DoTC chief says FedEx not relocating in China
Department of Transportation and Communications (DoTC) Secretary Leandro R. Mendoza yesterday said Memphis, Tennessee-based Federal Express Corp. (FedEx) would not abandon its hub in the Philippines when its contract expires in 2007.
In a talk with reporters, Mr. Mendoza said it is not true that FedEx would transfer its Asia-Pacific hub, which is currently at the Subic Freeport Zone, to China. He said the American company would instead move its Asia-Pacific hub to the former US air base in Clark, Pampanga from Subic.
He said he has talked to the management of FedEx, particularly to Alberto D. Lina, chairman of Airfreight 2100, Inc., the sole licensee of FedEx in the Philippines, about the matter.
"No, that's not true. I was talking with the management of FedEx, particularly Mr. Bert Lina. He said they will even expand their operations here," Mr. Mendoza said.
"They [FedEx] have made coordination already with Clark for the expansion of their operations. While they are going to have some operations in China, the major operations in Asia will be in Clark after 2007," he added.
Subic Bay Metropolitan Authority (SBMA) also confirmed yesterday FedEx's plans to abandon its operations in the free port and move to the Clark Economic Zone in Pampanga or China by 2008.
The Subic Bay Freeport Zone became FedEx's Asia-Pacific hub in September 1995, enabling the global freight carrier to do overnight delivery to the US via Asia-Pacific countries.
The contract, however, expires in 2007 and FedEx has said that it is having operational problems in Subic due to the expansion of its business.
FedEx has already signed a letter of intent with the Chinese government for the possibility of relocating in China its Asia-Pacific hub and has also met with officials of the Clark Development Corp.
In a statement yesterday, SBMA said that while FedEx had not officially informed them of the transfer, SBMA informally said that "it is looking at other possible expansion sites because of anticipated volume increase and arrival of big plans such Airbus 380."
But in a meeting with SBMA Chairman Felicito C. Payumo, FedEx officials also raised the possibility of creating a multi-hub, where they would operate not only in Subic.
Mr. Payumo also said that if FedEx needs to operate in another location, Clark would be a better choice.
The DoTC said a 50-hectare land inside Clark Airbase has already been identified as the new site of FedEx's Asia-Pacific hub, replacing its Subic hub come 2008.
"No, it's not true they are pulling out. They are even expanding. Subic's facilities are not enough for their requirements. Their capacity has increased," Mr. Mendoza said.
He said the Subic airport, particularly the runway, is smaller to Clark's, hence FedEx is transferring to the latter. "We are developing Clark into a fully operational international airport. That's why they are transferring."
Mr. Mendoza added that he sees no problem if FedEx would move its operations to Clark, where Atlanta-based UPS has set up its intra-Asia hub, although the DoTC has not informed UPS of this yet.
"UPS is expanding in Clark. I don't know but maybe they [UPS] know already because FedEx has reserved 50 hectares in Clark," he said.
Last week, Airfreight 2100, Inc. President and Chief Executive Officer Angelito Alvarez, FedEx's Philippine licensee, earlier said FedEx is not keen on renewing its contract with Subic, which expires in 2007. Instead, Mr. Alvarez said, FedEx is eyeing the Clark economic zone.
David Cunningham, FedEx Express Asia Pacific Division president, already informed President Gloria Macapagal Arroyo of FedEx plans, particularly the signing of the letter of intent with China.
The world's largest transportation and service delivery service, FedEx Corp. chalks up annual revenues of $22 billion.
