FedEx plans twin Asia-Pacific hubs, while celebrating a new Sino-US air deal
Federal Express (FedEx) will pursue a dual-hub strategy for Asia-Pacific in light of the new Air Services Agreement struck in Washington last week.
Asia’s No2 express operator by sales has been in talks with officials at the airport in the Philippines and the new Guangzhou Baiyun International Airport about the location for its future regional hub.
“You will see us form a multi-hub operation from somewhere in the Philippines as well as China,” FedEx Asia-Pacific president David Cunningham said yesterday.
FedEx follows a similar strategy in Europe, where two satellite hubs support its main facility at Charles de Gaulle International Airport in Paris.
The express giant, which yesterday said net profit rose 1 per cent to US$838 million for the year to May, was one of the main beneficiaries of the new air deal, which gave United States cargo carriers the rights and operational flexibility to set up hubs in the mainland.
Mr Cunningham, who described the deal as brilliant, said it would take aviation between China and the US into the 21st century.
“This aviation bilateral gives FedEx the ability to have hub operations in China,” Mr Cunningham said. “Before this agreement, you couldn’t have a hub, whether you wanted one or not.”
Revenues for the “billed in China” international express sector last year reached about US$1.2 billion and are expected to grow 45 per cent this year, according to market leader DHL Express.
FedEx does not disclose country or regional sales or volume figures, but said mainland exports soared 50 per cent for the fourth quarter.
The company said global sales grew 10 per cent year on year to US$24.71 billion.
A strong fourth quarter from FedEx Express – operating profit jumped 38 per cent to US$407 million – mitigated an otherwise difficult year for a division that saw operating profit fall 20 per cent to $629 million.
“It was a super quarter,” Mr Cunningham said.
FedEx Express accounted for 70.8 per cent of group revenue, down 2.4 percentage points from last year.
However, Asia continued to perform well for the company – fourth-quarter exports grew 18 per cent year on year – and it committed US$1.6 billion for next year, in part to “fund additional aircraft capacity for FedEx Express, which is driven by growth in International Priority”, it said.
The company’s average International Priority volume rose 12 per cent to just over 193.2 tonnes a day. Its average revenue per package for the division increased to US$52.24, up 7 per cent.
Mr Cunningham said FedEx expected to boost flights and services on the mainland this year.
In all, cargo operators such as FedEx and United Parcel Service will be allowed to serve the US-China market 111 more times per week by 2010 under the agreement.
“This [US-China deal] is an absolute hallmark,” he said. “China continues to set the standard for liberalisation on many fronts, and this is a very important part of that.”
FedEx expects the value of goods moved to and from China by air this year to reach USD121 billion.
