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QUEST MEANS BUSINESS

Trump Threatens Tariffs in NAFTA Talks; McDormand Proposes the Use of "Inclusion Riders"; Inside in Heart of the UPS Worldport;

Aired March 5, 2018 - 16:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


[16:00:00] STEPHANIE SY, CNN HOST: And there is the closing bell. Strong gains on Wall Street as trading comes to a close. There is the gavel.

It's Monday March the 5th.

Make a deal or face tariffs. President Trump warns Mexico and Canada as member of his own party warn against protectionism.

Diversity in Hollywood. One contract at a time. We'll explain the so- called inclusion writers.

And an inside look at the heart of the shipping industry. Richard Quest takes us inside the UPS Worldport. I'm Stephanie Sy, this is Quest MEANS

BUSINESS.

Good evening. Tonight, President Trump says there will not be a trade war, but he's not backing down on tariffs. In Mexico, digging in on NAFTA.

Negotiators say time is running out, and in fact, the U.S. representative says he'd prefer a three-way deal, but will negotiate bilateral agreements

if he must. Canada's foreign minister says any steel or aluminum tariffs would be unacceptable. And Europe is preparing a counterattack. A

frustrated EU commission chief is threatening to impose tariffs on Harley Davidsons and Levi's saying we can be that stupid, we have to be that

stupid, end quote.

In Washington, internal revolt as a leader in Mr. Trump's own party urges him not to go forward. House Speaker Paul Ryan releases a statement saying

he is extremely worried about a trade war. President Trump says his new tariffs would be part of negotiations over NAFTA.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: No, we're not backing down. Mexico is -- we've had a very bad deal with Mexico. Very bad deal with

Canada. It's called NAFTA. Our factories have left our country. Our jobs have left our country. For many year NAFTA's been a disaster. We are

renegotiating NAFTA as I said I would. And if we don't make a deal, I'll terminate NAFTA. But if I do make a deal which is fair to the workers and

to the American people, that will be I would imagine one of the points we'll negotiate. It will be tariffs on steel for Canada and for Mexico.

So, we'll see what happens.

SY: Now, investors clearly believe the trade dispute will end diplomatically because the Dow closed up more than 350 points. The S&P and

the Nasdaq also saw some strong gains. All the sectors closed in the green on this Monday.

CNN's Paula Newton is looking at all of this from the Canadian perspective, while Patrick Gillespie follows the story for CNN money in New York.

Patrick, I want to start with you because you were just listening to the press conference that came out of the NAFTA trade representatives. The

latest round of talks ending in Mexico. Robert Lighthizer, the U.S. trade representative seeming to take a different tone. How significant is that?

PATRICK GILLESPIE, CNNMONEY CORRESPONDENT: The U.S. is playing hard ball with Mexico and Canada. They're threatening to use tariffs as negotiating

tactics and was Lighthizer was saying, listen, we are running out of time, the political headwinds are going to hit us soon. We've got Mexican

presidential elections in July. U.S. elections in November and provincial elections in Canada later this year. So, he is saying let's get this done

now. He's running out of patience it sounds like. His tone was very grim and, you know, he mentioned that he's willing to move forward bilaterally.

One-on-one talks with Canada, and one-on-one with Mexico.

SY: I mean, that would be a mess. And some people have compared it to the Brexit divorce, and trying to negotiate bilateral deals that the U.K. is

facing. Paula, I want to bring you into this conversation because the foreign minister of Canada also had something to say at that NAFTA press

conference and they were talking about tariffs. Any plans at this point for retaliation against U.S. products?

PAULA NEWTON, CNN CORRESPONDENT: You can bet on it. Canadian officials are huddling as we speak, that if Donald Trump doesn't, in his words, back

down, that they will respond. What's clear here, though, is that they will respond economically, but my goodness, is it going to have a political

pushback.

[16:05:00] You know, it's interesting in speaking about Speaker Paul Ryan who was pushing back against this saying it will start a trade war. There

are many GOP leaders saying, look, we don't want any part of the Trump tariffs. And Canada plans to really hit that message home with their

targeted retaliation here. They will hit GOP states, they will hit swing states, they will hit industries perhaps in Paul Ryan's Wisconsin that will

make it clear this isn't going to work for anyone.

Now, having said that, Stephanie, time and time again, from these negotiations, we've heard rhetoric from Lighthizer. We've always heard the

same thing, he's always been pessimistic. And Chrystia Freeland from Canada has always been perhaps a bit too optimistic. What we heard is that

she was fighting back, fighting back hard, and saying look, we want this to a win/win/win. The minute it becomes a zero-sum game there's no question

countries like Canada will suffer much more than the United States. But make no mistake, the United States and Mexico will suffer as well.

SY: Patrick, what impact is this rhetoric from Trump on tariffs having on the NAFTA trade talks? Trump wants a better NAFTA deal. Has this

incentivized in any way the trade representatives from Canada and Mexico to concede any points?

GILLESPIE: I think the -- not so far. I think the threat of tariffs, you know, if Trump, President Trump goes through with them next week, would

only throw ice on already fragile negotiations in NAFTA. And I think the irony of these tariffs, Stephanie, is that the red states that got Trump

into the White House would probably be hit the hardest. You're talking about farmers in the Midwest, you know, autoworkers in the rust belt of the

United States, and even in the southeast as well with farmers and autoworkers there, it's a very trade-heavy area.

SY: The other irony is that we're not actually talking about punishing China with these specific steel tariffs, Paula, obviously, Canada and

Mexico, our U.S. allies. I wonder if there's any sense. I mean, the markets are clearly shaking off the feeling that there is going to be a

trade war at least today. That could change, but is there a sense among Canadian officials that this may be bluffing on the part of the Trump

administration?

NEWTON: I think they certainly hope so. If they learned anything from the Trump administration is just take them at their word and take it at Donald

Trump's word alone. And that is the point. And they are still hanging on what he says. They still do not rule out the possibility that those

tariffs will be imposed later this week. Now, if that happens, it doesn't mean Donald Trump won't change his mind again.

But it has been interesting to see the market shrug this off. I think they were definitely bolstered by Speaker Ryan saying he wasn't with it and

certainly seeing some of the more, let's say, alarmist predictions from some of the companies in the United States. Saying, look, this is going to

cost Americans more everywhere, even if it will help some steel and aluminum workers. Having said that, Stephanie, everyone has to be reminded

here, this is political script that Donald Trump is riding and will ride this out for several months even if it does appear to be hurting the

economy if he thinks it will help him politically. And that is the only thing that Canadian officials right now are banking on

SY: Paula Newton from Ottawa, and Patrick Gillespie, thanks a lot.

Well, the proposed tariffs threaten many foreign companies that invest heavily in the U.S. Luxury car maker Rolls-Royce and its parent company,

BMW, could be badly affected by steel and aluminum tariffs. Speaking on "QUEST EXPRESS" earlier, the Rolls-Royce chief executive stressed the

importance of his company's contribution to the U.S. economy.

(BEGIN VIDEO CLIP)

TORSTEN MULLER-OTVOS, CEO, ROLLS-ROYCE: Rolls-Royce is part of the BMW group, as you might know, the BMW Group is a major investor when it comes

to the United States. Not only and plant facilities but also when it comes to generate jobs for many, many Americans. And I think the BMW Group

brought quite some wealth into the United States. And with that, I will have to leave it because let's wait and see how that really pans out

finally.

(END VIDEO CLIP)

SY: Tactful answer there.

Israeli Prime Minister Benjamin Netanyahu has left a widening corruption probe back home to visit another administration mired in controversy and

chaos here in the U.S. President Trump welcomed his Israeli counterpart to the White House. Speaking to reporters, the pair celebrated the planned

opening of a new American Embassy in Jerusalem. Mr. Trump claims that move will cost significantly less than the proposed $1 billion. He said it'll

cost $250,000, in fact. And the president says he may even attend the opening ceremony, himself. Oren Liebermann has been following this story

from Jerusalem. Oren, you know, watching these two leaders meet is always amusing. But PM Netanyahu seemed to really bend over backwards to flatter

Mr. Trump this time. Comparing his decision to recognize Jerusalem as the Israeli capital to the Balfour agreement Did anything surprising come out

of the meeting, Oren?

[16:10:00] OREN LIEBERMANN, CNN CORRESPONDENT: Not really exactly as we expected. Netanyahu has often directed a tremendous amount of flattery

toward Trump. And this was certainly no different. They hit their talking points. As this was as much as this was about the substance of what was

said, it was about the optics of it. These two leaders getting along well. Netanyahu and Trump are popular with each other's voting bases. So, it was

all about that picture. The two of them smiling together, shaking hands.

Trump said he may attend the opening of the embassy in May. It's the first time he said it. Although, we fully expected he'll be here in May. For

the simple reason it's an easy win for Trump, it's an easy win for Netanyahu and these two leaders get along famously well. Netanyahu made it

clear he wants to talk about Iran and combatting the nuclear deal. That they did mostly in private or Netanyahu made a short statement about it

right at the beginning, but it was pretty much on point in terms of what we expected from these two leaders.

SY: All right. I know you've been following Netanyahu's political turmoil at home and right before he left, there was a development in one of the

corruption cases against him. Some bad news, it appears, for Prime Minister Netanyahu. Can you bring us up to speed on that?

LIEBERMANN: It actually happened after he left. It happened a few hours, just a few hours before Netanyahu and Trump met in Washington. That's that

a third one of Netanyahu's confidants turned state's witness agreeing to work with investigators in another blow to the Prime Minister. And seems

these blows and these developments against the Prime Minister and his inner circle are coming every few days now ever since police said they had enough

evidence to indict him in two separate investigations.

Netanyahu still has the support of his coalition at this point, so he doesn't have to worry about somebody toppling the government while he's

gone. But it's another blow against Netanyahu. And this comes just a couple days after he was questioned under caution in another graft probe,

meaning he is a suspect now in three different corruption investigations.

SY: That's right. Oren Liebermann reporting from Jerusalem. Oren, thank you. And we did hear from the opposition as well. Prime Minister

Netanyahu was expected to ask for U.S. help to prevent Iran from gaining a greater foothold in Syria. I asked former Israeli Foreign Minister, Tzipi

Livni how big an issue that is.

(BEGIN VIDEOTAPE)

TZIPI LIVNI, FORMER ISRAELI FOREIGN MINISTER: It's important to understand that is not only a threat to Israel. I hear about Iran and tracking

Arabic, no less than I hear it in Hebrew. This is a threat to the region and even to the world. We are talking about Syria. This is the day after.

And the outcome cannot be that the Iran controls Syria and we have Iran and this controlling Iraq and in Syria and then in Lebanon. It's unacceptable.

And I believe that the whole of Russia now since it's becoming very, very big in Syria, I think that there should be an understanding and an

agreement that without any connection to Assad, whether he stays or go, the need is to take Iran out of Syria and to minimize its control in the

region.

SY: Do you think that there should be more military intervention on the part of the U.S.?

LIVNI: I think we are not even there. It's important to say that everything is on the table, sometimes there's a need to speak about the use

of force in order to prevent the use of force. But now we are not even there. Frankly, the United States is not very active in the region

unfortunately. And it's time for the United States to come back to the region and to deal with some of the problems that we are all facing. This

is the meaning of the leadership of the United States. And when it comes to Syria, Iran, there is a vacuum, and frankly, in the Middle East, there

is no vacuum because the Russians are there. Therefore, it's time to be more active when it comes to the Middle East.

SY: Let's talk about another potential leadership vacuum. You were the chief negotiator for Israel for many years during peace talks with the

Palestinians. Ever since the U.S. announced that it would be moving its embassy to Jerusalem, the Palestinians have not wanted to engage with the

U.S. at least we don't know that they have publicly. Donald Trump said today that with Jerusalem off the table, that gives us an opportunity for

peace. The president also said that Palestinians are showing a willingness to come back to the table. I know that you must have contacts on the

Palestinian side.

LIVNI: Yes.

NEWTON: So, let me ask you, Tzipi, do you see any sign that the Palestinians are willing to come back to the table with the U.S. as a

negotiator?

LIVNI: My feeling is that after the declaration of Jerusalem, there is a fear on the Palestinian side that what they would see on the table would be

not balanced and, therefore, what the U.S. can do is to speak with the Palestinians, or send messages to do control the Arab world or directly, as

long as the deal is really the ultimate deal between the Israel and the Palestinians and doesn't take in consideration the political problems of

Netanyahu initially.

[16:15:00] Yes. Well, let's talk about that. How much deep water is Netanyahu in politically? And I have to ask you this, if, indeed,

Netanyahu ends up being indicted, are you and your party preparing for the possibility of a snap election?

LIVNI: Listen, this is the decision we are all waiting for. The decision of the legal -- the legal adviser to the government or the -- those that

need to make the decisions. But it is clear that there is a connection that we have more information about what's going on and about corruption,

it is disturbing. I don't know whether we are going to face elections in the near future. Even the next few days. This is the decision that

Netanyahu can make. But I must say that Israel is a great democracy and nobody's above the law and this is something that Israelis should be proud

of, even those who support Netanyahu. I hope they understand that even though these are quite difficult times, days for them.

(END VIDEOTAPE)

SY: Tzipi Livni speaking to me earlier.

Now turning to Europe. The major markets saw sizable gains thanks to a rally late in the session. Germany's Dax surged 1.5 percent. Germany's

Social Democratic Party has voted to form a coalition with Angela Merkel's Christian Democrats. So, stability there. Not the story, though, in

Italy, where stocks fell 0.4 percent. Italian politics has been flung into an era of uncertainty. A populist revolt is threatening to upend the

established political order there. Ben Weideman reports on the aftermath of Italy's general election.

(BEGIN VIDEOTAPE)

BEN WEIDMAN, CNN CORRESPONDENT (voice-over): It was a moment of joy for the five-star movement's 31-year-old leader, Luigi Di Maio when the numbers

came in. A movement born just nine years ago fueled by anger over corruption, bureaucracy and economic decline is now the country's most

powerful political force. Taking almost a third of the fractured electorate.

ALFREDO DI BENEDETTO, ROME RESIDENT (through translator): Italians chose to break with the only system says pensioner, Alfredo Di Benedetto.

WEIDMAN: The other big winner was the Eurosceptic rabidly anti-immigrant, La Liga or the League. Their share of the vote has more than quadrupled.

MATTEO SALVINI, LEADER, LEAGUE (through translator): It's clear yesterday the Italians gave us a precise mandate," the league's leader, Matteo

Salvini, declares.

WEIDMAN: Cambia Tutto, everything changes, this newspaper headline announces. While another paper throws up its hands with a body banner,

meaning roughly, what a mess. The country is ripe for radical change. Incomes have been stagnant for a quarter of a century. Unemployment

remains stubbornly in double digits. The young are leaving the country in record numbers.

AMELIO GIDA, ROME RESIDENT (through translator): They go to Spain, England, America, anywhere, as long as they can find a stable job. There's

nothing stable here anymore, says Roman resident, Amello Gida.

WEIDMAN: The last traditional party still standing, the Center Left, Partito Democratico, or Democratic Party, saw its share of its vote fall

from 25 percent in 2013 to 19 percent in Sunday's vote. Monday evening, its young, once promising leader, former Prime Minister, Matteo Renzi,

vowed to resign as soon as a new government is formed.

Newspaper columnist Massimo Franco says the guardians of the status quo only have themselves to blame.

MASSIMO FRANCO, COLUMNIST, CORRIERE DELLA SERA: The five-star movement is the symptom of the failure of the traditional party system. It's not

because the source of this failure. If you don't govern well, other people maybe more incompetent are coming and taking your place.

WEIDMAN: Where the traditional parties failed, it's not at all clear if the suddenly empowered populists can succeed. Ben Weideman, CNN, Rome.

(END VIDEOTAPE)

[16:20:00] SY: Move over, academy, we are giving out our own awards. For the best performer at the Oscars here at QUEST MEANS BUSINESS.

And after that, the QUEST MEANS BUSINESS quarterly report. Richard has an inside look at the global shipping industry from Kentucky.

(COMMERCIAL BREAK)

SY: I love the music. Don't worry if you missed the Oscars Sunday. We have a few trophies to give away here at QUEST MEANS BUSINESS. These are

the ones that really matter. First, best balancing act to host Jimmy Kimmel. Because the late-night host moved smoothly from serious segments

on diversity and the me-too movement, to jokes and comedic bits. Best business lingo. I mean, this is a business show. We're going to give that

to Frances McDormand for her call for inclusion writers in contracts in Hollywood. We'll tell you what those are in just a second.

And this is my pick. Best future co-host, Maya Rudolph and Tiffany Haddish. They stole the show presenting two awards. Maya, Tiffany, this

is for you. Wearing bedroom slippers and those fabulous ball gowns. Now for more on this year's Oscars, we've got an expert panel standing by.

Chris Witherspoon is a correspondent at Fandango. And Chloe Melas is CNN's entertainment reporter. Great to see both of you.

I guess I want to start with the Frances McDormand moment, because that seemed to be -- well, first of all, it's the most business sort of related

one. She was calling for tangible action. What are inclusion writers? I think everyone was googling that afterwards.

CHRIS WITHERSPOON, FANDANGO: I tried googling it myself and I couldn't really find it immediately. But Basically, it means there has to be

diversity and inclusion on the set. If you're going to do a film, there should be just as many women and minorities as there are white men working

there. I think it's a brilliant idea. It was a great way to move the times up and moving a little bit forward. And we learn something new.

SY: Actress Frances McDormand's caliber, you can certainly ask for writers in contracts. You know, Chloe, you've been writing sort of wondering how

much the me-too movement would play, how directly it would be addressed. Very much so I'd say. I would say women really dominated this awards show.

CHLOE MELAS, CNN ENTERTAINMENT REPORTER: They did. Jimmy Kimmel, the host for the second time I was really worried he wasn't going to talk about the

me-too movement. Because he gave conflicting interviews in the days leading up to the broadcast. But he did address it head-on very pointedly.

Making fun of the Oscars statue, but taking it on seriously during the opening monologue. But, you know, the time's up movement was -- played a

huge role in the broadcast. I mean, you have three women take the stage who were Harvey Weinstein accusers, Ashley Judd, Salma Hayek was up there.

And that was a really powerful moment.

SY: And they showed the whole video that went even deeper into it. It wasn't just women that were highlighted. There was another historic moment

-- I know Jordan Peele.

WITHERSPOON: Oh, my god.

SY: You interviewed him recently. Breaking barriers when it comes to winning best original screenplay.

[16:25:00] WITHERSPOON: Yes, and I was a bit sad he didn't win best picture. But he did win best original screenplay. That was a huge moment,

the first African-American to win that award which was huge. I think it's amazing the film came out almost a year a film. But to me it's a

groundbreaking film in Hollywood. Made for $4.5 million, brought in $255 million. It's really like a microbudget film. Jordan Peele told me Jason

Blum of Blumhouse Productions is really kind of a catalyst to make this film work. He comes in under with these microbudgets like "Insidious" and

"The Purge."

SY: Well, microbudgets -- we're not going have time to get into this -- but that might have been the reason why the ratings were so low. Some of

the lowest ratings -- the lowest ratings the Oscars have ever had. Because a lot of people haven't seen these films. Now, Chloe, before I let you go,

you wrote a really great article for CNN.com about some of the hypocrisies --

MELAS: Thank you.

SY: -- of last night's award.

MELAS: So, you know, like we said, the me-too movement played a major role in last night's telecast. But a lot of people took to social media

criticizing the academy for giving out Oscars to Kobe Bryant and Gary Oldman. They both won Oscars last night and they both were accused of,

well, Gary Oldman was accused of domestic battery on his wife. And then Kobe Bryant was accused of rape.

SY: And Jimmy Kimmel used to host a show where bikini clad women were bouncing around.

MELAS: And people saying that look, this was really hypocritical in a time we're talking about time's up. And you know, people like Ryan Seacrest and

others are dominating headlines based on allegations, alone. No charges were brought against Oldman or Kobe Bryant, settled that out of court. But

still, people said, listen, this is so out of touch. Why are they being supported?

SY: Chloe, we'll have to leave it there. Thank you, both.

Every quarter, QUEST MEANS BUSINESS takes you inside bedrock of America Inc. after the break Richard goes to the heart of the global shipping

industry in Kentucky where six percent of the U.S. GDP is moved every day.

(COMMERCIAL BREAK)

[16:30:00] SY: Hello, I'm Stephanie Sy in New York. We'll have more QUEST MEANS BUSINESS in a moment when Richard takes us to the heart of the global

shipping industry, the UPS Worldport in Kentucky. But first the headlines this hour.

British police say a former Russian spy and woman about half his age were found unconscious at as Saulsberry shopping center. They're being treated

for exposure to an unknown substance and apparently knew each other. The ex-spy Sergei Skripal was granted refuge in the U.K. following a spy swap

between the U.S. and Russia eight years ago.

China is revealing a hefty new defense budget at its annual National People's Congress. Beijing plans to increase military spending by more

than 8 percent to $175 billion. That's the biggest rise in three years as China modernizes its military.

Britain's most decorated Olympian cyclist Bradley Wiggins is fighting accusations he abused anti-doping rules to enhance his performance during

the tour de France. A British government committee claims Wiggins and Team Sky crossed an ethical line by abusing his medical need for a banned drug

to enhance his performance. Wiggins and Team Sky deny the allegation.

Those are your news headlines this hour. Up next, Richard takes us inside the UPS Worldport in Louisville, Kentucky.

RICHARD QUEST, CNNMONEY, EDITOR-AT-LARGE: One of the hundreds of wide- bodied planes that come to the UPS Worldport in Louisville, Kentucky, every day. It's here that 2 million packages are sent across the world. And

over the next half hour, we're going to show you the UPS system and discuss where the man in brown is headed next. First, we need to understand the

backbone of UPS.

(BEGIN VIDEOTAPE)

DAVID ABNEY, CEO, UPS We call it going forward fast.

QUEST: How do you go forward fast with a company this big?

ABNEY: You cannot act like an incumbent. You've got to feel like if someone is going to try to disrupt the industry then we have to have that

mentality. So, we talk about, do we have to make decisions much quicker. We have to not have to try to protect the past and we can be proud of the

past. We have to embrace the future and the future is all about technology. It's our smart logistics network and how we interconnect with

our customers.

QUEST: On the question of the global economy, you are very big here. You've got a major center in Cologne. You have a major center in Shenzhen.

Are you worried at the level of protectionism that is now coming into the world? A level where -- I mean, you know, we've seen it in rhetoric and

we're starting to see it in action. We're starting to see the scintilla that global trade could be threatened.

ABNEY: You know, at the same time that you do here all the rhetoric, global trade is expanding right now, and we see it as much more optimistic

than what we're hearing in the news. Now we are big believers in free trade. Everywhere we've seen the U.S. sign of free trade agreement, our

business which is reflective of our customers has increased 20 percent.

QUEST: So, I assume it was a disappointment that the U.S. backed out of TPP and you would urge the U.S. not to back out of NAFTA?

ABNEY: We are strongly urging the U.S., Canada and Mexico to find ways to have a win-win-win situation. It's a 25-year-old agreement. It needs to

be modernized and it does not need to be eliminated. Supply chains are just so interconnected between the three countries. And yes, we would have

liked to see TPP passed. There's no doubt about that. We still believe there's opportunities for additional agreements.

QUEST: I want to finish, since you've been very kind to give us a good dose of time. This -- I kind of keep coming back, David, to this idea of

the disruptor.

ABNEY: All right.

QUEST: The company that is this big. The man in brown. How do you do it? What do you envisage disruption looks like so that you don't find your core

business just eaten away by everybody else?

ABNEY: Well, you have to embrace the future. You have to embrace the technology that did not exist in years past. We just formed an advanced

technology group that is focused on not what's going to happen the next two to three years, but much further down the road. We capture now 21

terabytes of information that we have stored. How to take that information, integrate it with our customers' needs and be predictive in

our analysis. Help them to be more effective in their supply chains which we will get the benefit of that and that's what we're investing in.

(END VIDEOTAPE)

QUEST: This is the calm before the storm inside at the Worldport. Do not be deceived. It all looks quiet, relaxed, but what you're looking at is a

machine waiting to be fired up in the middle of the night.

(BEGIN VIDEOTAPE)

QUEST (voice-over): Hairspray your Houston, dog food for Dallas. Samples to Sydney. A contract for Kansas. Sorting parcels seem so simple. The

goods come in, they're sorted, and then they leave.

[16:35:00] But when your warehouse is bigger than 90 football fields and you're handling 20 million packages a day, there's no room for a snooze at

the UPS Worldport hub in Kentucky. In charge of it all is Jason Foote.

JASON FOOTE, UPS WORLDPORT OPERATIONS MANAGER: This facility on a normal day may only process 2 million packages, during peak season we'll handle

more than double that.

QUEST (on camera): Well, only, that's an enormous number.

FOOTE: It is but it's only every day.

QUEST (voice-over): Cameras and conveyers everywhere, 155 miles of moving belts. While automation is key, humans remain part and parcel of this

operation. Many of them working here are local students and the pace is relentless.

(on camera): This is never ending. Hour after hour, these small packages flow into this tidal wave of sorting that now has to take place. To ensure

these little packages end up in the right destinations. How do you keep track of all these parcels?

FOOTE: All these parcels have a unique label and mark all them. And the machine does it, automation does scanning and all the sortation of the

facility. And that's how we only handle the packages twice. One here and once unloaded and once again in the load.

QUEST (voice-over): That's where the humans came in. They're needed to fill freight containers to the brim.

Kyle: What you want to do is build up as high as you can.

QUEST: Kyle is the supervisor and showed me how. Think of playing Tetris.

KYLE: You want to start in this back-left corner.

QUEST: Why?

KYLE: Why, because that's where you're going to build your entire load off of.

QUEST: Right.

KYLE: The way you want to do this is you want to build left to right, as high --

QUEST: Why?

KYLE: Because that your cornerstone package and that's going to be the hardest package. That's what you're building your entire load off of.

QUEST: Right.

(voice-over): Suddenly a song came into my mind, "little boxes on the hillside. Little boxes made with ticky tape. Little boxes on the hillside

and they all look just the same."

(on camera): Live crickets.

(voice-over): Crickets in the cargo? And Amazon logos grinning down on me everywhere.

(on camera): All very complicated.

(voice-over): E-commerce is what's filling these containers.

(on camera): I'm just standing here and I'm just seeing Amazon after Amazon after Amazon just going through.

FOOTE: Correct.

QUEST: I mean, the e-commerce volume must be tremendous.

Foote: Well, it's be quite significant. And we have added opportunities in our network to handle that.

QUEST: It's about half past 1:00 in the morning and the tempo has increased. Roughly 380,000 packages an hour are now flowing into the

Worldport.

(voice-over): My parcels depart as quickly as they arrived. As those metal containers slide toward the planes.

(on camera): Amid all this high-technology movement of commerce, there's a delicious simplicity about the way these containers are dragged around by

hand.

(voice-over): The fact is, as the network grows with demand, so does the risk of problems and challenges. It's a fine balancing act for those in

control.

FOOTE: We have 120 aircraft coming in, so it's bound to happen, but we do it every night. We make that balance every single night.

QUEST (on camera): And that's when you're called. When they say, all right?

FOOTE: No, we have about 10,000 people who work here a night. They do a great job. They don't even need me.

QUEST (voice-over): Kentucky is UPS's biggest facility. And it's not big enough. Future expansion means the place will handle half a million

packages an hour. As our love of e-commerce grows exponentially, so does this logistics powerhouse.

(END VIDEOTAPE)

QUEST: After all these parcels are sorted and packed, some will go off to their final destinations in iconic style. We'll climb aboard a Boeing 747-

8. The passenger plane with a new lease on life as a freighter.

[16:40:00] (COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

QUEST: We've already seen how filling these containers to the brim is crucial to UPS. Now we need to understand how the pilots fly the plane and

they need to understand what's behind them.

CAPTAIN HOUSTON MILLS, UPS AIRLINE DIRECTOR OF SAFETY: We actually deliver live organs and human skin. And so, what we do, these bright pink bags,

they're pressed in there. We deliver everything from pancreases and kidneys, every other organ with except to the heart and the liver.

QUEST: But when you leave, are you told you're carrying this? So, you know you're carrying this.

MILLS: Yes. This pink pack bag really tells us this is an express critical package. So, we know every day that there's something that has to

be delivered. This is hand carried on, hand carried off. So, the captain absolutely knows that this is important.

QUEST: Then you got --

MILLS: Yes, so this is interesting because this is from triumph which is one of our customers. We actually handle all of their logistics worldwide.

So, they've got facilities here in North America --

QUEST: It's a motor bike. Part.

MILLS: Yes, it's a motorbike, but it's a part, so tens of thousands of parts. We basically handle all their part needs and we'll deliver this

from a bolt to an actual engine, you know, for Triumph. So, we manage all their logistics. We're the logistics expert. And then we allow them to

basically do what they do best, which is to design, build, and sell motorcycles.

QUEST: If you had passengers that are a little more delicate. This isn't going to complain about turbulence.

MILLS: That's right.

QUEST: Do you fly differently? Sort of up and down, left, and right?

MILLS: No, absolutely -- we handle every package like it's a customer. Because any delivery we make, there's literally anywhere from 7,000 to

30,000 customers.

QUEST: Right, but the airline pilots fly very gently. Do you fly a little more aggressively?

MILLS: It's the same because we want to make sure -- we have fun, but in a fun way. In a right way.

QUEST: Oh.

MILLS: But no, certainly, it's handled all the same. And particularly so you take a health care, for example, or when we do humanitarian relief,

here's some water, you know, for example, and we deliver all types of things. From a humanitarian perspective, if you think, you know, after

disaster like hurricane, you know, once the storm passes, the most important thing is for us to freight supplies to the folks who need it

most. So, we provide great logistical support such as water in those instances.

QUEST: Finally, do you find it interesting that so much of it is high- tech? Everything in there is high-tech. It's scanned. No one touches it. It's this it's that. The aircraft is several hundred-million-dollar

machine. But at the end of the day, it really just comes down to people.

MILLS: It does.

QUEST: Somebody has to physically put this on something which then physically has to be taken off and then physically has to be delivered by a

man in a brown suit.

MILLS: Absolutely. It's interesting how the whole team comes together. So, the technology and humans come together. So, we've got over 430,000

employees worldwide. So, 20 million packages delivered every day. You know, it all comes together with a blend in the technology and the people.

But that driver, the UPS driver that ultimately gets that to the customer is the face of our business.

QUEST: Do you ever walk back, -- I mean, you fly all over the world, I assume.

MILLS: Yes, I do.

QUEST: Do you ever walk back and look and think, I wonder where that's going and what's going on with that?

MILLS: We take a great amount of pride knowing that every customer and package important. And so, it doesn't matter if it's a motorcycle part or

bottle of water going to humanitarian, it certainly matters if it's urgent from an organ or human tissue perspective, but as a pilot, as a UPSer,

every package is important.

(END VIDEOTAPE)

[16:45:00] QUEST: To transport such a large volume requires big planes, and UPS has just invested sizable amounts of money, many billions of

dollars, in buying a 747-8, the jumbo jet.

(BEGIN VIDEOTAPE)

QUEST (voice-over): It's well into the night when the 747-8 arrives at the Worldport in Louisville. This is UPS's largest and newest aircraft

delivered only last October. It's taken six hours to fly from Anchorage, Alaska. The giant plane is carrying up to 50,000 parcels and packages from

Asia.

Since it first came into service in 1969, the 747 has been loved by passenger airlines and cargo carriers alike. Because of its distinctive

shape, it used to ferry the space shuttle between NASA's various sites. Boeing updated the jumbo jet. This is the latest version. The -8.

(on camera): Having been shunned by the world's passenger airlines, the 747-8 has found its natural home as a freighter. In fact, the orders for

cargo versions of the plane are what has saved the 747-8. Boeing pretty much only makes it now as a freighter.

(voice-over): UPS originally bought 14 of the planes and has recently bought 14 more. As the cargo business grows, so these larger aircraft are

vital for connecting the distant paths of the UPS network.

(on camera): The turnaround time for this jumbo is only 90 minutes. It will be on its way to Dubai then on to China, to Anchorage, Alaska, and

will return back here to Louisville, Kentucky, probably in 30 hours or so.

(voice-over): And with a list price of $400 million each, this is one asset you don't want sitting on the ground.

(END VIDEOTAPE)

QUEST: For any shipping company, the most important piece of the logistical labyrinth is the mile. From the delivery truck to your front

door. I'll go the final mile with one of the men and women in brown.

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

QUEST (voice-over): All this is, of course, vital to the UPS operation, but now I' m going to let you into our little secret. It's pretty

meaningless without the employee I met the other day.

[16:50:00] He is the man in brown.

(BEGIN VIDEOTAPE)

QUEST (voice-over): We're out on the road. He's the man in brown. Jeff Goodman. I'm the intern, Richard Quest. And when a package's journey

nears its end, it's down to us to get it the last mile all the way to the front door. Delivery driver rule number one, handle with care.

QUEST (on camera): When something says fragile, handle with care, how much care?

JEFF GOODMAN, UPS SERVICE PROVIDER: I see these people every day.

QUEST: Yes.

GOODMAN: I don't want to get a report saying that something of theirs was damaged, so I handle it just like it was mine.

QUEST: Do you ever wonder what's in all these things?

GOODMAN: This is dog food.

QUEST: What?

GOODMAN: This is dog food.

QUEST: How'd you know?

GOODMAN: By the weight and the sound.

QUEST: That's the real beauty of being a local deliverer.

GOODMAN: Right.

QUEST: You know the area. You know the people you're delivering for. And you know the dog.

GOODMAN: I probably know the dog better than the people.

QUEST: No matter how sophisticated, at the end of the -- the last bit is you going in there --

GOODMAN: Walking it to the door.

QUEST: Walking it to the door.

Right. Rule number two, you'll need to walk the walk and do a lot of walking.

SINGING: Here comes the postman. Here comes the postman.

QUEST: Number three, beware of the dog.

Are you an old softy when it comes to the dogs?

GOODMAN: Those can be my best friends or can be your worst enemy.

QUEST: Emergency resources.

GOODMAN: Exactly.

QUEST: A lot of planning involved, isn't there?

GOODMAN: The more you plan the easier your day is.

QUEST: Something tells me I'm not going to make a very good UPS delivery man.

(voice-over): Finally, I earned my stripes. Rather, my socks.

GOODMAN: I heard you were admiring our socks. Because not anybody can get these socks.

QUEST: Look at this.

GOODMAN: You are officially a UPS driver.

QUEST: You know you're a UPS driver, UPS socks.

(voice-over): For a moment, at least, I was officially a man in brown.

(END VIDEOTAPE)

QUEST: UPS's Role in Louisville and in Kentucky cannot be overstated. As I heard from the Louisville mayor.

(BEGIN VIDEOTAPE)

GREG FISCHER, MAYOR OF LOUISVILLE, KENTUCKY: Well, this is an area with UPS, has been a tremendous area of partnership for us, because, you know,

when you think about getting anywhere quickly in the world this is it. So, our university supports this. We have a metropolitan college at the

university of Louisville. It supplies workforce for all the 24/7 operations here as well. So, what we've done with UPS, and we do this with

many other companies, is we get with them and say, what do you need so we can make this home as good as possible for you? Usually all it centers

around workforce as well. So, workforce development is a big part.

QUEST: Workforce.

FISCHER: Lots of planes. Lots of beautiful brown planes.

QUEST: Lots of noisy plane.

FISCHER: That means business is good.

QUEST: I thought you' d say that.

When we look at what it means, it's a good opportunity for us to talk to you at the moment because the United States is divided. I think we can all

agree on that.

FISCHER: Unfortunately.

QUEST: It doesn't really matter the issue, there's no meeting of minds at the moment. How concerned are you as mayor of a major city?

FISCHER: Well, look, leaders should bring our country together. Not tear us apart. And the potential of our country, obviously, is great right now,

but imagine if we're all on the same page. We're all on the same page with education, health care, trade policies, there would be no stopping us. Not

just from a wealth perspective, but what we've got to get is our human values and our human wealth back together, then we will be even stronger.

QUEST: OK. But how do you get on the same page? How do you -- when you got a, you know, I mean, you got a president that the other side will

barely talk to.

FISCHER: Yes.

QUEST: And you have the rest of the world, I'm sorry to put it in blunt terms, but you travel, you know this, who is looking aghast at what you're

doing in this country.

FISCHER: Well, there a few -- I was in India last week and people were saying --

QUEST: What were they saying?

FISCHER: What in the world is going on with the United States of America? They said that to me in the U.K. last year. They said that to me in Sweden

last year. Because they hold us up on a pedestal, you know, democracy, and freedom, and they're very confused right now. It's like what my mother

used to say, take care of your own backyard first. So, the mayors of America, home of innovation, home of 85 percent of the population, but 92

percent of the GDP, so it really has to come from the city level up right now. Because it's not happening from the federal level down.

QUEST: Right. But the mayors of America have to deal with the problems that others won't deal with.

FISCHER: Yes, but that's where the rubber meets the road. And I tell you, being a mayor is an invigorating job, because we live with the people. We

see these DREAMers in our community.

[16:55:00] QUEST: What do you think should happen with the DREAMers?

FISCHER: Well, we say that's the future of our country.

QUEST: But what should happen.

FISCHER: What should happen is we should settle this issue out. There should be a pathway to citizenship, so they can continue to develop the

country we are. Look, we need to grow our population. Our DREAMers are more productive. They're more in school. They're more entrepreneurial.

This is who we need to build the United States of America around.

(END VIDEOTAPE)

QUEST: Still more work to be done. We have shown you the world of UPS and packages from the top down. But now we need to enjoy some local music,

bluegrass. And that means HOT BROWN SMACK DOWN.

[MUSIC PLAYING]

(COMMERCIAL BREAK)

QUEST: Tonight's Profitable Moment. Every 24 hours, UPS moves the equivalent of 6 percent of the daily U.S. GDP. It's an astonishing amount

of economic importance for one company. But for the company, itself, there is also the question of what next. Disrupters like Amazon threaten to get

into the shipping business. New technologies mean the lower cost of entry. And at the same time, how does a company with nearly half a million

employees not behave with the sclerosis of the government? These are the challenges of the men and women in brown.

And that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest at the UPS Worldport in Louisville, Kentucky. Whatever you're up to in the hours

ahead, I hope it's profitable.

END