FedEx deals blow to Incheon in China move

The government has failed in its bid to have FedEx Corp. establish its Asian hub at Incheon International Airport.

The U.S.-based express transportation company announced on Wednesday that it would relocate its Asian-Pacific hub from the Philippines to Guangzhou, southern China, by 2008.

“Due not only to the rapidly growing demand for air cargo service in China but also the convenience in airport use and customs clearance there, FedEx has decided to relocate its Asian hub to Guangzhou,” said a spokesman for the Korean subsidiary of the U.S. company.

In January 2004, Korea’s Ministry of Finance and Economy said that FedEx had begun to use the Incheon International Airport as its Northeast Asian hub after the company’s local subsidiary expanded air cargo flights from the airport from 13 to 20 per week.

Some analysts criticized the government’s remark as rash, as there had been no announcement from FedEx about a relocation of its Asian hub. The Finance Ministry retorted that the company had confirmed the growing importance of Incheon International Airport in Northeast Asia.

But FedEx Express Asia Pacific Division President David Cunningham said in his visit to Korea in April that Korea needed to improve efficiency and cut costs in order to achieve its goal of becoming a logistics hub of Northeast Asia.

FedEx said that its new $150 million, 155-acre Guangzhou facility, which will open in December 2008, would have floor space of 882,000 square feet and will employ 1,200 people.

The company forecasts that air freight from China to the United States will grow 9.6 percent on average per year over the next 20 years.

“Though we had hoped that FedEx would relocate its Asian hub to Incheon International Airport, the company selected China,” an official at the Finance Ministry said. “We will continue to induce other major express transportation companies to expand their logistics bases in Incheon.”

by Kwon Hyuk-joo