Thursday, November 20, 2008

FedEx to leave Subic by June 2009

American logistics giant Federal Express (FedEx) is expected to be out of Subic by June 2009, with the full operations of its new hub in China.
FedEx will transfer to its new Asia-Pacific hub at Guangzhou Baiyun International Airport in southern China. 

"Now in the testing phase, the new Asia-Pacific Hub is expected to be fully operational in the first half of 2009," the subsidiary of FedEx Corp said in a statement.

Its operations in Subic Bay will continue as it checks the Guangzhou hub's ability to process Hong Kong-Guangzhou cross border transportation, and its sort systems and flight operations.Hub in SubicFedEx's has been one of the first locators in Subic Bay in Zambales province since the former American base was rehabilitated after the Mount Pintubo eruption in 1991 engulfed it in ashes. Former Subic Bay Metropolitan Authority chairman, now senator, Richard Gordon helped pave the way for FedEx's investment in Subic in 2005.FedEx's move to choose Subic became the export processing zone's carrot to invite other investors, mostly export manufacturers who would like to benefit from Subic's logistical advantage. Subic eventually became one of the Philippine's success stories on transforming what could have been a wasteland into revenue generating zone. 

From its strategically located main hub in the Philippines, FedEx served more than 14,000 stations across Asia. 

However, the protracted effort to expand the runway allocated to FedEx so bigger cargo planes could fly into the hub, and the infighting among SBMA leaders who also wrestled with leaders of nearby Clark airbase that is best designed for aviation-related operations, have influenced FedEx to consider alternatives. 

In 2005, FedEx announced it will transfer its operations in China, which has dangled sweeteners, including tax incentives. It is investing about $150 million in the 82,000 square meter Guangzhou facility, which sits on 63 hectares.

FedEx was originally targetting to start its hub operations in China by 2008, but it moved schedules to fully test all systems and processes.

New China hub

It said that over the past several months, significant progress has been made in key areas, including construction, IT, employee training, and the installation of the hub’s unique package and sorting system, comprised of 16 high-speed sorting lines, seven round-out conveyer belts, as well as a total of 90 primary and secondary document-sorting splits.

"This advanced system will enable FedEx to sort up to 24,000 packages an hour at the start of operations," the company said. The Guangzhou hub features a ramp control tower—a first for an international air express cargo company facility in China.

“Since we announced plans for a new FedEx Asia-Pacific Hub in Guangzhou in 2005, we have achieved many important milestones toward our vision of delivering growth while providing our customers with expanded access to the global marketplace,” said David Cunningham Jr., president of Asia Pacific, FedEx Express.

“As the largest FedEx hub outside of the United States, it will help stimulate business both in southern China and globally, and will enable us to meet the growing demands for air express services in the region over the next three decades,” Cunningham added.

It said it moved the new hub because of several factors including an exhaustive series of feasibility studies which forecasted manufacturing and trading trends, both within Asia and internationally, for the next 30 years.

Meanwhile, FedEx said it will continue to maintain its presence in the Philippines, with its Manila and Cebu facilities remaining integral parts of the FedEx AsiaOne network.

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