"While all our Asian markets are vitally important to UPS and we see true, long-term growth potential in the region, UPS’ current strategic focus is on growing our businesses in China and India," said UPSAsia chief, Derek Woodward.
Both countries drove UPS’ fourth-quarter 2007 results in Asia Pacific to deliver more than 15 per cent growth over thesame quarter in 2006.
"Intra-Asia and Asia-Europe trade have been growing despite the slowdown in the US so we are confident that market demand will remain steady," Woodwardadded.
China the key priority
With trade within the India-Japan- Australia triangle ¨C of which China sits in the center ¨C now exceeding trade across the Pacific Ocean, China which provided the company with a 20 per cent growth in exports last year, has become a key priorityfor UPS.
To leverage this growth the express and logistics company is opening a new hub at Shanghai’s Pudong International Airport towards the end of this year, joining DHL which is following a similar strategy, unlike rival Fedex which chose to put its new hubin the Pearl River Delta.
"This Shanghai hub fits into a networkof comprehensive UPS air hubs in Asia, providing unparalleled connection withinAsia, and the world," Woodward said.
"Having grown more than 30 per cent in the last quarter, China is our fastest expanding market in Asia. We anticipate further growth and are deeply committed to our presence in China," he said adding that UPS has invested nearly US$600 millionin China over the past five years.
Currently, UPS has a network of 45 locations covering more than 330 cities in China. Once the new UPS International Air Hub at Pudong International Airport in Shanghai opens in November this year, the entire China network will link via Shanghai to UPS’ international network with direct service to the Americas, Europe and the rest of Asia. It will also connect points served in China by UPS through a dedicated service provided by Yangtze RiverExpress, a Chinese all-cargo airline.
Staples/UPS in Beijing
Last year also saw Staples and UPS announcing a joint venture to launch a new co-branded Staples UPS Express store in China. The first two Beijing stores are located in the key business districts of CBD SOHO Shangdu and the Central Financial District in the Beijing city, bringing core office supplies, document processing services, international package shipping, and packaging and labeling services forChinese businesses and consumers.
While over-capacity has been a serious problem in the mainstream air freight industry, particularly in China, Woodward is optimistic about the steady growth of intra-Asia trade, because of what he said is the trend towards greater trade liberalisation and deeper partnerships betweenAsian economies.
"We are confident that this will continue to boost demand for freight and logistics services in markets like China, India, Vietnam and Thailand," and he points to the fact that rather than scale back capacity into China, UPS has increased capacity into Shanghai by "up-sizing" their freightersfrom MD-11s to Boeing B747-400Fs.
Indian growth
Elsewhere in the region, UPS sees growth opportunities in India with UPS experiencing fourth-quarter 2007 growthof nearly 25 per cent in the country.
The logistics industry market size there is expected to reach over US$125 billion in 2010 according to Datamonitor. To tap this huge potential UPS recently formed an alliance with leading domestic player AFL. This has provided UPS access points for customers with international express delivery requirements to more than 200locations across India.
Capacity management & new products
"Another important factor in capacity management is our commitment to efficiency and synergy," he said, noting that Asia is the first market in which UPS is aligning the management functions and organisational processes between its Express and Supply Chain Solutionsoperations.
"Capacity management in our Asian hubs ¨C including Shanghai ¨C is made more efficient by this alignment, allowing us to ensure greater competitiveness, consistency and customisation abilities for all our customers, whether they require express package or air freight solutions,"he said.
"With our deep understanding of our customers’ businesses and our proactive ability to adapt UPS’ solutions to their specific needs, we do not foresee overcapacity being an issue within China or ourAsia Pacific markets as a whole.
In January of this year, UPS also radically redesigned its Asia service portfolio by adding eight new products aimed at simplifying global trade for Asian companiesconducting business internationally.
Taken as a whole, the portfolio aims to help UPS customers better their competition in terms of efficiency, speed, and in some instances, explore new business opportunities. This is in line with the current Asian trend of logistics companies going beyond transactional "vendor/customer" relationships to become customers’ supply chain partners, adding value and drivinggrowth, Woodward said.
