UPS starts faster ocean freight service from Asia
UPS has launched a new faster ocean freight service from Japan to the U.S. in an effort to capture more of the booming international freight market it already serves by air.
The new service will be extended to other parts of Asia over the next six months. The move announced Wednesday underscores the importance that the world's largest shipping company places on imports from Asia, which have been key to its sales growth while the U.S. business remains weak.
UPS will not buy any ships, but rather is leasing space from major container shipping companies. The company already does business with nearly every major container shipping company, according to spokeswoman Donna Longino. She said a major financial investment was not required to start the service.
UPS has offered freight service by boat since 2001, but it hopes the expedited service will lure customers who produce high-value goods now sent almost exclusively by air — like iPhones and other electronics, prescription drugs, computerized auto parts and designer clothing.
UPS, based in Atlanta and formally known as United Parcel Service Inc., said freight will move on the seas from Japan to the U.S. in 11 to 18 days. Goods will then be loaded on UPS trucks at West Coast ports for final delivery.
For East coast destinations in the U.S., the service will cut five to six days off the transit time of the current ocean freight service.
Overall, UPS aims to move freight up to 20 percent faster than current less-than-container-load companies do. Those companies take products from a number of manufacturers and consolidate them into a single load for shipment.
UPS will also offer a commitment to deliver on a specific day, which is relatively rare in the ocean freight industry.
Shipments of containers are surging as the global economy recovers. Companies are also transporting more goods by ship when possible because it's much cheaper than shipping by air.
UPS's international package volume surged 24 percent in the most recent quarter, while the money it made per package rose about 2 percent as customers used cheaper modes of shipping. Inbound shipments at the ports of Los Angeles and Long Beach, California, which handle the bulk of imports from Asia, were up by about 25 percent in August compared with the same period a year ago.
UPS' international shipments rose 15 percent last quarter, led by shipments out of Asia, which rose more than 40 percent.
In the U.S., average daily package volume rose 1 percent.