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Poor US roads mean FedEx is going through tires twice as fast

Poor US roads mean FedEx is going through tires twice as fast


A costly problem

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FedEx Reports Sharp Decline In Quarterly Profits

The decaying state of the United States roadway system can be costly for drivers. For companies where vehicles are central to the business model, it’s no trivial concern. Speaking before a hearing in Washington, DC earlier this week, FedEx CEO Fred Smith spoke about the need for improving the nation’s roadways, and reported that his company is using twice as many tires as it did two decades ago because of the state of the the country’s infrastructure.

The House Transportation and Infrastructure Committee convened a hearing on February 1st called “Building a 21st Century Infrastructure for America,” which aimed to examine the challenges facing the country’s roads, bridges, and seaways in the coming years. Chairman Bill Shuster of Pennsylvania outlined that the growth of the US population in the coming decades will put a huge strain on existing infrastructure, which is already in disrepair.

economic growth is largely dependent on good roads

In addition to Smith, representatives from Cargill, BMW, Vermeer Corporation, and the AFL-CIO provided testimony for the members of the committee. In his prepared remarks, Smith noted that online shopping will continue to grow in the coming years, and that the safe delivery of goods relies on “a robust infrastructure,” something that is currently undermined by aging roadways that aren’t designed to carry the traffic that utilizes them.

Business Leaders And Union Leader Richard Trumka Testfies To House Committee On  U.S. Infrastructure
Photo by Chip Somodevilla / Getty Images

The present state of the US Interstate System, he noted, “is in desperate need of updating,” and that “substandard roads result in drivers’ paying $67 billion, or $324 per motorist, annually in vehicle repairs and operating costs.” With a fleet of vehicles that numbers in the tens of thousands (he cites a worldwide fleet of 150,000 ground vehicles), that’s represents a major investment.

“We’ve allowed the highway system to atrophy for lack of maintenance,” he reported, noting that as a result, productivity has suffered. When talking about ways to fix US Interstate Highway funding, he dropped an eye-opening anecdote: FedEx replaces the tires on their vehicles twice as much as they did 20 years ago:

“All of us know what it’s like to buy a tire for our car. Over the past twenty years, our over the road vehicle tire utilization has been cut in half. So we’re using almost 100% more tires to produce the same milage of transportation. Why is that? Because the road infrastructure has so many potholes in it it’s tearing up tires faster than was the case before.

Smith noted that his company supports changes in the ways the federal government pays for the roads, such as increases in the fees that operators pay for using the roads, through congestion charges, or from other “revenue sources that provide sufficient long-term funding for the Highway Trust Fund.” The fund, which has primarily been funded through federal fuel taxes, has languished in recent years as demand for fuel has dropped and fuel efficiency has risen.

The convergence between these two elements — increased traffic on the roads and a drop in revenue to help fund repairs to those roads in recent decades — has put the country’s roadways in a tight spot: more wear and tear, but with a reduced ability to fix it. That ultimately translates into a small but costly problem for FedEx, other carriers, and drivers: blown tires.