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UPS to Offer Express Service in China

Associated Press
Published | Updated

ATLANTA – United Parcel Service Inc. (UPS) has expanded its operations in China, announcing it will offer express package service across much of the country by September, officials said.

The Atlanta-based company said it is the first and only foreign company to own its operations in the communist nation and the move "recognizes the dramatic business opportunities being created inside China."

UPS will take over 23 locations in China, a move based on a December deal reached with UPS' longtime partner China National Foreign Trade Transportation (Group) Corp., better known as Sinotrans (search).

UPS said in December it will pay $100 million to Sinotrans to take control of the joint venture.

China agreed to let foreign courier companies operate wholly owned international express mail businesses in the mainland as a condition of its membership in the World Trade Organization (search). Foreign express mail operators are currently required to work with a Chinese partner. UPS had been working with state-owned Sinotrans, China's largest transport and logistics company, since it entered the China market in 1988.

Its deliveries within China now will be made with UPS drivers and trucks, said spokeswoman Rebecca Treacy-Lenda.

"That enables us to bring the quality and efficiency that we're known for everywhere else in the world," she said. "We've been in China for a number of years and we believe we have a good reputation there."

Officials from shipping rival FedEx Corp. (FDX), which says it is the largest U.S.-based shipping company in China, said Friday they don't yet have similar domestic service in China but the Memphis, Tenn.-based company said it has the largest number of weekly flights — 23 — going in and out of China.

"China is one of our fastest-growing markets. We have a number of opportunities to consider to better service our customers in China and we just haven't made decisions yet," said FedEx spokeswoman Pena Lourdes. "We continue to look at ways to serve the market."

UPS flies from the United States to China 18 times a week and is expected to add another three daily flights in 2006. In April, the company was the first U.S. airline to launch nonstop service between the United States and Guangzhou.

UPS Supply Chain Solutions — the company's logistics arm — opened three new warehouse and freight distribution centers in Shanghai, Suzhou and Futian and plans to open another 20 facilities in major cities over the next two years. It already has more than 40 logistics centers in China.

The United States and China negotiated a new bilateral agreement last year that opened the door for expanded aviation rights, something several major passenger airlines have also been courting.