UPS said Monday it will develop a large express cargo hub at Hong Kong International Airport that will improve shipping service and connectivity in the South China and Asia-Pacific regions.
The Hong Kong airport authority agreed to lease UPS a 215,000-square-foot parcel for the fully automated air hub, which will have better access to freighter aircraft carrying imports, exports and transshipment cargo.
UPS (NYSE: UPS) said the facility, which will be about four times larger than its current airport locations, is expected to be completed in 2028 and have an annual package throughput of close to 1 million tons. The project will allow the integrated parcel company to collapse two existing operations in into one on airport operation, creating significant operational efficiences.
Officials did not disclose how much the project will cost.
DHL Express last month finished the third phase of its Hong Kong hub, which has an annual capacity of 1.1 million tons. DHL has spent more than $400 million on the facility since its inception 19 years ago.
The investments demonstrate how express integrators continue to plan for long-term growth in the Asia-Pacific region, especially to accommodate e-commerce demand, even though the current air cargo market is in a slump.
Expanding Hong Kong into a global distribution point from a simple feeder node when it already has a hub at nearby Shenzhen International Airport underscores how large the South China region is for trade and parcel shipping.
“Hong Kong continues to be an engine of growth and a critical part of UPS’s global smart logistics network,” said Daryl Tay, president of UPS North Asia District, in a news release. “This new hub, along with our existing operations at Shenzhen Bao An Airport, demonstrate our continued commitment to Asia.”
The automated facility will be able to sort 15,000 packages per hour, about five times more than the current building, with the aid of six-sided camera barcode scanners and computerized tomography X-ray technology.
UPS said it will optimize its existing operations in Hong Kong by streamlining some smaller and separately located facilities
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