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 -- 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 bosss essential optimism and making it clear also that FedEx would be joining the ranks of military enlistees. As Bunn put it: We are an active participant in a 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.
The amount of air stock which FedEx commits to such potential use is in the vicinity of 100 aircraft -- mainly MD-11s and DC-10s -- out of a total fleet of 650 to 700. These are not mothballed planes, but part of the companys in-service fleet. During the Desert Storm and Desert Shield operations a decade ago, FedEx flew 576 cargo missions to the Gulf War theater of operations, from August 1990 to June of 1991. We committed more lifts, operated more flights, and airlifted more tonnage than any other U.S. carrier, 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. Its hard to say, answered Bunn. It depends on such variables as what happens to fuel costs, how many missions are called for, how far the flights are, and so forth. 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 at least measurable) impact on FedEx,but -- since this is a company whose flight and support personnel include a good many military reservists , the impact upon the companys 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 mystery that the nature of the as yet unwaged war is for almost everyone else.
You cant say that Marc Jordan, the president of the Memphis Area Chamber of Commerce, isnt upbeat.
Inevitably, the vigor and optimism of his -- and the Chambers -- 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: The most immediate impact on Memphis was in relation to commercial air service, he confides. We had marketed ourselves as a hub of Northwest Airlines, and we know were going to see some changes there. So weve got to adjust. Its hard to quantify the impact in terms of what it means in [business] expansions and relocation.
But quickly he segues, Air 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. And then Jordan is off into a chronicle of -- relative -- good news. Were a distribution center, after all. You have to remember that Memphis International Airport has been the Number One cargo airport for nine consecutive years, and we dont see that changing. Our traffic control operation was ranked Number One two years ago by the F.A.A..
The bulk of the airports transport is, as Jordan notes, generated by home-grown FedEx, the monolith which has its international headquarters 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 Smiths or Bunns, was the first carrier back in the air after September 11th." The companys truck delivery system, which normally amounts to 300 trucks dispatched a day, went to 2700 trucks a day, he says. They quickly shifted and went out and found the trucks."
And thats not all. Were 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. Memphis therefore will be able to hold its own a little better than most other cities -- 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.
Jordan even invoked the old its-an-ill-wind-that-blows-nobody-some-good maxim. An economic downturn forces economies, and whenever that happens, proximity to distribution needs becomes more important to companies looking for a place to locate..
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 Reservist system, from the nearby Naval Base at Millington, and from the local telecommunications industry.
Remembers Jordan: In 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 were able to handle 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.
At another board meeting this 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 the many Arab American businesses that add value to our entrepreneurial spirit [and] love American deeply.
There are some who profess a pessimism about the fate of the newly acquired Grizzlies NBA franchise -- shifted from Vancouver this year in expectation 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 That [the arena] is three years away. By then the factors should be there.
On the whole, he ventures to say, this -- meaning the disaster plus the already existent economic downturn, is a blip.