UPS to Build Facilities, Logistics Network in China

New facilities expands to more than 40 the number of logistics centers operated in China by UPS Supply Chain Solutions

Shanghai — February 10, 2005 — As part of an aggressive effort to further link China to markets around the globe, UPS said it has opened three new warehouse and distribution centers in Shanghai, Suzhou and Futian and is executing plans to open another 20 facilities in major cities over the next two years.

The new facilities, each of which is located adjacent to vital manufacturing centers, expands to more than 40 the number of logistics centers operated in China by UPS Supply Chain Solutions. The supply chain management arm of UPS now plans to open 10 facilities in 2005 and another 10 in 2006.

UPS Supply Chain Solutions facilities in China are designed primarily to distribute textile/apparel, high-tech, automotive and consumer goods for both export and import.

"The aggressive expansion of our logistics infrastructure allows our customers greater and quicker access to more of China than ever before," said Bob Stoffel, senior vice president, UPS Supply Chain Group. "Strengthening the logistics links between China and global markets is critical to both China and companies doing business in China.

"By expanding this reach," Stoffel continued, "UPS brings supply chain expertise, quality and capabilities to more Chinese businesses, which will further improve transit times, visibility and service levels for international trade."

In Shanghai, the new 160,000-square-foot facility is in the Wai Gao Qiao Free Trade Zone. Also in Shanghai, UPS has three additional distribution centers for a total of approximately 400,000 square feet, including a large ocean container freight station, a sizeable airfreight facility at Pudong Airport and a customs office in downtown Shanghai.

In Futian, the new 240,000-square-foot bonded warehouse and full distribution center also is located in a Free Trade Zone. In Suzhou, the 66,000-square-foot facility was designed specifically for high-tech customers.

UPS has conducted logistics operations in China since 1988, and UPS Supply Chain Solutions' offerings now include freight forwarding, order and inventory management, shipment preparation, cross-dock operations, critical parts distribution, service parts logistics, international trade management, customs brokerage and domestic transportation services.

UPS expects that its expanded facility and transportation network will accelerate the movement of components and finished goods to and from the rapidly emerging provinces of China, especially in the Pearl River Delta and the Yangtze Delta River regions.

In addition to the logistics network, UPS has an intra-China international express network. By the end of 2005, UPS will have direct control over its international express operations in 23 business locations across China covering more than 200 cities, which account for more than 80 percent of China's GDP.

In November, UPS began flying the first six of 12 new flights to China with MD-11 service to Shanghai, where the company's Greater China office is located. The new flights will triple the current service from six to 18 flights a week. As part of that award, UPS plans to begin in April the first non-stop service in the industry between the United States and Guangzhou and also to establish a Shanghai air hub in 2007. UPS has filed with the U.S. Transportation Department for three additional flights to start in 2006. And last month, UPS introduced a nationwide toll-free customer service hotline in China.

"Our commitment to China extends beyond new buildings and air lanes," added Mike Eskew, UPS chairman and CEO. "We recently took steps to expand the capacity of our air network by placing orders for 10 Airbus A380 freighters and 11 Boeing MD-11 freighters. We also are investing in technology and in training our people to offer a supply chain and package delivery capability that is second to none."

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