UPS starts construction of intra-Asia hub

United Parcel Service (UPS), the world’s largest express carrier and package delivery company, recently began construction of its intra-Asia hub in Pampanga at the Clark International Airport.

UPS broke ground at the site, which is part of the Clark Special Economic Zone on Nov. 27. At that time, engineers and construction workers began planning and building the express delivery giant’s state-of-the-art sorting facility at the former Clark United States Air Force Base.

According to Matthew Ong, managing director of UPS Philippines, construction is on schedule for the hub’s launch in April 2002. The April launch will mark one year since the signing of a memorandum of understanding between UPS, the Bases Conversion Development Authority, and Clark Development Corp.

Clark’s runways, taxiways, and very wide ramp helped convince UPS of its viability as a major hub, said Ong. Clark offers another bonus. Mountains surrounding the former US base reduce the intensity of passing typhoons, allowing excellent weather conditions. Since its conversion to a freeport in 1996. Clark has never shut down operations due to weather.

"UPS’s 25-year lease with Clark is a clear indication of its commitment to locating in the Philippines. Long-term planning is vital to a company like UPS," said Ong. "When we decide to invest in something, we stay with it for a long time. Such a view is necessary when you’re working with airports and large equipment like cargo planes."

Charles Adams, UPS Asia Pacific president, said that the company had several Asian locations to chose from but settled on the Philippines for two major reasons: The country’s strategic location and the acceleration of the government’s "open skies" policy.

"The Philippines’ central position in the region makes it possible for cargo aircraft to reach all major Asian cities in less than four hours," Adams said. "This is vital for maximum operational efficiency, giving UPS the ability to dramatically improve delivery services."

Despite the recent economic slowdown, studies conducted by the ASEAN Transport Cooperation Framework predict a seven to 18 percent increase in air cargo traffic in Southeast Asian over the next 20 years. This assertion is supported by the fact that intra-ASEAN trade almost doubled between 1993 and 1999. The coming growth will be spurred by increased regional economic activity as the area enters a new free trade agreement in the coming years.

UPS’s initial investment will come mostly from the cargo aircraft that will ply the intra-Asia routes. This comes to around $300 million. "This investment will lead to the creation of transport efficiencies by operating the highly automated hub. The sorting facilities that are being employed for the regional hub are going to be among the best in the world," Adams added.