By Liying Gu
Elise Jordan, senior vice president, strategic financial planning and analysis & business systems of FedEx Express, opened the annual ACI-NA Economics & Finance and Human Capital Conference this week in Nashville discussing the economic outlook, air cargo market outlook, FedEx’s strategic imperatives, the evolving role of finance, and industry challenges.
FedEx economists see a two-speed world with emerging markets such as China, India, Brazil and Mexico leading global economic growth, and the developed world in the form of the U.S., Europe and Japan in slower growth mode for some time. The global economy “is in a soft patch” currently with uncertain markets and dampened consumer sentiments driven by the debt crises in the U.S. and Europe and geopolitical uncertainty in the Middle East. According to Jordan, FedEx expects calendar year 2012 U.S. gross domestic product growth to be slightly below the blue chip consensus of 2.3 percent, and calendar year 2013 below the consensus 2.6 percent.
The air cargo industry is expected to grow faster than world trade and global GDP, driven to a large extent by the increase in high value-added goods, just-in-time inventory practices and the growth of electronic commerce. In 1970, 10 percent of U.S. GDP was related to international trade. Today, it’s about 25 percent and growing. International air cargo accounts for only about 2 percent of the tonnage moved, but over 40 percent of the value.
FedEx continues to pursue growth opportunities in international service, which is the fastest growing component of the company’s overall revenue base. In this process, the company also strives to be flexible and nimble enough to respond to the ups and downs of the world economy in an organized and appropriate manner.
Looking forward, Jordan sees fuel, infrastructure, and sustainability among the many critical issues facing airlines and airports today. Greater access and connectivity, safer operations, fewer delays, lower costs, greater fuel efficiency and reduced carbon footprints, cannot be optimized without significant improvements to the nation’s aviation infrastructure in the very near future.