UPS to switch intra-Asia air hub from the Philippines to China

UPS has decided to relocate its intra-Asia air hub from the Philippines to Shenzhen Airport in southern China in order to reduce transit times across the region as well as boost its sorting capacity five-fold.

The new hub will be operational in 2010 and represents an estimated investment of $180 million. It is expected to total about 89,000 square meters in size and include an express customs handling unit, sorting facilities, cargo handling and cargo build-up areas and ramp handling operations. It will employ about 400 people and initially be capable of processing up to 18,000 pieces per hour -- to be expanded to a capacity of 36,000 pieces per hour -- which compares to the existing 7,500 pieces per hour at the Philippines hub, opened in 2002 in Pampanga at the former Clark Air Force Base.

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.

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.

UPS said the markets of China, Hong Kong, Japan, Korea and Taiwan account for more than half of its total intra-Asia volume, with a sizeable proportion of Asia package export volume originating 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, Brutto said.

Since taking direct control of its international express operations inside China in 2005, UPS's other major investments in the country include the international air hub at Pudong International Airport in Shanghai due to open in November.

UPS said the Clark facility in the Philippines would continue to be a strategic location for its multihub network in Asia as the main import and export gateway for the Philippines. It added that it is exploring placing alternative operations there and is looking at alternative employment opportunities within the UPS network for those who will be affected by the transition.

Meanwhile, UPS has added five weekly flights in and out of Nagoya in Japan's Chubu region. The announcement follows the U.S.-Japan aviation agreement signed in September last year, which granted the company the authority to operate daily flights between the United States and Nagoya in addition to its daily services to Tokyo and Osaka.

UPS will operate five weekly MD-11 flights from Anchorage through Nagoya's Central Japan International Airport before heading to Shanghai.

The start of UPS flights to Nagoya will allow UPS to gain an even stronger foothold in Japan and increase transportation options for the various industries in Chubu, Brutto said.

Source: American Shipper