Yahoo Finance FedEx plans to move Asia HQ, executives to Singapore from Hong Kong
By Shirley Zhao, Danny Lee and Andrea Tan
(Bloomberg) — FedEx Corp. is planning on moving its Asia-Pacific regional headquarters to Singapore from Hong Kong — another blow to the city’s image as an international business hub.
In an emailed statement, FedEx said it will consolidate some Asia Pacific, Middle East and Africa (AMEA) headquarters functions in Singapore “to connect all of our operations in this region with greater speed and agility.” The company said it will retain a “significant” presence and leadership roles in Hong Kong. The courier has 35,000 workers in the region and provides service to more than 100 countries, FedEx said.
The Memphis, Tennessee-based courier plans to relocate some of its Hong Kong-based executives, including regional president Kawal Preet, to Singapore, according to a person who declined to be identified because the details are private. FedEx’s Hong Kong staff were told that FedEx’s management team will move in September, the person added.
The US company will still keep an office in Hong Kong along with most Hong Kong business-related staff, and it’s also considering moving some non-essential roles to Malaysia or India to cut costs, one person said.
Fewer than 15% of the positions in Hong Kong will move to Singapore, FedEx said. The office will “continue to provide vital support” for the region, according to the company.
The move may fuel concern that multinational companies’ confidence in Hong Kong is waning, particularly after years of political turmoil and Covid restrictions.
Hong Kong was at the center of the US-China trade disputes in 2019 as Beijing’s tightening grip over the financial hub — in response to months of social unrest — triggered sanctions from Washington. The city’s fortunes fell further during the pandemic, when tough travel curbs drove capital, companies and workers to other cities such as Singapore.
Even after Hong Kong reopened earlier this year as China scrapped its Covid Zero policy, its logistics industry has continued to suffer from a decline in global trade, the rising rate of inflation and increasing interest rates. Container processing in March fell about 10% year on year. While air cargo volumes rose about 6% the same month, that was mainly due to the low base last year amid Covid-related supply chain disruptions, Hong Kong’s Airport Authority said in a statement last month.
Regional competition
While Hong Kong remains the world’s busiest air cargo port, it has lost regional relevance with the rise of nearby mainland Chinese logistics hubs including Guangzhou, where FedEx has an operations center, and Shenzhen. The freight giant also shut its Hong Kong pilot crew base during the height of the pandemic.
FedEx itself suffered from increasing scrutiny from China in 2019 after Huawei Technologies Co. said documents it asked to be shipped from Japan to China were diverted to the US instead without authorization. In a separate incident, FedEx said it rejected a package containing a Huawei phone being sent to America from the UK by mistake.
Following the incidents, Chinese authorities targeted the company in a series of events, such as investigating a package containing a gun delivered by FedEx to a company in China and seizing a package containing knives to be shipped to Hong Kong. A pilot for the company was temporarily detained in 2019 in Guangzhou after authorities found hundreds of air-gun pellets in his luggage prior to boarding a commercial flight to Hong Kong.
FedEx is also embarking on a sweeping restructuring, seeking to cut US$4 billion in costs as it faces falling demand and trails its rival United Parcel Service Inc. on profit margins. It aims to merge its express package business and its ground unit, operating a “fully integrated air-ground network” by 2024. The company has also trimmed global officer and director jobs by more than 10%, put workers on furlough, reduced cargo flights and parked some planes.
©2023 Bloomberg L.P.
