December 3, 2004

UPS gains direct control of its express operations in China

Canadian Shipper

UPS and Sinotrans are now in agreement for UPS to take direct control of its international express operations in China’s largest and most important cities by the end of 2005.

The agreement, signed on Dec 1, requires a payment of US$100 million by UPS for the transfer of operations in 23 cities across China. Operations in those 23 business centers extend service to an additional 200 cities, which account for more than 80 percent of China’s gross domestic product. With an expanded network in place, UPS says it will offer customers enhanced services and access in and out of the world’s fastest growing market.

Starting in January of 2005, UPS will take direct control of operations in five locations: Shanghai, Guangzhou, Shenzhen, Tianjin and Qingdao. By December 2005, UPS will assume control over its express operations in 18 additional locations, and have a total of 1,700 employees.

UPS and Sinotrans will work closely to ensure a smooth transition in these locations. In addition, the two organizations will continue to work together in areas not covered under the agreement.

The deal, which also better positions Sinotrans to develop its own services, will advance a relationship dating to 1988 when UPS first entered the China market in partnership with Sinotrans.

“This agreement opens a wealth of opportunity for UPS customers seeking to do business with China,” said David Abney, president of UPS International. “UPS will have the flexibility it needs to expand operations and to invest in facilities, infrastructure, technology and employee development. And our customers will have the confidence of knowing we can stay ahead of demand in a country that’s changing the face of worldwide commerce.”

With direct control of its own network, UPS expects to improve its reliability and to build its brand presence by expanding the number of branded trucks and uniformed drivers. The company also plans to enhance its package-tracking network, expand the shipping software options available and introduce a toll-free telephone customer service hotline.