FedEx Chief confident on US exports

Fred Smith, founder and chief executive of package-delivery pioneer FedEx, said growing demand from developing countries for high-technology and other valuable goods would assure continued growth in US exports even if the dollar’s slide reversed.

Economists from Goldman Sachs and Citigroup have predicted that the narrowing trade deficit could add one-half of a percentage point to the US’s gross domestic product in the first quarter.

“Were it not for US exports, the country would be in a significant recession right now,” Mr Smith said. “The consumer is getting clobbered.”

While the dollar’s decline has helped make US goods more attractive to overseas businesses and consumers, it will not be the primary driver of a sustained growth in exports for high-value products, Mr Smith said.

The burgeoning wealth of emerging economies has spurred demand for many high-end goods made in the US, from network routers to artificial knees and hips.

The advent of electronic commerce has eliminated language barriers and other traditional impediments to international trade, he said.

“People are getting wealthier in China, in Russia and the Middle East, and they can afford to fix that bad knee or hip that they might just have lived with a decade ago,” Mr Smith said.

“When you get into the high-tech and high value-added trades, it’s the globalisation of those markets that’s more powerful than the currency.”

FedEx warned investors this month that the run-up in fuel costs would leave the company short over its quarterly profit forecast.

While FedEx can pass price increases to customers by increasing its fuel surcharges, the higher fees do not kick in immediately. “We can’t pass it along fast enough to recover it,” said Mr Smith.

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