FedEx Corp may keep regional base in Subic

Federal Express Corp is considering keeping its regional hub at the Subic Bay Freeport Zone in Zambales until 2013, and may yet abandon a previous plan to move possibly to China when its lease contract expires in 2007.

This was learned from the Subic Bay Metropolitan Authority (SBMA), which had claimed to have convinced FedEx – the world’s biggest freight company – to retain its Asia-Pacific hub at Subic, which had improved its facilities and services.

“We are talking of extension until 2013. Their nod is already there, that it is possible to extend the term,” SBMA Chairman Felicito C. Payumo told BusinessWorld over the weekend.

Early this month Mr. Payumo negotiated with FedEx officials to stay in Subic beyond 2007. To this, he said, FedEx gave a “positive response.”

Last year FedEx’s sole Philippine franchisee, Airfreight 2100, Inc., was reported as saying the Subic hub could be abandoned in favor of either Clark Special Economic Zone in Pampanga or China in 2008.

At that time FedEx also signed a letter of intent with Chinese government for the possible relocation of its expanded business.

But Mr. Payumo said Subic already improved its facilities to suit FedEx’s needs. It has provided additional space good for 20 planes, from only 12 previously.

“We are also improving and repairing the runway. We have already improved half of it and the other half is scheduled [to be finished] this year,” Mr. Payumo said.

Subic is also upgrading navigation and instrument landing systems for FedEx. “These [improvements] will justify their extended stay,” Mr. Payumo said.

But he also admitted if FedEx continued to expand its business, its transfer would be inevitable. “They are welcome to stay in Subic for as long as they have not outgrown Subic facilities,” he said.

But he also quoted FedEx officials as saying they would rather not leave. In a previous statement, FedEx also said that it had the option to renew its Subic lease contract when it expires in 2007.

Once touted as the biggest investor at the Subic Bay Freeport Zone, FedEx opened its regional hub there in September 1995 so it could deliver overnight to the United States.

As the world’s largest transportation and service delivery service, FedEx Corp. makes as much as $22 billion annually.