UPS acquires Chinese express network for $100 million

UPS acquires Chinese express network for $100 million    UPS will acquire part of the express service network in China of its partner Sinotrans for $100 million under an agreement signed Wednesday.
   The takeover will allow the American express operator to take direct control of its international express operations in China’s largest and most important cities by the end of 2005. Operations will be transferred to UPS in 23 cities across China. Starting in January, UPS will take direct control of operations in Shanghai, Guangzhou, Shenzhen, Tianjin and Qingdao. By December 2005, UPS will assume control of its express operations in 18 additional locations, and have a total of 1,700 employees.
   UPS said operations in those 23 business centers extend service to an additional 200 cities, which account for more than 80 percent of China’s gross domestic product.
   “UPS will have the flexibility it needs to expand operations and to invest in facilities, infrastructure, technology and employee development,” said David Abney, president of UPS International.
   UPS and Sinotrans will continue to work together in areas not covered under the agreement.
   The transaction was announced as UPS ramps up its U.S./China airline operations after obtaining additional flying rights from the U.S. Department of Transportation. In November, UPS began the first of 12 new flights to China with MD-11 service to Shanghai. The new flights triple the company’s earlier service from six to 18 flights a week.
   UPS also plans to begin next year a non-stop service between the United States and Guangzhou.
   The integrator’s export volume in China grew 129 percent in the third quarter of 2004 compared to the same period last year, and by more than 90 percent year-to-date.
   Sinotrans has been the business partner of UPS since the company entered the China market in 1988.