Dive Brief:
- FedEx and China Southern Air Logistics plan to share their network resources to bolster global supply chain and route connectivity, according to a June 2 press release from FedEx.
- The two carriers signed a Strategic Memorandum of Understanding to explore opportunities across five areas: cargo space, routes, fleet, operations and digitalization, China Southern Air Logistics Chairman Li Xiao said in the release. Besides supply chain efficiency, the partnership also aims to bolster Guangzhou, China, as an international air cargo hub, per the release.
- Through the collaboration, the carriers aim to build a “smarter, more agile, and more resilient air logistics ecosystem,” while also serving cross border logistics needs of China-based shippers, FedEx China President Poh-Yian Koh said.
Insight:
The partnership comes as no surprise for a global integrator such as FedEx, which has a hub at Guangzhou Baiyun International Airport (CAN), Derek Lossing, founder of Cirrus Global Advisors, told Supply Chain Dive in an email.
The CAN hub handles intra-Asia express package and freight shipments, in addition to international express package and freight shipments to and from Asia, per a FedEx securities filing. The facility is equipped with an hourly sorting capacity of 36,000 packages.
“FedEx’s Asia hub is in CAN, and partnering with an airline that has fleet, schedule reliability, and pilots already located there makes a lot of sense,” Lossing said.
But the strategy is not unique among integrators. For years, DHL Express bought large amounts of block space agreement capacity from carriers on routes such as Los Angeles to Sydney, Lossing said.
“FedEx could be doing this- buying blocks of capacity and deeply integrating their hub and China Southern’s hub, to get the same reliable speed and connection times,” Lossing said. “If you’re in the US and ship something to a Southeast Asian Country, there is a good chance that [it] might connect in China Southern’s & FedEx’s hub in CAN.”
The MOU comes as FedEx continues to flex its air cargo network to better match market dynamics and boost speed. In 2023, FedEx announced its "Tricolor" redesign that splits its network into three sections to better align capacity with demand. That same year, FedEx said that the carrier would lean on third-party providers to transport less urgent shipments, while its own fleet would focus on moving priority volumes.
Last year, FedEx cut back on air cargo capacity between Asia and the Americas, including its third-party capacity, President and CEO Raj Subramaniam said at the time.
