The Wall Street Journal reported Thursday that the pilot, former U.S. Air Force colonel Todd Hohn, was detained last week in the city of Guangzhou. Citing sources, the Journal said Hohn, who lives in Hong Kong, had been flying a FedEx plane as part of his normal route through the company's hub in the Southern China city.
"FedEx confirms that Chinese authorities in Guangzhou detained and later released one of our pilots on bail after an item was found in his luggage prior to a commercial flight," the company said in a statement to TheStreet. "We are working with the appropriate authorities to gain a better understanding of the facts."
FedEx shares closed 1.02% higher Thursday, trimming a portion of the previous session's 12.9% slump that followed a 2019 profit downgrade, to end the day at $152.45 each.
Reports of the detention come at an awkward time for both FedEx, which is struggling with both slowing global trade and the loss of Amazon AMZN as a major customer, and U.S.-China trade relations, as deputies from delegations from Beijing and Washington hold two days talks near the White House.
FedEx has been operating in China since 1984, and has a 54.6% of the logistics market in China, according to technographics provision firm Datanyze. Package delivery rivals DHL (DPSGY) and United Parcel Service (UPS - Get Report) are also heavily involved in China, with market shares of 25% and 17% respectively.
Earlier this spring, FedEx was forced to apologize for what it called an "operational error" that prevented the shipping of a Huawei phone from Britain to the United States, where it was meant to arrive at the offices of PCMag for a product review.
China's Foreign Ministry said at the time that FedEx needed to explain why the shipment was intercepted while the Global Times newspaper said officials were considering adding FedEx to a government list of so-called "unreliable entities" that could keep it from doing business in the world's second-largest economy, where it generates around 7% of its global revenues.
The issue was sensitive enough for FedEx to file for relief from U.S. trade regulations an it argued put an "impossible burden" on the world's biggest package delivery company to monitor the origins of shipments to and from the United States.
In papers filed with the U.S. District Court in the District of Columbia, FedEx asked for relief from rules set out by the Commerce Department's Export Administration Regulations (EAR) that make carriers and delivery companies liable for shipments that violate its rules without requiring evidence that the carriers knew they were doing so.
"As a company that is committed to complying with all laws and regulations in the countries we serve, FedEx strongly supports the objectives of U.S. export control laws," FedEx said in a statement.
"We have invested heavily in our internal export control compliance program. However, we believe that the EAR, as currently constructed and implemented, place an unreasonable burden on FedEx to police the millions of shipments that transit our network every day. FedEx is a transportation company, not a law enforcement agency."