FedEx expects China to keep markets open
The world’s biggest express carrier FedEx said on Tuesday it was confident China, newly on-board the WTO, will allow foreign firms into its small shipments market despite opposition from the state postal bureau.
David Cunningham, president of FedEx Asia Pacific, said a tussle between international firms and the Chinese postal bureau, which wants to control shipments weighing 500 grammes (17.65 ounces) or less, was likely to be settled by a June 15 deadline.
FedEx handles a variety of shipments, including those that weigh 500 grammes or less.
“China Post wants to be regulator and a competitor in the industry and we don’t think that’s appropriate, particularly with its accession into the WTO,” Cunningham told Reuters.
“If you look at it from a standpoint of what China is trying to accomplish in the World Trade Organisation, I think the government will reconsider and intervene as appropriate.”
Cunningham said the China Post directive, issued in February and previously due to be implemented on May 6, banning express delivery firms from handling shipments weighing 500 grammes and less, had been postponed.
China Post’s directive No. 64 also proposes that express delivery firms require certification, otherwise they could lose their licences to operate.
China Post had said the new rules were part of heightened security measures needed in the wake of the anthrax mail scares in the United States.
BULLISH ON CHINA
China has about 1,500 licensed international freight-forwarding operators.
“We are working with government organisations in the U.S., the EU and China itself to resolve the issue, and we are very optimistic they will reconsider.”
FedEx, which flies to Beijing, Shanghai and Shenzen, services a network of 190 Chinese cities and plans to expand that coverage to 290 cities within the next three to five years.
Cunningham was bullish on his firm’s prospects in the world’s most populous nation, but had no immediate plans to shift its Asian hub, currently located in the Philippines’ Subic Bay.
“I am proposing a forward-looking view that China will inevitably become the third largest global transport and logistics hub in the world after the U.S. and the EU,” he said.
“But a lot of factors go into determining what makes a good hub, including good geography and the right regulatory environment.”
He said China’s air freight demand was expected to grow by 60 percent over five years from 1999 to 2004, but uneven infrastructure development and competition between provincial governments could bloat costs.
“These market inefficiencies mean it costs 40 percent more to ship electronics products in China than in the U.S.,” he said.
Cunningham said he expected China to upgrade its air transport network, turning airports in Beijing, Shanghai and Guangzhou into large hubs and transforming six others in Chengdu, Xian, Shenyang, Wuhan, Kunming and Urumqi into medium-sized ones.
(US$ = 3.8 ringgit)
