Business
UPDATED: 09:35, September 27, 2004
FedEx to turn Shanghai into cargo centre
US FedEx plans to turn Shanghai into its intercontinental cargo centre in the Asia-Pacific region by adding more flights to its air routes from China to the US, Europe and the Asia-Pacific hub in Subic Bay in the Philippines.
The plans are based on the awarding by the US Department of Transportation (DOT) to FedEx of 12 new frequencies, resulting from successful negotiations on rights of navigation between the Chinese and the US governments.
"We are looking forward to providing our customers with even more comprehensive service to and from China," said Eddy Chan, head of FedEx Express China.
Today, FedEx operates 11 weekly flights to Shanghai, Beijing and Shenzhen. When finalized, the award will provide FedEx with 23 weekly flights to China, more than doubling its current number of weekly flights and preserving its leadership position as the largest express carrier in China, FedEx said in a statement.
"If finalized, six new flights will begin this year and another six in 2005," Chan said.
Based on the Sino-US negotiations, the US will add 111 weekly flights to its air routes to China between 2004 and 2010. At present, there are only 54 weekly flights on Sino-US air routes.
"Adding new flights to China should be attributed to the express carrier's booming business, with its volume increasing by 52 per cent in its first fiscal quarter (June-August) of 2004, compared with the same period last year," Chan said.
"With more flights, we have enough power to compete with our rivals," he said.
Reports on FedEx's global business in the first fiscal quarter this year showed that its revenue grew by 23 per cent over the same period last year to reach US$6.98 billion.
Its net income came to US$330 million, an increase of 157 per cent over the same period last year.
Next year, it will operate four daily flights from Shanghai to the US, Europe and its Asia-Pacific hub.
"But it's not enough and we need more flights to meet the growing demand," Chan said.
The FedEx statement said the company has filed a request with the DOT for six additional frequencies connecting Guangzhou to Anchorage.
"Our expanded service would expand our shipment capacity in Southern China," he said.
Meanwhile, FedEx will further enlarge its delivery network in China, which now covers 223 cities with Beijing, Shanghai and Shenzhen as their centres, by adding 100 more cities in the next five years.
"As the Chinese economy further expands, FedEx will possibly consider setting up bases in Southwest China and Northwest China," he said.
FedEx has also ordered eight A380s from Airbus. The first will fly on a Shanghai route when it is delivered in 2008.
The A380 aircraft can carry 150 tons of cargo, 50 per cent more than Boeing 747 planes and double the capacity of MD-11 carriers.
Chan said that FedEx will invest US$2.1 billion next year to expand its business.
"A considerable amount of the investment will be spent in China, because it has become our major market," he said.
In another development, FedEx has signed a memorandum of understanding with the Guangzhou Baiyun International Airport Company on the possibility of establishing a hub operation there.
"The project aims to relocate its Asia-Pacific hub in Subic Bay to Guangzhou if it is finalized," Chan said.
He said FedEx is confident of the project and a decision would be made in the next 12 months.
The Baiyun Airport is suitable because from there it is only four to five hours' journey to any major city in Asia.
Source: China Daily
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