UPS invested $100 Mln in Hong Kong for Europe – Hong Kong link
United Parcel Service [UPS] has announced plans to invest $100 million to link its Hong Kong and Cologne hubs, giving European customers improved access to the Asia-Pacific region. The move would add a major spine to UPS’ global network, and boost Hong Kong’s status as a key Asian gateway.
Pending regulatory approval of a second tranche of aviation rights, UPS is preparing to establish a direct air link between Hong Kong and its European hub in Cologne, Germany. UPS has applied for an extra 18 weekly flights in total, six of which would operate between Hong Kong and Cologne. The US company hopes to see the first of these flights take off in October.
However, this depends upon the granting of additional Chicago Convention fifth-freedom rights (those granted by governments to foreign carriers) through Hong Kong. A decision from the Hong Kong and US governments is expected soon. UPS’ $100 million investment would pay for a dedicated aircraft ($60 million), extra capacity at Hong Kong Air Cargo Terminals and additional ground-handling equipment.
Long the gateway to mainland China, Hong Kong has recently seen its strategic importance threatened by the opening-up of the People’s Republic. UPS itself recently moved its booming Greater China HQ from Hong Kong to Shanghai. While this relocation led to speculation that Hong Kong may be increasingly bypassed by regional trade, UPS at least has reaffirmed its importance, announcing the European link and stating that Hong Kong would remain one of UPS’ top three hubs in the Asia-Pacific region.
As economic activity booms in China, and export volumes surge in many Asian countries, carriers such as UPS, and rivals FedEx and DHL, have invested in expanding their networks across the region to meet the demand for their services. In the last two years, DHL has invested $30 million in the Philippines, while last September FedEx introduced an improved westbound flight connecting its AsiaOne hub in the Philippines to its EuroOne hub at Charles de Gaulle, Paris, via Bombay and Dubai.
While demand for UPS’ domestic package services remains subdued, it is particularly important that the US carrier continues to grow its successful international business. As it focuses upon this goal, linking the key export markets of Europe and Asia should be a major boon for UPS.
