FedEx Corp, one of the largest air express companies in the world, announced Wednesday that it would establish an Asian Pacific transport hub in Guangzhou, in South China's Guangdong Province, in a bid to penetrate further the air express market in China.

The transport hub will be the largest of FedEx Corp's bases outside of its home market in the United States and will become the company's most important investment in the Asian Pacific region, said Frederick W. Smith, chairman and chief executive officer with the FedEx Corporation.

"Today, (with this hub in Guangzhou) we further invest in our position as market leaders by creating a new gateway that expands our customer's access to the global marketplace," he said.

Construction on the transport hub, which will have a total floor space of 82,000 square metres located on 63 hectares (155 acres), will begin in 2006 and will be established in co-operation with Guangzhou's Baiyun International Airport.

It represents a US$150 million investment by FedEx, although this figure includes only investment in infrastructure.

When it is completed in 2008, the new hub will become the Asian Pacific transport centre of FedEx and will replace FedEx's existing hub at Subic Bay in the Philippines, said Smith.

He explained that, when fully operational, the capacity of the Guangzhou hub will be double that of the current hub in Subic Bay.

The express giant regards Guangzhou as the best place to locate its Asian Pacific transport centre because of its geographic advantages, as well as its foreign trade volume.

The new hub will not only connect FedEx's businesses in the Asian Pacific region but also provide access to the entire network of the company, Smith said.

Officials from Guangzhou said they believed the establishment of the transport hub would help promote the development of Guangzhou's logistics industry.

"It will take Guangzhou's logistics sector into a new area," said Liu Zijing, a senior official with Guangdong Airport Management Corporation.

A joint study by a Chinese development research institute and the Campbell-Hill Aviation Group of the United States said that the FedEx hub is expected to contribute some US$11 billion to China's economy by 2010 and around US$63 billion by 2020.

Liu said the establishment and operation of this facility is also expected to boost the economic development of the Pearl River Delta.

As China is gradually opening its logistics and express market to foreign investors, as part of its commitments under the World Trade Organization(WTO), none of the major foreign companies want to miss the opportunity to tap the emerging market of China, now the world's third-largest trading power.

A source close to the company said this new hub was just one step in the company's expansion strategy in China, but he declined to disclose further details.

United Parcel Service Inc, a close rival of FedEx, announced that it would establish a regional transport hub in Shanghai last Thursday.

Source: China Daily