UPS profits soar on direct cargo flights
UNITED Parcel Service (UPS), the United States cargo and airfreight giant, is eyeing additional traffic rights for direct cargo flights between China and the US after revenues topped US$200 million (HK$1.56 billion), double its forecasts, in the first year of operations.
UPS president Ronald Wallace said that when the six direct China-US services were launched on April 3, 2001, “we projected to break even in a year”.
But he added: “We broke even in seven months, exceeding volume and profit projections. From forecasts of US$100 million in revenue we have gone to well over US$200 million revenue in a year.
”We hope that with a truly open economy and with this growth the US and Chinese governments will recognise the need to put up more capacity.” Wallace, speaking just before the formal launch of the UPS intra-Asia transhipment cargo hub at Diosdado Macapagal International Airport, formerly Clark airbase about 80 kilometres north-west of Manila, said experts predicted a phenomenal growth in trade.
He said intra-Asian trade was forecast to grow by 16.9 per cent a year to 2005, while US exports to China would grow by 80 per cent over the next three years to more than US$29 billion.
Wallace said that with such numbers “it’s not hard to see why this hub is important to the growth of UPS, and more importantly to our customers here and around the world”.
UPS has spent US$300 million on its hub operation that includes five aircraft, comprising three Boeing 757s, one 767 and an Airbus A300, ground equipment, technology and the construction of the 2,300 square metre facility.
The fleet, which will shortly be augmented by Boeing MD-11 aircraft capable of carrying up to 95 tonnes, operates five flights a day linking Hong Kong, Taipei, Beijing, Shanghai, Singapore, Seoul, Tokyo, Bombay and Cologne. The complex has a capacity to process 2,500 packages an hour.
Additional services will be added from April 18 when the second runway opens at Tokyo’s Narita international airport. This is still small compared with rival US express parcels company, Federal Express. Its operation at nearby Subic Bay serves 10 aircraft and 19 destinations a day and can process up to 12,000 packages an hour.
Dismissing the threat posed by FedEx, UPS Asia Pacific region president Charles Adams said one of the aims of its new Philippines hub was to help attract other industries and logistics operations to the former Clark airbase.
He said Clark boasted two of the world’s longest runways at 3.2 kilometres long while Subic Bay has “one of the best deep water ports over the mountain”.
Adams said the Clark hub completed UPS’ network of hubs to support intra-Asia, transpacific and round-the-world cargo services.
Asked if the Philippines hub would replace or downgrade its similar operation in Taipei, Adams replied: “Clark serves intra-Asia and connects to Europe. Taipei is a transhipment centre that is a totally different operation linking Hong Kong, the mainland and all of Asia.’
