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 After
23 rounds of negotiations stretched over 25 months, the world’s
top air express delivery service FedEx finally decided to move
its Asia-Pacific hub to Guangzhou’s Baiyun International
Airport. The deal was made official after a signing ceremony on
July 13 last year. Construction broke ground on January 16,2006.
Through its extensive airline network, FedEx delivers more than
3.1 million packages to customers in 215 countries around the
globe every day, quickly and reliably. Such is the company’s
sway that any place chosen as its Asia-Pacific hub could expect
to reap rich rewards. Take for example the existing one at Subic
Bay in the Philippines. According to statistics, in 1995 Subic
Bay’s turnover amounted to US $20 million. In 2001, it had
shot up to US $1 billion, a 50 times increase in only 6 years.
Moreover, about 500 companies from 40 different countries opened
offices there, giving a massive boost to the local logistics industry
and the local economy as a whole.
What’s in It for FedEx?
For a long time, there was confusion and uncertainty over the
deal. The Guangzhou municipal government could not be sure that
FedEx would relocate to Baiyun International Airport. Though the
two parties signed a framework agreement, FedEx went ahead and
extended its deal with Subic Bay for three additional years to
2010. It also signed an agreement with Clark international Airport
Corp to reserve land at Diosdado Macapagal International Airport.
The new hub location remained a puzzle, but Guangzhou prevailed
in the end.
China leads the region in terms of high aircraft fuel and non-fuel
costs. But Jin Wenzhou, vice president of South China University
of Technology’s school of Transportation, reckons FedEx had
one eye on the country’s massive market potential when making
its decision. More importantly, Baiyun International Airport owns
an excellent geographical advantage, situated as it is in the
middle of the Pearl River Delta. As China’s fast-growing,
export-oriented manufacturing powerhouse, Guangzhou is expected
to hit a cargo throughput of 10 million tons a year. And that’s
just a part of the story. The city is ideally located to serve
as a hub linking North, South, Northeast and Southeast Asia. What’s
more, the brand new airport has state-of-the-art facilities that
will ensure FedEx can run its operations smoothly, and maintain
its excellent reputation, as cargo volumes soar in this part of
the world.
What’s in it for Guangzhou?
Liu Zijing, president of Guangdong Airport Management Group,
says, “The arrival of FedEx in Baiyun International Airport
is expected to increase cargo throughput by 600,000 tons a year.
That’s equivalent to the airport’s total throughput
in 2004.” On January 16, 2006, the FedEx Asia-Pacific Hub
project was launched, and is scheduled to take over Subic Bay’s
operation in Deember 2008. The hub is designed with the capacity
to ship 179.000 packages and sort 125,000 packages every day.
The project includes the construction of the hub base, the cargo
apron, accessories and 24 hangars, and will cost US $300 million
to complete. When the new hub commences business, it will be FedEx’
largest outside the United States. Research carried out by the
China Development Researching Committee and the American Campbell-Hill
Aviation Group suggests the new hub will generate US $11 billion
for the Chinese economy by 2010, and US $63 billion by 2020.
The Pearl River Delta currently handles 3 million tons of cargo
a year, 80 percent of which is put through Hong Kong. When the
new FedEx hub opens for business, manufacturers and customers
will all benefit. The local economy will be boosted, costs will
fall, and customers will have their products delivered quicker
than ever before.
The new hub will handle cargo from about 30 countries in the
Asia Pacific Region, and will act as a giant sorting office for
both inbound and outbound goods. Domestic freight companies will
receive a boost from FedEx’ presence with a record number
of new business opportunities.
Huadu District head Wang Zhongbing says, “The new hub project
will link Huadu with the world.” Follwing FedEx’ decision,
some internationally-renowned companies like Hyundai Motors, Shanghai
Airlines, and Deppon Logistics have plans to move to the area.
As FedEx chief executive Frederick W. Smith puts it, “We
believe a miracle will happen in China!”
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