FedEx Express (FedEx), a subsidiary of FedEx Corp. (NYSE:FDX), announced todayplans to build a new Asia Pacific hub at the Guangzhou Baiyun International Airport in SouthernChina to better serve its global customers doing business in and with the fast-growing China andAsia Pacific markets. The new FedEx Asia Pacific hub will commence operations in December 2008 atwhich time the existing hub in Subic Bay, Philippines, will close. “More than two decades ago, we envisioned China as a nexus of global supplyand demand and as a result became the first express carrier to enter the market,” said Frederick W.Smith, chairman and chief executive officer, FedEx Corporation. “Today, with the announcement ofour planned Guangzhou hub – the largest in Asia Pacific – we further invest in our leadershipposition by creating a new gateway that expands our customers’ access to the globalmarketplace.” The Guangzhou facility – representing a $150 million dollar capital investmentby FedEx – will have a total floor space of 82,000 square meters located on 63 hectares (155acres). The hub will provide employment for 1,200 people at start-up and be capable of sorting upto 24,000 packages per hour, double the capacity of the current facility in Subic Bay. This hub isexpected to assume and expand the current activities of the existing hub in the Philippines,beginning in December 2008. FedEx based its plan to develop the new hub on several factors including anexhaustive series of feasibility studies which forecasted manufacturing and trading trends, bothwithin Asia and internationally, for the next 30 years. “We believe this hub will stimulate business both in Southern China andglobally,” said David L. Cunningham Jr., senior vice president, FedEx Express Asia Pacific.“Locally, a superior time-definite express service will attract high-value industries that requirethe speed, reliability and global access that FedEx provides.”
A joint study by China’s Development Research Commission and Campbell-HillAviation Group of the United States estimated that the direct output impact of a FedEx hub onChina’s economy is $11billion in 2010, increasing to $63 billion by 2020 with the majorityresulting from industrial expansion. According to recent forecasts (1), transportation within Asia remains theworld’s fastest growing regional air freight market and is expected to grow each year at 8.5percent until 2023. China will remain a key factor in that growth due in large part to increasingtraffic in semi-finished manufactured goods and steadily rising consumption within China. Airfreight from China to the U.S. is expected to grow at an average of 9.6 percent a year over thenext 20 years, while traffic to Europe is predicted to grow almost as quickly at 9.3 percent overthe same period.
The planned new hub will also allow FedEx to significantly improve servicelevels for locations in China. FedEx will continue to maintain its presence in the Philippines, where Manilaand Cebu will remain integral parts of the FedEx AsiaOne(R) network. The company is currently inthe process of developing a regional center and expanding an operations gateway in Manila. We willbe providing back-office functions as part of a regional strategy to provide continuous qualityimprovement by centralizing certain services.
