UPS signs intra-China package deal
United Parcel Service has signed an agreement with a new Chinese all-cargo carrier to handle packages for UPS within China.
The first route, expected to begin service on Thursday, will connect Shanghai with Xiamen and Guangzhou. The aircraft, a 737-300 aircraft formerly owned by Lufthansa, will then return to Shanghai.
“It’s going to let us improve delivery times by up to a day for exports out of China,” UPS spokesman John Flick said Monday.
Yangtze River Express, an integrated carrier formed by the Hainan Air Group, will operate the route Monday through Saturday.
UPS also plans to start a northern route in conjunction with Yangtze River in late March. That route will connect Shanghai with Beijing and Qingdao before returning to Shanghai.
While the arrangement with Yangtze River is primarily designed to move packages between China and foreign markets, Flick said the company will be looking at the possibility of using the Chinese carrier to handle domestic shipments within China. “After our board meeting in Beijing last November, we made a commitment to stay in the forefront of the China market, which is one of the most important worldwide in terms of our global strategy,” he said, adding, “China has the potential to be the world manufacturing center within a short period of time.”
UPS is not taking an equity stake in Yangtze River. Flick said the deal will have no impact on its relationship with Sinotrans, which has been its partner in China since 1988. UPS, which began flying its own aircraft to Beijing and Shanghai in April 2001, has maintained a joint venture with Sinotrans since 1996.
“The agreement with Yangtze River allows us to access an intra-China airfeed network,” he said. “Essentially we’re going from common carriage to dedicated lift.”
Hainan Air Group, which went public in 1997 and which is said to be one of China’s most profitable airline companies, recently received permission from the Civil Aviation Administration of China to start an all-cargo operation. The company has reportedly purchased three 737-300QC (quick-change) aircraft from Lufthansa, with a fourth to follow. Lufthansa used the aircraft for intra-European passenger services during the day and express freighter operations at night.
The deal with Yangtze River could provide UPS with a vital entree to the broader Chinese market. Presently, it is the only Chinese all-cargo carrier dedicated to the domestic market. Hainan Air Group’s subsidiaries serve a total of 30 cities within China. China’s only other all-cargo carrier, China Cargo Airlines, a subsidiary of China Eastern Airlines with a minority stake held by Taiwan-based China Airlines, concentrates on international routes.
The Hainan Air Group currently consists of Haikou-based Hainan Air, Beijing-based Xinhua Air, Xian-based Changan Air, and Taiyuan-based, Shanxi Air.
