FedEx is reducing its presence at Liège, axing 671 jobs, and concentrating its flying operations on Paris Roissy. This is the current situation announced 3 weeks ago by the U.S.
integrator, which, according to local Belgian media, caught the Walloon airport by surprise. However, that FedEx might turn its back on Liège (LGG) airport, was apparent more than a year ago, yet
the airport management either did not see it or turned a blind eye to the signals.

Flashback: About 2 years ago, the sky above Liège was still full of violins. The airport managers promised FedEx the utilization of a large plot of land within the fence on which to build a huge
sorting facility for e-commerce items and express cargo, acting as a centerpiece super hub that the integrator was intending to set up. In FedEx’s view, a highly attractive proposition making LGG
the U.S. integrator’s steppingstone to penetrating the European market in close combination with its primary EU hub Charles de Gaulle.

Cainiao comes first
However, nothing much happened in the weeks and months after the verbal consent. Instead of pushing ahead with the FedEx sorting and distribution project, the airport management and
representatives of the Belgian government took a U-turn, so it seems. On 30DEC18, they proudly announced that Cainiao, the logistics arm of Chinese e-tailer Alibaba, also had ambitions to
establish a hub in Liège. Needless to say, the airport bosses were delighted about their big scoop. To keep the (potential) Chinese customer satisfied, they offered Cainiao and Alibaba a 220,000
m² plot on airport to develop a large logistics and distribution center from scratch. In return, the new Chinese partners announced that they would invest 75 million euros in ground
infrastructure. Cainiao also confirmed plans to set up its central European hub at the Walloon airport, thus putting LGG on the map of successful cargo airports and improving its status. Sweet
music to the ears of the airport management and their supporters in the Walloon government, who expected a rapid jump in volumes following the Cainiao/Alibaba announcement.

And so it happened. According to a report published in the Flemish paper De Standaard (23JAN21), almost half of the volumes processed in Liège during 2020, were Chinese imports or exports,
pushing FedEx figures back into 2nd place (40%).

Abuse of confidence
This, in itself, was irritating news for the success-oriented Memphis, U.S.-based parcel delivery company. However, the integrator was particularly outraged at the fact that Liège had allowed
Cainiao/Alibaba to build its own premises on the plot that had first been offered to FedEx. It considered this to be a clear breach of promise.

Meanwhile, the Chinese have put their money where their mouth is, by laying the foundation stone for a sorting and distribution center on the disputed site. Liège spokesman, Christian Delcourt,
is quoted by De Standaard as saying: “The fact that Alibaba chose Liège as its hub has already attracted a number of new companies that are preparing their arrival at the end of 2021 or the
beginning of 2022.” These are mainly Chinese, he admits. He said this while 2 freighters were just arriving, one of them coming from Hangzhou, where Alibaba is headquartered.
“Immediately after the landing of the 2 aircraft, Chinese people flocked out of the warehouses to take care of the handling,” De Standaard observed.

From FedEx’s point of view, the turn of the airport towards Chinese carriers and particularly the handing over of the building plot to Cainiao/Alibaba is obviously the straw that broke the
camel’s back.

Act of revenge?
FedEx’s intended strategic and operational shift from Liège to Paris CDG, announced some weeks ago and labeled as “TNT/FedEx network integration”, is an understandable decision based on
commercial terms, and justified by network experiences in the carrier’s U.S. home market, or so it appears at first sight.

However, on closer inspection, the move proves to be a slap in the face for Liège and its policy of giving preference to the Chinese and their allies in developing the e-commerce and air cargo
business.
The situation is made even more opaque by French interests. It cannot be ruled out that the French government and airport operator ADP have their hands in the matter, siphoning off cargo traffic
from a competitor. ADP holds a 25% stake in Liège Airport, while ADP’s majority shareholder is the French state.

However, people close to the case question whether FedEx will be concentrating its operations at Paris Charles de Gaulle whilst simultaneously scaling down its Liège activities step by step.
“It seems that they are trying to identify an alternative to Liège, namely Budapest, Bratislava, or Cologne/Bonn, as suitable candidates for setting up a secondary European hub,” a
leading European logistics manager hinted to CargoForwarder Global.
Please stay tuned!

Heiner Siegmund

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