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Sunday, Jun 23, 2024

FedEx plans to move Asia HQ, executives to Singapore from Hong Kong

FedEx plans to move Asia HQ, executives to Singapore from Hong Kong

FedEx is planning on moving its Asia-Pacific regional headquarters to Singapore from Hong Kong, in another blow to the city’s image as an international business hub.
In an e-mailed statement, FedEx said it will consolidate some Asia-Pacific, Middle East and Africa headquarters functions in Singapore “to connect all of our operations in this region with greater speed and agility”.

The company said it will retain leadership roles and a “significant” presence in Hong Kong. The courier has 35,000 workers in the region and provides services in more than 100 countries, FedEx said.

The 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 employees were told that the management team will move in September, the person added.

The American company will still keep an office in Hong Kong along with most Hong Kong business-related staff, and it is also considering moving some non-essential roles to Malaysia or India to cut costs, one person said.

Fewer than 15 per cent 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-19 restrictions.

Hong Kong was at the center of the United States-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 countries such as Singapore.

Even after Hong Kong reopened earlier this year as China scrapped its zero-Covid 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 per cent year on year. While air cargo volumes rose about 6 per cent the same month, this was mainly due to the low base last year amid Covid-19-related supply chain disruptions, Hong Kong’s airport authority said in a statement last month.

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 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 Britain by mistake.

Following the incidents, the 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 the 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 (S$5.3 billion) in costs as it faces falling demand and trails its rival, United Parcel Service, on profit margins. It aims to merge its express package business and its ground unit into a “fully integrated air-ground network” by 2024. The company has also trimmed global officer and director jobs by more than 10 per cent, put workers on furlough, reduced cargo flights and parked some planes.

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