Fedex remains bullish on RP, Asia

Despite the anticipated slowdown in the global economy, Federal Express Corp. (Fedex) said the projected growth of its Asian hub would make up for the slack mainly through intra-regional air express.

Fedex managing director for Asia Pacific hub operations Alex C. Yim told reporters that the company is confident of continued growth in the production-based economies in Asia.

According to Yim, the region still had unrealized growth momentum that would be boosted even further by e-commerce, especially in developed economies like Singapore, Hong Kong, Taiwan and Japan.

"We are fortunate because we have an effective system going on here," Yim said, adding that the growth of Fedex’s AsiaOne hub was enough to warrant more investments and expansion in the company’s operations in Subic Bay Freeport.

Fedex had invested on upgraded airport facilities as well as opened a new feeder flight to Vietnam where the company now carries cargo from Subic direct to Ho Chi Mihn City.

"The basic difference between the Asian market and, say, the US market is that here, the business is production-based while in the US, it is consumer-based," Yim explained.

In the Philippines, specifically, Fedex’s business is 70 percent accounted for by the electronics and semiconductor industries, two sectors with high air express requirement that were willing to pay the price.

Historically, Yim said the growth in AsiaOne had been phenomenal since Fedex launched the hub in 1995 with six flights out of Subic International Airport. "Now, we have 10 flights a night, using wide-body aircraft with 80-ton capacity," he said.

Yim said this was also the reason why Fedex did not feel threatened by the decision of United Parcel Services (UPS) to open its Asian hub at the Clark Special Economic Zone.

"The market is so big that there is room here for everyone," he said. "We also have a significant headstart."

"We consider their decision a compliment because if the competition decided to do what we are doing, it’s a confirmation that we are doing something right," Yim said, adding that "we welcome competition because it is a chance for us to show the difference between our services, our customers can make comparisons."

According to Yim, Internet-based business is also expected to be a major revenue source in the future as e-commerce takes root in Asia.

Last year, Fedex expressed optimism that the company would be able to sustain its 20 to 30 percent growth rate with the expected growth in intra and extra-Asian trade.

Although the bulk of the trade had been between Asia and the Americas, Fedex said there was a marked increase in the trade between Asia and Europe as well as within the region itself as countries slowly recovered from the crisis.

Fedex said it’s strategic positioning of its Asian hub at the Subic Bay Freeport has put the company at the most favorable position to take advantage of the growth in the air express segment of the air freight market which carries high value goods between trading destinations.

Fedex said the air freight market had been projected to grow by six to seven percent. Air express, he said, traditionally grows between three to four times faster than the overall air freight market.

Fedex said its AsiaOne Hub operates in all 19 major trading centers in the region and there was continuous expansion of the network to link up minor trading hubs.