UPS moving air hub from Philippines to China

SHENZHEN, China — UPS is moving its intra-Asia air hub from the Philippines to Shenzhen in China’s thriving Pearl River Delta to improve customer service by reducing transit times across Asia, the company has announced.

UPS also has added five weekly flights in and out of Nagoya to enhance customer service to Japan’s Chubu region, a major industrial manufacturing centre. UPS already flies to Tokyo and Osaka. The new flights offer significant new options to Chubu industry to reach the rest of Asia and the US, say UPS officials.

UPS will base the new intra-Asia hub at the Shenzhen Airport in southern China, near Hong Kong. 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 hub will be operational in 2010 and represents an estimated investment of US$180 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. “We want to be where our customers need us most. “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.”

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 US and European destinations. It thus will play a substantially different role than the hub in Shenzhen, which will connect all major Asian points.

The Shenzhen hub, expected to total about 89,000 sq. m. (almost 1 million sq. ft.), will include an express customs handling unit, sorting facilities, cargo handling and cargo build-up areas and ramp handling operations. It will be capable initially of processing up to 18,000 pieces per hour – compared to the existing 7,500 pieces per hour in the Philippines – but can be easily expanded to a capacity of 36,000 pieces per hour, the company says. It will employ about 400 people.