UPS ORDERS 10 FREIGHTERS FROM BOEING

UPS ORDERS 10 FREIGHTERS FROM BOEING

United Parcel Service, spurred by double-digit volume growth in its domestic and international air services, said Tuesday it ordered 10 more freighters

from the Boeing Co. at a cost of $600 million.

The planes, a specialized freighter version of Boeing's 757 model, will be delivered in 1994 and 1995, UPS said. The company already operates 35 of the planes and has 20 more on order. By the end of 1997, UPS will have 65 of the planes in its fleet. That fleet now includes 197 planes.The Clinton administration, scrambling to secure congressional support for the North American Free Trade Agreement, hailed the announcement as an example of how the trade pact will generate more business for U.S. companies and more well-paying jobs for U.S. workers. The House votes today on the accord.

"Nafta is one very powerful way to dramatically increase the volume of international air cargo, the number of cargo planes needed to carry it and the health of Boeing and other aircraft manufacturers," said Secretary of Transportation Federico Pena.

UPS, which last week came out in support of the Nafta, also linked the order to expanded business opportunities spawned by a free-trade environment. The order "is a direct result of volume growth and is a clear example of how increased trade helps the economy overall," said Richard Oehme, president of UPS' airline unit.

In remarks directed at the Teamsters union, which strongly opposes the Nafta, Kent C. Nelson, UPS' chairman, said that "for every 70 packages that enter the UPS system, one UPS job is created in the United States and it is likely to be a union job." UPS employs 165,000 Teamsters, more than any other company.

The range of the twin-engine 757 makes it suitable for trans-Atlantic flights. UPS has used the planes only in domestic service, however.

For the first nine months of this year, UPS' domestic air volumes rose 29.2 percent, while international traffic rose nearly 40 percent. UPS recently announced that its average daily air volume in the third quarter broke the 1 million shipment barrier for the first time.

The company expects traffic to remain at those levels through this quarter, generally considered the busiest shipping period of the year.

On Monday, UPS expanded its North American and inter-continental services to include surface operations into Mexico and overnight air deliveries of letters and documents between 21 U.S. cities and 64 international markets.

The air express industry has grown strongly over the past few months, buoyed by an improving U.S. economy. Besides UPS, Airborne Express and Federal Express Corp. have reported double-digit traffic increases, while Burlington Air Express and Emery Worldwide posted sizable profits in the third quarter.

Among the big-three package carriers, UPS and Airborne have grown at a 20 percent clip the entire year, while Federal Express' volume, through the first five months of its fiscal year, is up 11.6 percent from the same period a year ago.

Paul R. Schlesinger, analyst for Donaldson, Lufkin and Jenrette, said the figures don't prove that Airborne and UPS are grabbing market share from Federal Express. Instead, they indicate shippers using other modes of transportation are gravitating toward air express but they're choosing UPS and Airborne because they're perceived to offer cheaper prices than Federal Express, he said.

"I think the best way to describe it is that air express as a market is gaining a larger share of transportation," he said. "Federal Express is still growing faster than the economy."

UPS ADDS PLANES

UPS announced plans Tuesday to buy 10 Boeing 757s, with delivery scheduled for late 1994.

Overall length: 155 feet, 3 inches

wing span: 124 feet, 10 inches

Overall height: 44 feet, 6 inches

Maximum weight: 250,000 pounds

Maximum cargo: 88,000 pounds

Range (nautical miles): 2,600

Speed (knots): 469

Engine type: Rolls Royce RB211-535E4