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FedEx CEO shoots down deliveries by drones

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MINNEAPOLIS -- The CEO of FedEx doesn't see drones taking over the package-delivery business any time soon.

Fred Smith said FedEx has several drone studies underway. But the idea of delivering items by drone is "almost amusing," Smith said on a conference call Wednesday after the company reported financial results.

Smith said FedEx has a drone expert on staff -- technology chief Rob Carter.

"He actually owns a drone," Smith said. "He reported that it operates about eight minutes and can carry four Budweiser beers at his farm."

Jeff Bezos, the CEO of Amazon.com, caused a stir recently when he said Amazon is exploring drone deliveries and sending a small package via an automated drone could be reality in a few years. United Parcel Service and German delivery company Deutsche Post DHL have said they are evaluating drone delivery.

There are huge obstacles to residential drone deliveries. The U.S. Federal Aviation Administration barred their use for commercial purposes in 2007. No-fly zones abound in places such as Washington D.C. There are questions about who is liable if a drone crashes and damages something, or someone, on the ground.

Smith, who is also FedEx's chairman and president, commented in response to an analyst's question about online sellers getting into the business of delivering goods themselves.

Though FedEx may eventually have to cope with online retailers making their own local deliveries, right now it is dealing with customers shifting from overnight delivery service toward cheaper ground transportation. That shift was a factor in the smaller-than-expected gain in FedEx's second-quarter profit reported Wednesday.

Revenue and U.S. volume both fell slightly in FedEx's express unit, which handles overnight shipments and is the company's largest division. Ground-shipping revenue rose 10 per cent, and freight revenue was up four per cent.

FedEx Corp.'s net income rose 14 per cent to $500 million, or $1.57 per share. Analysts had been expecting $1.64 per share.

A year earlier it earned $438 million, or $1.39 per share.

-- The Associated Press

Republished from the Winnipeg Free Press print edition December 19, 2013 B8

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