UPS expansion in China picking up momentum
 

UPS expansion in China picking up momentum

February 20 2006

SAN FRANCISO, Sun: United Parcel Service Inc (UPS), the world's largest package shipper, said it will open 22 distribution centres in China within the next two months, as China's expanding economy increases shipments.

The expansion is part of the Atlanta-based company's US$500 million (US$1 = RM3.72) investment in China to increase staff to more than 3,500 people with a fleet of 1,400 delivery vehicles in 75 facilities.

UPS, FedEx Corp and other package shippers are speeding up their China expansion, as the country's 9.9 per cent economic growth last year spurred demand for delivery.

UPS bought Beijing-based partner Sinotrans Ltd last year, gaining access to 23 distribution centres serving more than 200 Chinese cities.

"We are seeing tremendous demand for transportationservices and logistic services in both directions between the US and China, UPS spokesman Norman Black said in a phone interview here.

"We are about to gain some additional air rights to fly additional aircraft between China and the US," he added.

UPS, which boosted profit by 21 per cent in the fourth quarter last year, doubled its revenue from shipments between US and China last year, according to Black's estimates.

FedEx, the second-largest US package shipping company, is also increasing its China investment.

The Memphis, Tennessee- based firm last month announced a US$400 million buyout of its Chinese partner to expand its domestic delivery business in the country.

FedEx, which entered China in 1984 as the first express air carrier in the country, currently operates 23 weekly flights and plans to add three more in March.

The company connects more than 200 Chinese cities to its international network and it plans to add flights to 100 more cities in the next few years.

China allowed overseas distribution and storage companies tooperate without local partners at the end of 2005 to meet its pledge to open the country's services industry under World Trade Organisation rules. That provided UPS and FedEx with the chance to speed up expansion in the country.

China is the second-largest domestic air cargo market in the world and is expected to be the fastest-growing market for aircargo with an average growth rate of more than 10 per cent between 2003 and 2023, according to FedEx. - Bloomberg