The US Department of Transportation's (DoT) tentative decision to award United Parcel Service's (UPS) much-coveted routes to China sets the stage for a small package war in Asia's fastest-growing freight market.

FedEx, UPS's chief US rival in the express package business, has been entrenched in the market since 1995.United Airlines, Northwest Airlines and three Chinese carriers provide direct passenger services, but the USA hopes to implement an open skies agreement after 2004. Before then, however, American Airlines and Delta Airlines may be able to penetrate the market.

FedEx hoped that the DoT would chose American, Delta or Polar Air Cargo, and award it additional route authority to expand service to other cities in China. But UPS waged a major lobbying campaign, calling China rights the company's number one international priority. Currently, UPS has to unload its packages in Hong Kong and put them on other aircraft bound for China. It also delivered shipments through Sinotrans, a Chinese Government-owned transportation concern. UPS urged DoT to "break the FedEx monopoly, rather than add a sixth passenger carrier."

At the moment, roundtrip flights between the two countries are limited to 44 for each country's airlines, with an additional 10 to be added next April. From then, UPS will initiate six weekly roundtrip all-cargo flights to Beijing and Shanghai from Ontario, California and Newark, New Jersey, via Anchorage, Alaska. The carrier will initially use Boeing 747Fs, but is expected to eventually operate converted Boeing MD-11Fs to China which are being acquired through Boeing (Flight International, 7-13 November).

In addition, the Clinton Administration awarded four additional flights to the three US carriers already serving China, with FedEx and Northwest each getting one, and United garnering two. American and Delta may benefit from recent informal US/China talks which could lead to a type of wet-lease/codeshare arrangement with their Chinese partners.

Source: Flight International