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UPS foresees strong growth in China for its delivery services

The world's largest package-delivery service, United Parcel Service Inc, is looking to China's burgeoning logistics market to drive growth for its earnings as the company's home market in the US stagnates, a company official says.

"Our plan in China is really aggressive," said Daniel Chen (陳學淳), managing director for strategic planning and development for UPS in China.

"We are ahead of many players here in the field in terms of expanding and building up infrastructure," Chen said, noting the Atlanta-based firm has committed over US$600 million in the past three months for investment in China.

Of the total capital expenditure earmarked for China, about US$500 million will be used to expand infrastructure by building 20 new warehouse and distribution facilities over the next two years. This will bring the total number of such centers to 60 by the end of next year, Chen said on Friday.

UPS also plans to invest US$100 million in expanding a joint-venture express delivery company with Sinotrans Group, one of China's biggest express parcel operators.

When the deal is concluded, UPS will own the company, making it the first foreign company to have a wholly owned operation in the express parcel business in China once Beijing has relaxed ownership rules in the sector at the end of the year under the WTO.

Once that happens, Chen said, UPS will have wholly owned operations in 23 locations in China covering 200 cities.

UPS' expansion in China follows a banner year for the company's China operations last year, when its export volume in the market doubled, reflecting the country's surging economy.

Chen expects business volume from China to grow at a faster rate this year than in previous years.

"We grew 100 percent last year while growth in the year before was between 50 percent and 60 percent," Chen said.

"So if you take that trend and project it onto this year, the growth could be as high as 200 percent," he said.
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