UPS expands Chinese presence
Global package deliverers UPS is expanding its presence in China with two new contract logistics distribution facilities.
The important economic centre and capital of China’s Sichuan Province, the city of Chengdu, and historical and massive city Shanghai will be the settings for two non-bonded distribution facilities, strategically located in close proximity to international airports and major road networks.
They will be built with capabilities to support a diverse spectrum of growing Chinese industries - primarily high-tech, industrial manufacturing, aerospace and retail - customers will also have connectivity to UPS global IT platforms for distribution and post-sales support, UPS claims.
Jim Barber, President of UPS International, said: "UPS is committed to supporting emerging market demand and helping customers expand into new markets in China.
"Expansion efforts, such as the opening of these two facilities, will bring unmatched resources to our customers looking for a national distribution platform in China.
“Our customers will benefit from our trustworthy and reliable service, proven logistics methods, industry-leading technology solutions, global distribution and multi-modal transportation network and decades of experience in the Chinese market."
This brings the total number of UPS facilities in China to 130 in 87 cities.
The two new facilities are in addition to the UPS healthcare facilities that opened last year in Shanghai and Hangzhou. The contract logistics facilities will provide distribution and warehousing solutions to shippers who want to reach customers within China.
These facilities are further proof that UPS's goal is to exploit the opportunities provided by the emerging middle class of China.
The new facilities are considered a major part of UPS's efforts to develop a national distribution network in China and strengthen the company's overall portfolio of international capabilities.
The company – which employs nearly 400,000 people and has annual revenue in excess of $50 billion – claims that each facility is designed with specific regional and market needs in mind.
The Chengdu facility will offer more than 47,000 square feet of warehousing and distribution space and aims to provide multinationals looking to conduct business in the region with access to central and western China and the growing cities of Chengdu and Chongqing.
The facility is located 2.5 miles from the Chengdu Shuangliu International Airport and is close to major interstate roads.
The new Shanghai facility will consist of more than 70,000 square feet of distribution space and is less than two miles from the UPS International Hub at Shanghai's Pudong Airport, one of China's largest airports.
The new facility, UPS's fourth in the area, is designed to meet the needs of multinational companies looking to increase their business operations in the domestic Shanghai market.
Brendan Canavan, President UPS Asia Pacific Region, said: “UPS's established network, sophisticated technologies, facilities and our trade management expertise give companies a distinct business advantage in Asia's emerging markets and China.”
Driver shortages: Why the industry needs to be worried
While driver shortages are a global problem, with a recent survey from the International Road Transport Union suggesting that driver shortages are expected to increase by 25% year-on-year across its 23 member countries, the issue has very much made itself felt for UK businesses in recent weeks.
A perfect storm of factors, which many within the industry have been wary of, and warning about, for months, have led to a situation wherein businesses are suddenly facing significant difficulties around transporting goods to shelves on time, as well as inflated operating costs for doing so.
What’s more, the public may also see price rises as a result due to demand outmatching supply for certain product lines, which in turn brings with it the risk of customer dissatisfaction and a hit to brand and stakeholder reputation. Given that this price inflation has been speculated to hit in October, when the extended grace period on Brexit customs checks comes to an end, the worst may be yet to come.
"Steps must be taken to make a career in the industry a more attractive proposition for younger drivers, which will require a joint effort from government, industry bodies, and the sector as a whole"
That said, we have already been hearing reports of service interruption due to lack of driver availability, meaning that volumes aren’t being transported, or delivered, to required schedules and lead times. A real-world example of this occurred on the weekend of 4-6 June with convenience retailer Nisa, with deliveries to Nisa outlets across the UK affected by driver shortages to its logistics provider DHL.
But where has this skills shortage stemmed from?
Supply is the primary issue. Specifically, the number of available EU drivers has decreased by up to 15,000 drivers due to Brexit alone, and this has been further exacerbated by drivers returning to their home country during the COVID-19 pandemic, as well as changes to foreign exchange rates making UK a less desirable place to live and work. This, alongside the recent need to manage IR35 tax changes, has also led to significant inflation in driver and transport costs.
COVID-19 complications have also meant that there have been no HGV driver tests over the past year, meaning the expected 6,000-7,000 new drivers over the past year have not appeared. With the return of the hospitality sector we understand that this is a significant challenge with, for instance, order delivery lead times being extended.
It is little surprise, therefore, that the Road Haulage Association (RHA) earlier this month became the latest in a long line of industry spokespeople to write to the government about the driver shortage for trucks. The letter echoed the view held by much of the industry, that the cause of this issue is both multi-faceted and, at least in some aspects, long-standing.
So, many in the industry are in agreement as to the driving factors behind this crisis. But what can be done?
Simply enough, outside of businesses completely reorganising their supply chain network, external support is needed. In the short-term, the government should consider providing the industry with financial aid, and this can also be supported more widely with legislative change.
Specifically, immigration policy could be updated to place drivers on the shortage occupations list, which would go some way towards easing the burden created by foreign drivers returning to their home countries. Looking elsewhere, government should also look for ways to increase the availability of HGV driver tests after the blockage created by the coronavirus lockdowns.
Looking more long-term, steps must be taken to make a career in the industry a more attractive proposition for younger drivers, which will require a joint effort from government, industry bodies, and the sector as a whole. As it stands, multiple sources suggest that the average age of truck drivers in the UK is 48, with only one in every hundred drivers under the age of 25. We must therefore do more to increase the talent pipeline coming into the industry if we are to offset more significant skills shortages further down the line.
On the back of a turbulent year for the supply chain industry, it has become increasingly clear that the long-foretold shortage of drivers is now having a tangible and, in places, crippling effect on supply chains.
Drivers, and the wider supply chain industry, have rightly been recognised for the seismic role they played in keeping the nation moving and fed over the past year under unprecedented strain. If this level of service is to continue, we must now see Government answer calls to provide the support the sector needs, and work hand-in-hand with the industry to find a solution. If we do not see concrete action to this effect soon, we are likely to be in for a turbulent few months.
Rob Wright is executive director at SCALA, a leading provider of management services for the supply chain and logistics sector