In a bid to press forward on its China strategy, UPS has sought immediate allocation of 12 new US-China frequencies from the US Department of Transportation (DOT), at a testimony delivered by UPS chairman & CEO, Mike Eskew, to the DOT.
The proposal involves building a Shanghai air hub and inaugurating daily non-stop service to the Pearl River Delta area.
According to Eskew, globally synchronised supply chains serve as critical catalysts for the development of burgeoning US-China and US-Asia trade. The new US-China aviation agreement offers an extraordinary opportunity for strengthening the commercial supply chains that support growing international trade between the US and China, and throughout the world.
One of the main trysts of UPS’s proposal takes advantage of the most important and innovative element of the new US-China agreement, i.e. using six new frequencies directly and specifically to continue its development of a cargo hub in Shanghai, China’s commercial centre.
UPS is the only applicant to propose using the new frequencies directly and specifically to continue its development of a cargo hub, underscoring its commitment to open skies. The ground breaking hub concept affords virtual open skies rights to all-cargo carriers that make the commitment and investment to establish qualifying cargo hubs.
Last year, air cargo tonnage at Shanghai’s Pudong Airport grew by 87.5%. Since 2001, UPS’s existing Shanghai service has experienced 100% growth in express traffic each year on its round-trip US-China flights. With load factors on UPS’s current non-stop flights from Shanghai to the US exceeding 90%, even before the busiest pre-holiday shipping season, there is clearly an immediate need for the additional daily capacity as proposed.
By also making full use of the newly liberalised change-of-gauge rights available in 2005, UPS will be able to add a new daily flight that will both serve the US-China market and enhance Shanghai’s existing connectivity to UPS’s intra-Asia network via its Clark hub in the Philippines.
The proposal to use the six additional frequencies in March 2005 to launch the first daily non-stop US service to Guangzhou and the underserved Southern China region will allow UPS to greatly improve integrated express service to the Southern China region, offering shippers the latest end-of-business-day departure time from Guangzhou to the US. There is currently no US non-stop service to and from this hugely important region, and accordingly, UPS is working with Chinese authorities to become the cargo “launch customer” for the new state-of-the-art Baiyun International Airport in Guangzhou. UPS is the only applicant proposing to operate non-stop from the US and devote all of its capacity to this market, as opposed to one-stop service proposed by others.
With this daily flight, UPS will offer service to all three key coastal regions and commercial centres – Bo Hai Bay (via Beijing), the Yangtze River Delta (via Shanghai), and the Pearl River Delta (via Guangzhou). Together, these regions account for 84% of China’s international trade, 75% of direct investment in China, and 48% of the country’s GDP.
