United Parcel Service (UPS), the world's largest package delivery company, is relocating its intra-Asia air hub to Shenzhen, China from its current location in Clark, citing the change in trade dynamics towards north of Asia.

Andy Connelly, UPS senior vice president for South Asia Pacific, yesterday announced the move was "a pure business decision aimed at improving its service to customers." He added the Philippines will, however, remain as a gateway and existing businesses such as small package and supply chain solutions will continue.

"The Shenzhen hub will be operational in 2010. After that, we will still maintain our presence in Clark but on a reduced basis, which means that we will decrease the number of aircrafts going there from nine to two," Connelly emphasized.

The move to relocate the hub from the Diosdado Macapagal International Airport, the former Clark Air Force base in Pampanga, will affect at least 20 percent of UPS Phils.'s total employees. The company currently employs 200 people.

As an employer that values its employees and with a strong tradition of promoting from within the company, UPS is identifying alternative employment opportunities within the UPS network for those who will be affected by the transition, UPS said in a statement.

In addition, the company is also exploring placing alternartive operations in Clark.

The decision to reposition the hub to Shenzhen, which is in southern China is expected to slash at least a day off shipment times-in-transit for Asian customers. The new 0million hub will also reduce operational costs, the company said.

Shenzhen's strategic location will provide significant time-in-transit and cost advantages, allowing UPS to better serve the growing Asian markets along these rapidly expanding trade lanes," said Derek Woodward, president UPS Asia Pacific. For example, we expect a full day's improvement in transit time on almost 200 city pairs once the hub opens."

Currently, the markets of China, Hong Kong, Japan, Korea, and Taiwan account for more than half of UPS' total intra-Asia volume. Of this, a sizeable proporton of Asia package export volume now origininates in southeast China and Hong Kong.

"Given the growth in shipping along southern China, it makes sense to sort and dispatch this volume from a hub closer to our customers," said Woodward. "And in making the switch, because of the growth we're seeing, we intend to build a new sorting hub in Shenzhen with five times the capacity of the existing hub."

The Shenzhen hub, expected to total about 89,000 square meters in size, will include an express customs handling unit, sorting facilities, cargo handling and cargo build-up areas and ramp handling operations. It will initially be capable of procesing up to 18,000 pieces per hour but can be easily expanded to a capacity of 36,000 pieces per hour. employ 400 people.