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UPS Opens Distribution Centers in China

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United Parcel Service, Inc. (UPS - Free Report) has added two new logistic distribution facilities in Chengdu and Shanghai in China. The company now boasts 130 distribution facilities across 87 cities.

UPS is set to tap market opportunity in this rapidly expanding market for shipping companies. Over the years, the company has established various distribution facilities dedicated to health care in the key markets of North and South America. The two new facilities are part of the company’s plans to expand its health care business and add health care distribution facilities in China.

The company plans to capture the growing opportunities in the emerging markets of China, India and Japan with health care distribution facilities in the Asia-Pacific region. To fortify its presence in Europe, UPS is planning to take over Hungary-based pharmaceutical logistics company, CEMELOG Zrt that serves some of the most renowned health care global brands, with custom-made health care logistics solutions for many years.

With this acquisition, UPS will gain access to a strong regional network, highly developed warehousing management systems, high-quality assurance services and efficient manpower. The company’s current European base will be enhanced by three health care distribution facilities of approximately 255,000 square feet. UPS operates 41 dedicated health care units worldwide covering over 6.4 million square feet.

Besides expanding the health care business, UPS plans to invest about $500 million toward new technology and facility expansion over the next few years in markets including France, Latin America, Vietnam, China, and Korea. In sync with this expansion spree, the company augmented phase 1 of its European hub operations at Cologne/Bonn Airport in Germany to increase capacity by 65%. The expansion would cost about $200 million, with the entire project slated to be completed by year-end 2013. Overall, UPS projects capital expenditures of over $2.0 billion for the year, which is concurrent with its capital spending estimate of 4% of revenues over the next five years.

UPS, which operates with the likes of FedEx Corp. (FDX - Free Report) , Expeditors International of Washington Inc. (EXPD - Free Report) and Radiant Logistics, Inc. (RLGT - Free Report) , retains a Zacks Rank #3 (Hold).

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