UPS clinches Shanghai hub deal

United Parcel Service Inc signed an agreement with the Shanghai Airport Authority yesterday to establish its international air hub at Shanghai Pudong International Airport with an initial investment of more than US$20 million.

The hub, which is under construction and scheduled to open next year, will link all of China via Shanghai to UPS's international network with direct service to the Americas, Europe and Asia, UPS said.

UPS will rent the facilities at the hub located at West Cargo Terminal at the airport, according to the deal.

Covering an area of 96,000 square meters, the hub is designed to have a sorting capacity of 17,000 pieces per hour by 2012 and a workforce exceeding 1,000 in 2010.

Chinese cargo carrier Yangtze River Express Airlines will feed the hub with domestic cargo, the company said.

"The hub enhances the self-handling capability by UPS on ground handling, terminal operation and express handling," said Richard Loi, senor vice president of UPS China.

The deal benefited from the Sino-US civil aviation accord in 2004 which pledged to open up the skies of both countries and promised UPS more flexibility over flight scheduling if it can meet the criteria for building an air hub in China.

"The 2004 accord has opened the way for companies like UPS to bring valuable expertise and investments to meet the demands of an air freight market that's expected to grow almost 10 percent a year over the next two decades," said US Secretary of Transportation, Mary Peters, at the signing ceremony.

She said air freight volumes between the two nations have taken off, rising from about 270,000 tons in 2003 to almost 400,000 tons last year.

UPS, which has invested US$600 million in China over the past five years, anticipates the investment in the Pudong hub to grow proportionally, said Ken Torok, president of UPS Asia Pacific.

Source:Shanghai Daily