FedEx Sues US Department of Commerce Over China

Get ready for more punches in the US-China Trade War. In the latest round of drama, FedEx has filed a lawsuit against the US Department of Commerce. FedEx’s lawsuit states that the company shouldn’t be liable for unknowingly shipping products that violate the Trump Administration’s ban on US exports to certain Chinese companies.

It’s All About the Money, Money, Money

The motivation behind the lawsuit is clear: it’s a preemptive strike to protect the company’s bottom line. As it currently stands, FedEx could be held liable for paying fees from shipping banned products to China.

FedEx receives roughly 15 million packages daily for shipment, and earns roughly 7% of all its revenue from China. FedEx Chairman and CEO Frederick Smith said fines for violations could be as high as $250,000 per package. However high the fees may be, the company simply cannot afford to pay them and hope to maintain profits.

Shipping Carriers Are Not Law Enforcement Agencies

FedEx makes a very critical point here: the need to separate law enforcement from parcel transportation. FedEx isn’t the only company that could possibly be hit by sanctions. In fact, all other shipping carriers could also be held liable.

The following is a direct quote from the lawsuit:

“Typically, the law offers protection for common carriers, excepting them from liability for the contents of packages and communications they transmit, such as Internet service providers and telecommunications companies.”

“The [Export Administration Regulations], however, offer no safe harbor provision. To the contrary, the EAR hold common carriers liable as aiders and abettors of the EAR violations committed by their customers, with steep penalties.”

The Bottom Line: Shipping Companies Shouldn’t Be Liable for The Contents They Transport

Trade war or no trade war, shipping carriers shouldn’t be liable for the contents of every single package they transport at the end of the day. Of course, USPS has its own policing branch—the United States Postal Inspection Service. However, other private carriers aren’t in the business of law enforcement.

As FedEx’s lawsuit states, “FedEx is a transportation company, not a law enforcement agency.”