UPS To Relocate Its Intra-Asia Air Hub

UPS is moving its intra-Asia air hub from the Philippines to Shenzhen in China's thriving Pearl River Delta to reduce transit times across Asia.

UPS will base the new intra-Asia hub at Shenzhen Airport. The repositioning will slash at least a day off shipment times in transit for Asian customers while offering a new level of service to the manufacturing region located just north of Shenzhen. The new cost-efficient hub will be operational in 2010 and represents an estimated investment of USD180 million.

"Shenzhen's strategic location will provide significant advantages, allowing UPS to better serve the growing Asian markets along these rapidly expanding trade lanes" said Dan Brutto, president, UPS International. "For example, we expect a full day's improvement in transit time on almost 200 city pairs once this hub opens.

"We want to be where our customers need us most," Brutto added. "Since we began flying directly to China in 2001, we have watched this region grow exponentially not only from a small package perspective but also in heavy air freight."

Currently, the markets of China, Hong Kong, Japan, Korea, and Taiwan account for more than half of UPS's total intra-Asia volume. Of this, a sizeable proportion of Asia package export volume now originates in southeast China and Hong Kong.

"Given the growth in shipping along the southern rim of China, it now makes more sense to sort and dispatch this volume from a hub closer to our customers," explained Brutto. "And in making the switch, because of the growth we're seeing, we intend to build a new sorting hub in Shenzhen with five times the capacity of the existing hub. UPS is very grateful to the Shenzhen government and Shenzhen Airport Authority for their strong support of our expansion and we look forward to a successful partnership."

Since taking direct control of its international express operations inside China in 2005, UPS has made significant investments in the country. In 2007, UPS signed an agreement with the Shanghai Airport Group to establish a UPS International Air Hub at Pudong International Airport in Shanghai. When it opens in November, the Shanghai hub will connect China to the UPS global air network, including U.S. and European destinations. It will have a substantially different role to the hub in Shenzhen, which will connect all major Asian points.

The Shenzhen hub, expected to total about 89,000 square meters in size, will include an express customs handling unit, sorting facilities, cargo handling and cargo build-up areas and ramp handling operations. Initially it will be capable of processing up to 18,000 pieces per hour — compared to the existing 7,500 pieces per hour in the Philippines – but will be easily expandable to a capacity of 36,000 pieces per hour. It will employ about 400 people.

The existing facility at Clark in the Phillipines will continue to be a strategic location for UPS's multi-hub network in Asia.

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