarters in Memphis, and UPS, the FedEx competitor which also has a hub at Memphis International Airport.
FedEx, says Jordan with a vicarious, near-proprietary pride that seems every bit the equal of SmithÕs or BunnÕs, Òwas the first carrier back in the air after September 11th." The companyÕs truck delivery system, which normally amounts to 300 trucks dispatched a day, went to 2700 trucks a day, he says. ÒThey quickly shifted and went out and found the trucks
And thatÕs not all. ÒWeÕre still the second or third largest community served by Class A rail service.The main factors to reckon with for Memphis are changes in the economy in general, Jordan says. ÒMemphis therefore will be able to hold its own a little better than most other cities Ð because of the diversity of transport and because of our position as the prime distribution center in America. Goods and services have still go to be distributed.Ó
Jordan even invoked the old itÕs-an-ill-wind-that-blows-nobody-some-good maxim. ÒAn economic downturn forces economies, and wheenver that happens, proximity todistribution needs becomes more important to companies looking for a place to locate.Ó.
On the day after the disaster, Jordan presided over a meeting of his board of directors and got reports from the airport, from FedEx, from the Federal Reservice system, from the nearby Naval Base at Millington, and from the local telecommunications industry.
Remembers Jordan: ÒIn all the reports, it was encouraging to hear how quickly those respective groups responded. And there were no major problems, no hiccups in the system. Nobody made a run on the bank. The telephone lines was able tohandle the increase in calls. Even at the airport, only 20 people out of several thousand stranded passengers were without lodging by nightfall. All of us worked together on that.Ó
At that same Wednesday meeting last week, the Chamber board adopted a resolution which is notable for its determined expressions of optimism. The statement was even prescient in its inclusion of strokes of solidarity for Òthe many Arab American businesses that add value to our entrepreneurial spirit [and] love American deeply.Ó
There are some who profess a pessimism about the fate of the newly acquired Grizzlies NBA franhchise -- shifted from Vancover this year in expectations of the construction of a downtown arena within the next three years. For political reasons, the construction formula was made to depend not on relatively secure property tax levies but on the relative intangibles of a hotel-motel tax and a car-rental tax at the airport. Jordan shrugs ÒThat [the arena] is three years away. By then the factors should be there.Ó
On the whole, he ventures to say, ÒthisÓ Ð meaning the disaster plus the already existent economic downturn, Òis a blip.Ó