FedEx Corp. (FDX) - Get FedEx Corporation Report filed a lawsuit against the U.S. government late Monday arguing new trade regulations put an "impossible burden" on the world's biggest package delivery company to monitor the origins of shipments to and from the United States.
In papers filed with the U.S. District Court in the District of Columbia, FedEx asked for relief from rules set out by the Commerce Department's Export Administration Regulations (EAR) that make carriers and delivery companies liable for shipments that violate its rules without requiring evidence that the carriers knew they were doing so. The suit follows two separate incidents in which it was accused by Huawei Technologies of mishandling packages either destined for, or travelling to, the United States following the China-backed company's blacklisting by the U.S. State Department.
"As a company that is committed to complying with all laws and regulations in the countries we serve, FedEx strongly supports the objectives of U.S. export control laws," FedEx said in a statement. "We have invested heavily in our internal export control compliance program. However, we believe that the EAR, as currently constructed and implemented, place an unreasonable burden on FedEx to police the millions of shipments that transit our network every day. FedEx is a transportation company, not a law enforcement agency."
Fedex shares were marked 2.4% lower Tuesday to change hands at $156.96 each. The stock slumped 2.7% on the session yesterday, wiping out all of its year-to-date gains, after its second apology in as many months for failing to complete the shipping of a package linked to Huawei Technologies.
FedEx said an "operational error" prevented the shipping of a Huawei phone from Britain to the United States, where it was meant to arrive at the offices of PCMag for a product review.
China's Foreign Ministry said FedEx needed to explain why the shipment was intercepted while the Global Times newspaper said officials were considering adding FedEx to a government list of so-called "unreliable entities" that could keep it from doing business in the world's second-largest economy, where it generates around 7% of its global revenues.
FedEx has been operating in China since 1984, and has a 54.6% of the logistics market in China, according to technographics provision firm Datanyze. Package delivery rivals DHL (DPSGY) and United Parcel Service (UPS) - Get United Parcel Service Inc. Report are also heavily involved in China, with market shares of 25% and 17% respectively.
Last month, FedEx issued a similar apology for mishandling packages destined for Huawei amid accusations that it deliberately diverted four parcels addressed to the Chinese tech giant's offices in Asia.
Huawei said the packages, which contained company documents, were re-routed by FedEx back to the United States, and warned the alleged diversion would force it to "review" its relationship with the courier.