QUOTE AND NEWS
SeekingAlpha  Apr 5  Comment 
By Valuentum: As part of our process, we perform a rigorous discounted cash-flow methodology that dives into the true intrinsic worth of companies. Let's examine what we think UPS (UPS) is worth in this article and whether shares are timely for...
Benzinga  Apr 4  Comment 
Below are the air delivery & freight services stocks on the NYSE and the NASDAQ in terms of revenue. The trailing-twelve-month revenue at United Parcel Service (NYSE: UPS) is $55.44 billion. United Parcel Service's ROE for the same period is...
StreetInsider.com  Mar 24  Comment 
Visit StreetInsider.com at http://www.streetinsider.com/Corporate+News/MicroVision+%28MVIS%29+to+Supply+PicoP+to+UPS+%28UPS%29/9309048.html for the full story.
SeekingAlpha  Mar 20  Comment 
By Alpha Strategist: UPS is Continuously Adapting Today's business is evolving very rapidly and this makes it necessary for businesses to keep up with the fast pace by adapting their operations through innovative ideas and technologies. With...
The Economic Times  Mar 19  Comment 
Sam Pitroda today admitted that the UPA government "messed up" through its decisions such as the retrospective taxation for Vodafone.
TheStreet.com  Mar 19  Comment 
NEW YORK (TheStreet) -- You see UPS and FedEx trucks all over the place. Now is the time to know some cool things the companies are doing to save themselves bank and make Mother Nature happy. FedEx now has over 360 hybrid-electric vehicles in...
SeekingAlpha  Mar 18  Comment 
FedEx Corp. (FDX) is set to report FQ3 2014 earnings before the market opens on Wednesday, March 19th. This December was marked by brutal snowstorms and extremely cold temperatures, which kept shoppers out of retail stores. Amazon.com (AMZN) got...
Cloud Computing  Mar 17  Comment 
TARPON SPRINGS, Fla. , March 17, 2014 /PRNewswire/ -- White Cloud Electronic Cigarettes, one of the world's fastest-growing manufacturers of electronic cigarettes and accessories, is proud to announce its new partnership with United Parcel...
Jutia Group  Mar 17  Comment 
[Business Wire] - Just in time for NCAA® March Madness®, The UPS Store® today announced its own roster of activities to help small business owners compete and win the business game. Read more on this. United Parcel Service, Inc. (UPS), valued...
Jutia Group  Mar 14  Comment 
[at noodls] - Richmond, March 14, 2014 UPS Freight® (NYSE:UPS), one of the nation's largest heavy freight carriers, announced today a general rate increase of 4.4 percent, effective March 31, 2014. This rate adjustment ... Read more on this. ...




 

United Parcel Service (NYSE:UPS) is the world’s largest small-package carrier, by revenue and by volume. UPS offers ground, air, and ocean freight shipping and shipping-related services. Every day, UPS ships approximately 15 million packages for businesses and individuals around the world.[1] UPS aims to grow by increasing its coverage of global small-package markets and developing its auxiliary businesses.

Business Overview

UPS was founded in 1907 by 19 year-old Jim Casey as the American Messenger Company, a private messenger service employing local teenagers in Seattle. In 1913, the company moved from messages to packages, began using automobiles, and started making deliveries for retailers. Despite legal restrictions that it faced initially, UPS offered parcel delivery services between the 48 contiguous United States by 1975. In the 1980s, UPS began flying packages on its own airplanes to avoid the risk associated with relying on commercial airlines. UPS is now the 9th largest airline in the world.

In the 1990s, UPS launched online package tracking, the UPS Logistics Group, and UPS Capital, which offers customers financing for the supply chain purchases that they ship via UPS. These steps marked the beginning of UPS’s first efforts to expand its services beyond shipping, efforts that remain key to UPS’s growth strategy for the coming years. Today, UPS offers business customers supply-chain management, financing, and the option to incorporate UPS shipment data into their own IT systems. For individuals, more than 6,000 franchisee-owned UPS Store and Mail Boxes Etc. locations across the U.S. offer private mail box rentals, packaging supplies for purchase, and convenient drop-off locations for UPS shipments. These services are available in around 25 countries and include about 150,000 access points.[2]

UPS has ample opportunity to grow in the international parcel shipping market. As a result of globalization, the global economy is expanding at roughly twice the rate of American GDP. Recently, UPS also acquired freight carrier and supply chain management businesses. Both have struggled to date but have the potential to contribute significantly to revenue growth if UPS can cross-market them to its parcel service customers.

Business Growth[3][4]

  • Revenue: Revenue increased from $45,297 million in 2009 to $1 billion in 2010. For the second quarter of 2011, revenue increased 8.1% to $13.2 billion compared to $12.2 billion in the second quarter of 2010.
  • Net income: Net income increased from $2,152 million in 2009 to $3,488 million in 2010. For the second quarter of 2011, net income increased 25.8% from $845 million in 2010 to $1.06 billion.

the company has been recording lower growth rate recently

Business Segments

Domestic Package Business (around 65% of total revenues)

UPS includes packages up to 150 pounds, via air and ground delivery, as well as letters in its U.S. Domestic Package segment.[5] UPS seeks to strengthen its position as the leader in U.S. Domestic shipping by reducing shipment times and expanding its related services—tracking, intra-company shipping for customers with multiple locations, and systems integration options that allow large customers to see UPS data on their own information systems. On 29 May 2008, UPS received a major boon to its core domestic package business. Deutsche Post's American subsidiary, DHL, decided to outsource its air operations to UPS.[6] The arrangement is for 10 years and will add an additional $1 billion a year to UPS's revenues. [7][8]

International Package Business (around 20% of total revenues)

UPS’s international package business offers parcel delivery between more than 200 countries and territories and domestic service within more than 20 countries besides the United States.[5] Although UPS is geographically diversified in this segment, about 50% of revenue is related to shipping in Europe.[8]

Freight and Supply Chain Solutions (around 15-18% of total revenues)

UPS reports earnings for its freight and supply chain management businesses together. UPS entered the logistics services and ground freight markets in earnest in 2004-2005 when it acquired Menlo Worldwide Forwarding and Overnite Transportation, leaders in those markets respectively. UPS Supply Chain Solutions offers integrated domestic and international transportation, customs brokerage, and supply chain management services including warehousing and financing. These businesses complement one another because they allow customers to store, import/export, and transport large quantities of material entirely through UPS.

Key Trends and Forces

International Trade

UPS has 46-50% share in the U.S. domestic market, but more room to grow abroad, where markets are less mature. The U.S. domestic zxvczcvxzxcvxcvpackage market is expected to grow about 3% annually, tracking U.S. GDP. In contrast, the international market is expected to grow 5-6% annually in coming years, at nearly twice the rate of global GDP. Increased international trade not only boosts growth in less developed economies, but also results in increased demand for transportation services. Further, international markets are generally more fragmented than the U.S. market, offering more opportunities for large carriers like UPS to grow by acquisition.

Global Sourcing

Increased international trade in finished goods translates into more packages shipped longer distances. But the potential benefits of international trade for UPS are not limited to growth in the parcel carrier market. Many developed world businesses already purchase materials they use from abroad, and this practice, known as global sourcing, is on the rise. For businesses, the downside of global sourcing is complex supply chains that present previously unknown risks. For businesses facing import/export regulations and international transportation logistics for the first time, the appeal of outsourcing supply chain management is obvious. UPS Supply Chain Solutions hopes to capitalize on a projected increase in the market for third-party supply chain managers.

Fuel Costs

Fuel surcharges, which pass fuel costs on to customers, are standard practice in the transportation business. UPS calculates surcharges for a given period based on fuel prices six weeks earlier, absorbing some loss when prices increase sharply but making a profit on surcharges when prices fall. There is little reason to expect that this practice will change in the near future, despite the threat of increasing prices.

UPS is a barometer of the U.S Economy

UPS's profits are highly cyclical; they depend on the strength of the U.S. and world economies because economic health is a key determinant of package volumes. Package volumes and economic strength are so tightly correlated that economists will study package volume data from companies like UPS as an indicator of whether economic activity is slowing or heating up.

Competition

UPS has three major competitors. The services offered between them are identical, though prices and availability in different regions vary.

Deutsche Post AG: A privately held company, Deutsche Post AG competes with UPS through its DHL operations. Overall, DHL-branded businesses account for more than half of the parent company's sales. However, most of Deutsche Post's sales come from outside its home country. Deutsche Post still handles the mail in Germany, delivering an average of 70 million letters per working day. In addition to traditional postal operations, the company provides mail process outsourcing at home and abroad. [9]

United States Postal Service: USPS is also not traded publicly. It is an independent government agency that relies on postage and fees to fund operations. USPS handles all kinds of mail and ships domestically and internationally. The USPS delivers more than 200 billion pieces of mail a year (at an average of more than 650 million per day) to some 150 million addresses in the US and its territories. Though it has a monopoly on delivering the mail, the USPS faces competition for services such as package or freight delivery.[10]

FedEx (FDX): FedEx and UPS are close competitors in almost every way. FedEx offers every service offered by UPS, including freight services. FedEx Corporation provides transportation, e-commerce, and business services in the United States and internationally. It operates in four segments: FedEx Express, FedEx Ground, FedEx Freight, and FedEx Services. The FedEx Express segment offers various shipping services for the delivery of packages and freight. This segment also provides international trade services specializing in customs brokerage, and ocean and air cargo distribution; customs clearance services, as well as global trade data. However, the scale of operation between FedEx and UPS are different.



References

  1. UPS 2Q09 10-Q, pg. 27-28
  2. UPS 2008 10-K, pg. 5
  3. Wikinvest SEC Files: UPS 2010 10-K, Item 8
  4. UPS Investor Relations News Release - Second Quarter 2011 Earnings
  5. 5.0 5.1 UPS 2008 10-K, Item 1
  6. Wall Street Journal
  7. http://www.tmcnet.com/usubmit/2008/05/28/3469337.htm
  8. 8.0 8.1 Wikinvest SEC Files: UPS 2010 10-K, Item 7
  9. Yahoo Company Profile: Deutsche Post AG
  10. Yahoo Company Profile: United States Postal Service
Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki