Globalization is good for business, especially when you are FedEx Express, or FedEx, one of the world's largest express-transportation companies.

Unsurprisingly, Michael Ducker, FedEx's executive vice president, international, has been an active advocate of globalization, which is a catchword for the free flow of capital, trade and information. Interviewed in Hong Kong after attending the APEC-CEO Summit 2003 in Bangkok, Ducker says that his company is an "enabler of global trade."

As such, FedEx is a strong advocate of liberalization of trade, capital flow and air traffic as well as the improvement of custom procedures, Ducker says. The solution to foster sustainable growth and economic prosperity is by enacting free, open trade and liberal investment policies, he says.

"We believe that the more you liberalize, the greater the net good for the economy," he adds. As a key sponsor of the APEC-CEO Summit 2003, FedEx has reaffirmed its support of free and open trade. "We contend that it is only by breaking down the artificial barriers and obstacles that limit open-trading practices, that all countries, regardless of size and stage of development, will be able to experience economic prosperity and sustainable growth," Ducker says.

When FedEx helped introduce the air-express service in the United States some 30 years ago, the idea of a global economy that was completely inter-dependent and integrated was largely theoretical. Now, cross-border manufacturing has become an established trend.

It is widely estimated that 20 per cent of the goods consumed are manufactured across borders. The ratio is expected to jump to 80 per cent in 20 years, thanks to globalization. In cross-border manufacturing, involving suppliers in many different countries, the streamlining of the supply chain to control costs becomes a paramount concern to the manufacturers. They will have to ensure the most efficient flow of physical goods and information, Ducker says.

Hong Kong is one of the pioneers in cross-border manufacturing activities. Since the mainland began pursuing economic reform and an opening-up policy in 1978, many Hong Kong manufacturers have moved their production facilities across the border into the Pearl River Delta (PRD) area to take advantage of the plentiful supply of land and labour there.

The process has been further refined as Hong Kong and overseas manufacturers began sourcing components from the most cost-effective suppliers around the world for assembly into finished products in PRD factories. These activities have helped catapult the PRD into one of the world's leading manufacturing powerhouses.

Cross-border manufacturing and global sourcing activities have created a strong demand for fast and efficient transportation services. The opportunities arising from such demand have prompted FedEx to invest heavily in deploying aircraft and establishing stations on the mainland. The mainland market is growing faster than any other market, Ducker says.

The company's network of services covers 220 cities on the mainland, compared with only 20 five years ago. It is expected to extend its services to an additional 100 cities in the next five years.

FedEx established its presence on the mainland in 1984 by using commercial airlines to provide outbound express service. Inbound services were added three years later. In April 1994, it became the first express operator to be linked electronically with mainland customs in Beijing, Shanghai and Shenzhen. This pre-clearance capability based on FedEx technology has helped cut days off the custom-clearance process.

The company began operating its own cargo flights between the mainland and the United States in January 1996. And in September that year, it upgraded its mainland service by linking Beijing and Shanghai to its Asia-Pacific hub in Subic Bay of the Philippines, enabling two-day delivery from the mainland to anywhere in Asia.

With 11 flights per week, FedEx operates the highest number of cargo flights in and out of the mainland among its competitors. It has its own express-handling facilities at Shenzhen's Bao'an International Airport and Shanghai's Pudong Airport in a joint venture with Da Tian.

Ducker says a number of developments have been driving the industry under the trend of globalization.

One of them is the rapid growth of the high-tech industry in the Asia-Pacific region. The production of high value-added goods is growing faster than that of the low-end consumer products, Ducker says.

As the marketing cycle of high-tech products is relatively much shorter, manufacturers would need to exercise greater control over their parts inventories to keep down costs and to get their products from the assembly lines to the market as quickly as possible. A recent study by a major US university shows that every dollar spent on express service results in a saving of US$1.50 in inventory costs.

Another factor driving the express-services industry is the explosive growth of the Internet and e-commerce, Ducker says. The need for fast delivery and the global nature of these transactions have created a strong demand for express services, he says.

Ducker says that the express-services industry, in turn, is helping to facilitate the growth of the high-tech industry and e-commerce. "Our key role in all of these is to ensure the smooth flow of goods between economies," he says.

Another important element in the express-services industry is the flow of information. Ducker says that as a custodian of the customers' goods, an express-service company has to have the capability to keep track of the shipments it handles at all times.

"A well-developed information technology network is essential to our business," he says. Indeed, the company often handles more electronics transactions in a day than some of the largest banks in the world, he says.

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