FedEx Proposes to Continue Operations Despite Being Ruled Out of Public Utility Contract
PHILIPPINES – When the judiciary comes up against state in virtually any country, casual observers can often sit back and enjoy the ensuing row. After effectively being kicked out of the country this week when a Court ruled that its government-issued freight forwarding licence was invalid, FedEx has apparently vowed to continue operations whilst awaiting the final decision of the Supreme Court after two native logistics firms won a wrongful practice suit.
The government, under the auspices of the Civil Aeronautics Board (CAB), issued FedEx with the 5 year licence in May 2011 following a Department of Justice authorisation some years earlier that exempted freight forwarders from the national requirement to only grant public utility contracts to companies owned and operated by Filipinos.
The appellate Court begged to differ however saying, having made the original decision to disqualify FedEx (and any other forwarder affected by similar licence arrangements) that the Justice Department had no authorisation to overturn its ruling. Three justices all agreed on this after a case was brought by two Philippine companies, Merit Freight International Inc. and Ace Logistics Inc., aiming to prove that FedEx is a foreign corporation.
There was precedent for the prosecution in that one company, Royal Cargo, apparently previously 70% owned by Filipinos and with a foreign president but married to a native, exchanged their president for a German national which caused the CAB to rescind their licence to operate unless a further change of presidential status was effected within one month.
It is difficult to see how FedEx can win this particular argument and certainly there may be some residue of distaste after the events of February 2009 when the logistics giant pulled out of its contract to operate a 300,000 square foot cargo terminal in the Subic Bay International Airport. The closure, despite an agreement stretching into 2010, was due to FedEx’s desire to reposition its main Asia Pacific hub to China’s Guangzhou Baiyun International Airport, the first time the US company had ever closed a main cargo hub. The move cost over seven hundred Filipino jobs and followed a move the previous year when FedEx pulled the plug on the operations of Corporate Air which also had a presence at Subic.
It is presumed that the FedEx appeal will centre on the money the US corporation says it is has earmarked to invest in the expansion of its facilities in the country, which was to include new offices and freight terminals supposedly at a cost exceeding $11.5 million. In a statement a spokesman for FedEx (Philippines and Indonesia) said:
“FedEx is operating under the international freight forwarder licence issued by the CAB as an independent entity in the Philippines. The licence was issued on May 2, 2011 and is valid until May 1, 2016. Pending the final decision of the Supreme Court, the CAB has confirmed that FedEx (together with all of the 30 plus other foreign-owned air freight forwarders) can continue to operate under the licence.”
source: http://www.handyshippingguide.com/shipping-news/giant-logistics-group-falls-foul-of-freight-forwarding-ownership-law-_4791
PHILIPPINES – When the judiciary comes up against state in virtually any country, casual observers can often sit back and enjoy the ensuing row. After effectively being kicked out of the country this week when a Court ruled that its government-issued freight forwarding licence was invalid, FedEx has apparently vowed to continue operations whilst awaiting the final decision of the Supreme Court after two native logistics firms won a wrongful practice suit.The government, under the auspices of the Civil Aeronautics Board (CAB), issued FedEx with the 5 year licence in May 2011 following a Department of Justice authorisation some years earlier that exempted freight forwarders from the national requirement to only grant public utility contracts to companies owned and operated by Filipinos.
The appellate Court begged to differ however saying, having made the original decision to disqualify FedEx (and any other forwarder affected by similar licence arrangements) that the Justice Department had no authorisation to overturn its ruling. Three justices all agreed on this after a case was brought by two Philippine companies, Merit Freight International Inc. and Ace Logistics Inc., aiming to prove that FedEx is a foreign corporation.
There was precedent for the prosecution in that one company, Royal Cargo, apparently previously 70% owned by Filipinos and with a foreign president but married to a native, exchanged their president for a German national which caused the CAB to rescind their licence to operate unless a further change of presidential status was effected within one month.
It is difficult to see how FedEx can win this particular argument and certainly there may be some residue of distaste after the events of February 2009 when the logistics giant pulled out of its contract to operate a 300,000 square foot cargo terminal in the Subic Bay International Airport. The closure, despite an agreement stretching into 2010, was due to FedEx’s desire to reposition its main Asia Pacific hub to China’s Guangzhou Baiyun International Airport, the first time the US company had ever closed a main cargo hub. The move cost over seven hundred Filipino jobs and followed a move the previous year when FedEx pulled the plug on the operations of Corporate Air which also had a presence at Subic.
It is presumed that the FedEx appeal will centre on the money the US corporation says it is has earmarked to invest in the expansion of its facilities in the country, which was to include new offices and freight terminals supposedly at a cost exceeding $11.5 million. In a statement a spokesman for FedEx (Philippines and Indonesia) said:
“FedEx is operating under the international freight forwarder licence issued by the CAB as an independent entity in the Philippines. The licence was issued on May 2, 2011 and is valid until May 1, 2016. Pending the final decision of the Supreme Court, the CAB has confirmed that FedEx (together with all of the 30 plus other foreign-owned air freight forwarders) can continue to operate under the licence.”
source: http://www.handyshippingguide.com/shipping-news/giant-logistics-group-falls-foul-of-freight-forwarding-ownership-law-_4791
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