The freight forwarding arm of the global express giant has virtually simultaneously opened 10 new facilities in Singapore, Taipei, Taiwan, and in Beijing, Guangzhou, Qingdao, Shenzhen, Tianjin, Xiamen, and Dalian, China. This was followed by the opening of a representative office in Vietnam.

These openings add to FedEx Trade Networks’ freight forwarding operations in Hong Kong and Shanghai, which launched in 2008 and brings the total number of locations to 12.

Speaking to Payload Asia following the announcement, Joseph Frank, managing director, Asia, FedEx Trade Networks said the new offices were aimed at giving more comprehensive coverage in key Asia-Pacific trade lanes and support the company’s continuing global freight forwarding expansion plans.

While the name ‘FedEx’ is essentially synonymous with the express courier business, FedEx’s involvement in the forwarding business – known formally as FedEx Trade Networks – stretches back nearly 100 years.

In Asia there has been very low visibility because the business was outsourced to an agency network, compared to the US for instance, whereit was handled in-house.

Evolving customer demands
Frank says that two years ago it was becoming very clear that customers wanted end-to-end solutions that were premised around the company’s reputation for reliability.

“The decision was made to transfer the international freight forwarding operations from the agencies to FedEx’s own operations,” he said.

“We recognised that it’s as important on the back-end as it is on the front-end, so having these origin-type services is important for us to help our customers with the traditional type services, plus even some of the expanded services.

“Customers today are looking for companies offering a wider range of services and they want the ability to trade up and trade down as the environment demands,” he says, citing the exampleof trading off speed and price between ocean and air services, depending onproduct, inventory levels, demand, etc.

He added that customers today are “really looking at value, value in terms of time and money. They are much more aware of value in their supply chains and are really looking for more value and more options.”

Offering more choices
The key to offering more choices to customers is to streamline the product offering with other parts of the FedEx business to offer seamless, combined services. He gives the example of a less than container load (LCL) ocean shipping service into North America.

“We’re able to combine the kind of activities we do on the forwarding side to a particular port and then in combination with one of our other operating companies whether its FedEx Ground, FedFx Global Logistics or even FedEx Express, we can combine those activities and provide door-to-door delivery with the kind of door-to-door visibility and service typically found in the express market, even for ocean customers that are moving LCL type of freight.” In the past he says, companies might have been willing to look at an express company simply as an express company and a forwarding company as a forwarding company.

“They’re no longer in a position of wanting to do that because we’re seeing an expansion in terms of global trade,so we now have customers who might have had traditional manufacturingsites in just one region, but now they’reproducing globally, selling globally andconsuming globally so they’re looking forcustomers that can satisfy their needs ona global footprint not regionally, or evena smaller footprint.”

“I believe that companies like FedEx who have that kind of footprint covering both the traditional forwarding and the express side, are well positioned for this kind of market and meeting those kind of needs for the client.”

“So that is kind of unique in the business, to be able to provide those kind of services as a one look and feel of the company,” Frank says.

In Vietnam FedEx has opted for a representative office because the country is still in the process of joining the World Trade Organisation (WTO), so until that process has completed the only options are to either create a rep-office, form a joint venture, or wait until WTO status is achieved in 2012/13.

“We want to have more involvement in the activities of our overseas offices so the rep-office was appropriate now and once the WTO opens up those restrictions we will take another look at it,” Frank said.

India is also an important market, acknowledges Frank, but for FTN it’s still operated by agent and “we don’t say what we’re doing until we’ve done it, so for now it’s an agent situation.”

A sustainable peak?
On the current air cargo environment which has seen a somewhat unexpected up-tick during the traditional peak season, Frank is guarded in his view.

“There was a peak this year, there wasn’t last year. Airlines have taken tonnage out of the market and shipping lines have laid up some of their vessels, so it’s hard to say whether the volume is significantly better, or is the supply and demand actually in check compared to what it was a year ago.

“No one knows for sure, but we all see the year-on-year comparisons are favourable compared to what they were. Probably by February we’ll see if this peak we’re seeing this year is sustainable.”