UPS opens up new contract logistics distribution facility in Beijing

Transportation and logistics bellwether UPS this week formally opened up its new contract logistics distribution facility in Beijing, China.

UPS said that this facility is comprised of 6,500 square meters of non-bonded warehouse space and is 19 kilometers from Beijing Capital International Airport and has the capability to serve contract logistics orders with four-hour delivery in the metropolitan Beijing area and next-business-day orders for major cities in China.

UPS Vice President of Global Logistics and Distribution Marketing Alan Amling told LM that China’s growing middle class and UPS’s customers’ desire to tap into this market were the catalysts for this expansion.

According to CNN Money, China’s middle class income has tripled over the last ten-to-15 years and has more than 300 million people today, with an expected 600 million people by 2020, according to the China Population Density Map.

“This Beijing building was part of a plan developed several years ago to provide national reach for distribution in the Chinese market,” he said.

The new Beijing facility will improve coverage for distribution to Northern and North Central China, Amling said, adding that this building along with similar facilities in Shanghai, Chengdu and Shenzhen provide national distribution with 58 percent of China’s GDP within 1-3 days of these four regional locations.

The UPS executive explained that these strategic locations provide not only all the warehousing, order fulfillment, transportation management and trade management services needed to get products to customers in China, but also serve as key regional locations to support aftermarket service of high tech, healthcare and industrial equipment.  And in addition to these regional facilities, UPS also has a network of Field Stocking Locations in 87 cities across China with the ability to deliver critical parts the same day.

“The shift in our expansion strategy echoes the shift in the Chinese market overall from primarily a production economy to becoming a large consumption economy as well,” Amling noted. “While we’ve had a strong focus on Post Sales service networks for some time, over the last few years we’ve expanded our distribution focus from primarily supporting import and export in Shanghai and South China to also supporting the distribution of goods throughout China.”

The multiple UPS China-based distribution centers, said UPS, support growing industries in China, including high-tech, industrial manufacturing, aerospace and retail and also provide other services, including order fulfillment, inventory management, kitting, packaging and other specialized value-added services.

“The opening of the Beijing facility is testament to UPS’s long-term commitment to China. Chinese customers have greater access to the growing market, backed by a strong and extensive integrated network,” said Richard Loi, president of UPS China, in a statement. “We will continue to leverage our global logistics expertise and expand our offerings in China to meet our customers’ demands for top-notch logistics services.”

In developing these facilities, UPS has its eye on the future in China, citing research from market research firm Transport Intelligence indicating that China is expected to overtake Japan in becoming the largest contract logistics market in the Asia Pacific region by 2016, driven by rising domestic consumption from a growing middle class and the gradual move of Chinese businesses up the value chain.