United Parcel Service, Inc.
) announced the expansion of UPS Worldwide Expedited service to
cover more than 220 countries. UPS Worldwide Expedited includes
air service for international shipments and provides delivery
within two-to-five working days. This would facilitate UPS'
customers with cost effective freight solutions across
Given the slackness in the economy, the company foresees
continued yield pressure due to the changing business mix,
resulting from customer shift from premium products to cost
effective logistics solutions. As a result, we see the expansion
of UPS Worldwide Expedited as a strategic move to gain from the
current market trends. This is a more economical solution
compared to other international services such as Worldwide
Express. Moreover, the expansion of these services on a global
platform adds opportunities for revenue generation even in a
volatile market such as UPS' home turf.
Health care business is another key market that UPS is keen on
investing in. UPS is set to tap opportunities in this rapidly
expanding market by establishing various distribution facilities
specially dedicated to health care in key markets like Singapore,
the Netherlands, Canada, Latin America, Australia and the
The company sees other opportunities in emerging markets like
China, India, Japan and Brazil. As a result, United Parcel
Service extended its 8-year long partnership in 2011 with pharma
Merck & Co. Inc.
) to expand its distribution and logistics services to certain
Asian and Latin American markets. In 2012, the company acquired
Italian pharma logistics provider Pieffe Group to enhance its
health care distribution networks in North and South America,
Europe and Asia.
However, we remain concerned about volatile economic
conditions that continue to restrict market demand. Further, the
company is also exposed to unionized workforce and intense
competition from giants like
Deutsche Post AG
), with a Zacks Rank #1 (Strong Buy), is another stock we suggest
considering in this sector.
DEUTSCHE PST AG (DPSGY): Get Free Report
FEDEX CORP (FDX): Free Stock Analysis Report
MERCK & CO INC (MRK): Free Stock Analysis
UTD PARCEL SRVC (UPS): Free Stock Analysis
To read this article on Zacks.com click here.