Consultant’s Insight: FedEx looks to rebuild APAC volumes

With plans to reignite declining volumes in the Asia-Pacific region, FedEx signed agreements with Chinese municipal governments to collaborate on customs clearance and cross-border e-commerce. [caption id="attachment_76185" align="alignright" width="298"] Cathy Roberson, Cargo Facts Consulting senior consultant and Air Cargo Next columnist[/caption] FedEx Express announced a strategic collaboration with the Xiamen municipal government in March to explore opportunities in air network planning, infrastructure, supply chain management, cross-border e-commerce and sustainable logistics. “We are pleased to collaborate with the Xiamen municipal government to promote mutual strategic cooperation,” Eddy Chan , senior vice president of FedEx Express and president of FedEx China, said in March. “We are optimistic about the economic growth outlook in China, where Xiamen is one of the fastest-growing economies. FedEx considers Xiamen one of its preferential locations for global routing and network planning and [it] is one of our most important markets in China.”. FedEx Express signed a similar agreement with the Guangzhou municipal government in May. In addition to cooperating on customs clearance and cross-border e-commerce, the agreement supports Guangzhou’s development as an international cargo hub. In 2022, FedEx announced plans to build its South China Operations Center within the FedEx APAC Hub at Guangzhou Baiyun International Airport (CAN). The facility, expected to be operational in 2027, will double the size of the current Guangzhou Gateway and be able to sort up to 25,000 packages and documents per hour — three times the sorting efficiency of the existing facility. “Through the strategic collaboration with Guangzhou municipal government, FedEx will be able to better meet customer needs, improve customs clearance efficiency, connect our customers in Guangzhou and southern China more efficiently to global markets, and further promote the development of small- and medium-sized enterprises and cross-border e-commerce,” Chan said in May . APAC volumes decline FedEx is not alone in its APAC volume decline. Total cargo traffic for Asia Pacific airlines during Q1 2023 decreased 11% compared to both Q1 2022 and pre-pandemic levels, according to IATA analysis . IATA attributes the decline to continued disruptions to trade, manufacturing and supply chains due to pandemic-related challenges in China. FedEx Chief Customer Officer Brie Carere told analysts in March that “revenue at FedEx Express was down 8% year-over-year primarily due to lower volumes globally and yield softness in Asia and Europe.” Indeed, FedEx’s Asia-Pacific cargo revenue ton-miles were 5.41% lower year-to-date through February than in the same period in 2022, according to the U.S. Bureau of Transportation Statistics . The yield softness in Asia was attributed to a rebalance of market demand — that is, lower demand for priority services. As a result, FedEx Express reopened its International Economy (IE) service in May to help stabilize volumes out of Asia. “Not everything needs to be delivered the next day,” said Salil Chari , senior vice president of marketing and customer experience for the Asia Pacific, Middle East and Africa region at FedEx Express. “Day-defined delivery is what more of our customers are looking for. Our IE service enables us to address customers’ changing needs and expectations to select the service that adds the most value to their business.” Join Air Cargo Next for the upcoming webinar , “What’s new in digital cargo systems,” on Tuesday, June 13, at 11 a.m. ET. F or more information on the webinar and to register, click here.

Consultant’s Insight: FedEx looks to rebuild APAC volumes

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