FedEx’s Smith Calls for More Development of Electric Vehicles in Regional Shipments

This story appears in the March 2 print edition of Transport Topics.

WASHINGTON — Passenger cars and even some trucks moving short distances in the United States need to switch to electric battery power from gasoline or diesel, FedEx Corp. founder Frederick Smith told the National Press Club here Feb. 23.

Smith said dependence on oil imported from the Middle East is the “biggest single threat to our nation’s economy and national security” after terrorist attacks and the proliferation of weapons of mass destruction. To lessen our need to import oil, he argued for hybrids — electric, hydraulic and plug-in — for transportation; solar, wind, hydroelectric and nuclear power for producing electricity; and conservation and increased domestic oil production.

Although most well known as chairman and chief executive officer of FedEx, Smith said he mainly was speaking in his role as co-chairman of the Energy Security Leadership Council, a group of 21 business executives and retired military personnel concerned about energy and national security.

During a question period, Smith said a carbon tax made more sense than a proposed vehicle-miles-traveled levy, and that there should be a “robust implementation of fuel-economy standards for all on-road transport, including medium- and heavy-duty trucks” such as the ones he uses at his FedEx Express, Ground and Freight subsidiaries.

Starting from the premise that “about 70% of all of the trips we make in our personal automobiles on a daily basis are less than 40 miles,” Smith said the nation should build and sell more all-electric and electric-hybrid vehicles once there is an adequate supply of electricity generation and transmission capacity. He emphasized the need for coordination.

“We need to work on all of them in sync. Without one, the others are useless, and without all three, this entire venture could put us at greater risk,” Smith said.

His remarks were based on his group’s study — “Economic Impact of the Energy Security Leadership Council’s National Strategy for Energy Security” — which was released the day of his speech. Smith’s co-chairman is retired Gen. P.X. Kelly, a former commandant of the U.S. Marine Corps.

Smith said that with thousands of troops in Iraq, largely because of Middle Eastern oil, the move toward energy independence is entirely justifiable for changing that situation. However, his council’s study estimated a substantial economic benefit to securing more diverse supplies of energy.

ESLC’s study, performed by the University of Maryland and Keybridge Research, said the investment would create jobs that paid well and, once completed, decrease overall energy costs and payments abroad for oil, resulting in a higher U.S. standard of living.

In contrast, being resigned to simply enduring continuing oil shocks would be “a recipe for economic disaster,” Smith said. In assessing the relationship between last year’s record run-up in oil prices and the current recession, he said the high price of petroleum did not cause the slump but was “the match that lit the fire.”

Smith took issue with the proposed vehicle-miles tax as “ill advised,” because “it penalizes people in [spread out] places such as Montana or Wyoming, and those with long commutes.”

He did not urge passage of a carbon tax, but said if Congress decides carbon dioxide output is a serious issue, he recommended passage of such a tax as preferable to a cap-and-trade system.

To make such a tax revenue-neutral, he said it could be offset by a corresponding cut in payroll taxes. A carbon tax would be similar to the current taxes on diesel and gasoline.

In endorsing mileage standards for trucks, Smith brought with him Lee Scott, the recently retired CEO of Wal-Mart Stores. During Scott’s tenure, Wal-Mart began a campaign of trying to cut transport and logistics costs.

The retail giant has paid for research into hybrid truck engines, more aerodynamic tractor and trailer design, more fuel-efficient engines and greater packaging efficiency by squeezing more products into the same space.