Mon, May 17, 2004 page11

• Time is money for FedEx

  Say `FedEx' and people may think of the movie `Cast Away,' in which a manager of the US-based delivery giant goes missing. While the real setting is less dramatic, the company is committed to the Taiwan market, as FedEx Express managing director Scott Williams told `Taipei Times' staff reporter Jessie Ho last week.

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  Taipei Times: FedEx entered the Taiwan market in 1990 and has since been eager to increase its market presence. What's your major investment here? And what's your outlook for Asian markets?

  Williams: One of our major investments here in Taiwan is a transshipment center at the Chiang Kai-shek International Airport we launched two years ago. It's a good investment for us. We are looking for different opportunities to invest more in Taiwan.

  Our corporate information that was publicly announced showed that in the third quarter [ending February 29], FedEx Express' operating profit grew by 77 percent year over year worldwide; FedEx International Priority, our express product, grew year over year 21 percent.

  

  Scott Williams, managing director of FedEx Express, sees possible opportunities for his company's further rapid growth in free-trade ports, cross-strait direct links, streamlining of customs procedures and reductions in other official red tape.

  PHOTO: CHIANG YING-YING, TAIPEI TIMES

  We found that the Asian market is the fastest-growing part in our international business, and I believe we'll continue to be in a good position for that growth.

  TT: How do you plan to expand market share in Taiwan now that you have taken over the helm?

  Williams: We have seen strong growth of our business in Taiwan, where the economy is getting better, and will continue to see optimism over the next year. A lot of different institutions are predicting at least 5 percent growth in GDP over the next year.

  I think another reason for the growth last year is that we extended our service cut-offs by two hours in the greater Taipei area. Our service cut-off time used to be 5pm and now is 7pm. We expanded the same service cut-off time in the Kaohsiung area as well as in central Taiwan.

  Export trade is about providing the right documentation for the right export declaration as quickly as possible, and customers want that as late as possible. So we will continue to listen to their needs and provide them with the best service.

  For example, we were the first company to provide a software application on the Internet for customers to track their shipments from point to point, which is of great value to our customers. Recently we further provided an advanced tracking service, called Insight, which will automatically send messages to customers regarding their shipments. We've received positive responses from customers regarding this service.

  TT: Taiwan's government has been pledging to turn the nation into a logistics hub for Asia. For a foreign express delivery service like yours, what would make Taiwan stand out in achieving that goal?

  Williams: One of Taiwan's advantages is the geographic location, which is in the center of Asia. This location helps us to better reach our customers in this region. I also found there is good two-way communication between the government and business after attending a few discussions that involved government officials.

  Moreover, Taiwan has been successful in terms of economic clus-tering for information technology, high-tech products and other clus-tering developed further. Express companies like FedEx are positioned right for this by delivering short-lived high-tech products to the market as quickly as possible.

  TT: Does Taiwan suffer any comparative disadvantages?

  Williams: I think I'm still fairly new here and can't comment too much further on that. But I'll say that we are looking for different things to make the shipment and movement as smooth as possible for our customers.

  TT: Local and foreign logistics companies have been calling on the government to ease several barriers facing the industry, such as red tape and some troublesome customs procedures. Does FedEx also find these to be thorny issues?

  Williams: Of course we'd like to see barriers reduced, but this does not mean that we can't do our business if these barriers are still there. Our object is to facilitate trade activities as we did for the past 31 years, so our focus is to provide the best service we can based on whatever resources and infrastructure are available in the market.

  TT: Taiwan will kick off its first free trade port at Keelung Harbor this September and then the second at Kaohsiung Harbor next year. Does FedEx plan to set up a branch in the free trade ports, which are designated not only as transshipment centers but also as processing and financial hubs? How do you think this mechanism will help the logistics industry and attract foreign investment?

  Williams: We are very much supportive of the initiative for free trade ports in Taiwan, as we always are throughout the world, and I think this is a positive step. I'm sure that there are going to be some advantages for exporters and shipment businesses. However, we are still evaluating if we are going to, or how to, take advantage of the yet-to-be-launched free trade ports in terms of positioning.

  We will watch closely the development of the mechanism. In fact, free trade areas are not the only places we are looking at. We will invest wherever helps to reach our customers and cater to their needs.

  TT: Many local and foreign business groups have been pushing for direct cross-strait transportation as business ties between Taiwan and China have become closer over time. If the direct links are realized, your shipments will certainly move faster. How much time and cost do you estimate you can save from direct links?

  Williams: Certainly we support the discussion of direct links and we hope that moves forward. This is a two-way communication we want to be involved in. We have no analysis of how the mechanism will affect our operations. It's an interesting issue. But now, in the absence of direct links, we can still deliver goods on the same morning or same day across the Asia-Pacific region as customers need.

  TT: Rising oil prices have forced several airlines and cargo operators to increase their prices in the passenger and cargo sectors to offset increasing outlay in fuel costs. Does FedEx plan to raise charges as well?

  Williams: The surging fuel costs did impact on the air industry. FedEx has a dynamic fuel surcharge, meaning a flexible way to adjust charges by the fluctuation in fuel prices. We put the surcharge policy on our Web page so customers can go online to get the latest information related to that. It is calculated through a formula based on an index of the US energy authorities. Other express and logistics companies have similar surcharges as well.

  [Editor's note: Asked about the company's business strategies in China, Williams said he was not in a position to answer that question, and referred it to Eddie Chan (陳嘉良), FedEx's vice president in the China region. Chan replied in a statement the Taipei Times received on the same day.]

  TT: What is your plan to operate in the Chinese market in the near future -- especially after 2006, when China will open its markets to all overseas investors as one of the commitments it made to enter the World Trade Organization?

  Chan: We remain very confident in China's prospects for continued growth, which will in turn bolster the express and logistics industries. Facing the new challenge, we'll continue to reach new markets, new suppliers and part-ners as we can. For example, we served 144 cities in China in 1999, and serve 224 cities today. We plan to increase that to 320 by 2008.

  To cater to the needs of business expansion, we project we will increase our employees to about 2,000 by mid-2005. In terms of forming alliances, we partnered with Kodak to provide international express service in eight selected Kodak Express stores for customers to drop their shipments. The service was extended to 41 stores in Shanghai and is available in 20 Kodak Express shops across Guangzhou since last November. We'll look for more opportunities for such cooperation to cover as many customers as we can.

  TT: Taiwan's express companies are also interested in exploiting the Chinese market, where they have an advantage in terms of cultural and language similarity. Some industry watchers have said express and logistics businesses from Taiwan and China have an opportunity to compete with foreign express giants like FedEx by forming joint ventures. How do you perceive the possible competition?

  Chan: We welcome competition as we see that as a sign of pros-pering trade and sustainable development of a country. Besides, service providers will enhance their ability to provide the best solutions to the benefit of customers. The air express market is not a zero-sum game.

  In fact, FedEx is a global trade enabler and has been a longtime advocate of free trade and open skies. Once trade barriers are elim-inated, trade activities will increase and sustainable economic development in emerging countries will be stimulated.

  The economic benefits will be offering the country's businesses more choices with lower prices that come with competition. This in return provides win-win situations for the countries involved.
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