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FedEx CEO says US lawsuit is 'separate and distinct' from Huawei package mishaps

Key Points
  • FedEx sued the Department of Commerce on Monday over Export Administration Regulations, which the company said impose an "impossible burden."
  • "What really led us to [file the lawsuit] at the end of the day wasn't Huawei at all," FedEx CEO and Chairman Frederick Smith said. "It was on last Friday, there were five new entities added with these extraordinarily opaque requirements."
  • The Tennessee-based company is under investigation by China following several shipping incidents involving Huawei products.
Frederick Smith, CEO of FedEx.
Adam Jeffery | CNBC

FedEx CEO and Chairman Frederick Smith said on Tuesday the company's lawsuit against the Department of Commerce is "separate and distinct" from recent shipping incidents involving Chinese technology company Huawei.

The shipping company sued the Department of Commerce on Monday, saying that regulations requiring companies to screen and block packages that could pose a threat to national security violate the company's fifth amendment rights and impose an "impossible burden."

"What really led us to [file the lawsuit] at the end of the day wasn't Huawei at all," Smith said on the company's Q4 earnings call. "It was on last Friday, there were five new entities added with these extraordinarily opaque requirements."

Smith said fines for violations stand at $250,000 per package.

"Contrary to what you hear in the media, we don't have to be complicit in this," Smith said. "It's strict liability. If you make a mistake ... they are empowered under their regulations — not, we think, based on congressional law, but on their own regulation — to fine us or any other common carrier."

FedEx has said the shipping incidents involving Huawei were mistakes. In one incident, FedEx failed to deliver packages shipped from Japan to China, instead sending them to the United States. In another, a package bound to the U.S. from the U.K. containing a Huawei phone was returned to its sender.

Huawei has been at the center of the ongoing trade conflict between China and the U.S., with the Pentagon expressing national security concerns about the Chinese company's products. China launched an investigation into FedEx after the package misdirects.

FedEx reported earnings on Tuesday afternoon, notching $5.01 in adjusted earnings per share on $17.81 billion in revenue for its fiscal fourth quarter. That's above earnings estimates of $4.85 per share and revenue expectations of $17.79 billion, according to Refinitiv consensus estimates.

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FedEx's double-edged sword: New rivals Amazon and Uber aim to slash its business

Key Points
  • As FedEx prepares to report earnings on Tuesday, market watchers are looking at the range of threats the world's second-biggest courier company is facing.
  • Earlier this month FedEx announced it won't renew its express U.S. shipping contract with Amazon.
  • The move comes as Amazon is more aggressively building out its own shipping and delivery network.
  • Uber Freight is just getting started; it already has relationships with about 1,000 shippers.