United Parcel Services Inc.UPS recently announced that it has entered into a strategic partnership with Sealed Air Corporation SEE to improve packaging efficiency and provide shipping solutions. The deal is expected to benefit both companies given the increasing demand for logistics and packaging services in a thriving e-commerce industry. The retail e-commerce industry is expected to grow in double digits, at least through 2020. Notably, the two companies have a long history of collaborations that have resulted in lower shipping cost, waste reduction and improved efficiency.
Benefits of the Deal
Per United Parcel, the latest deal is expected to bring about further development in the e-commerce space. The strategic alliance will focus on enhancing cost effectiveness, efficiency and operational sustainability. The company's customers can now benefit from the additional engineering expertise in the packaging space through Sealed Air's Packaging Application Center. Notably, these centers provide a range of facilities such as testing and packaging performance analysis to customers across 27 locations, globally.
Sealed Air, on the other hand, will gain access to United Parcel's Customer Technology Program (CTP) that links small and medium enterprises with top-notch vendors of hardware, software, peripherals, and now packaging as well. This network management by United Parcel will result in higher efficiencies and promotes growth. Per the company, customers can access new packaging solutions and tour Sealed Air's showroom at the United Parcel Supply Chain Solutions facility in Louisville, KY from early 2017.
Strike Authorization Vote
In a separate development, airline mechanics at United Parcel have reportedly decided in favor of a strike authorization. Voting on this matter had begun in October. The mechanics are represented by Teamsters Local 272. Per the report, the vote was due to the healthcare concessions sought by United Parcel from employees. United Parcel faces strong competition from peers such as FedEx Corp. FDX and Radiant Logistics, Inc. RLGT and hence, smooth operations are essential for the company.
However, strike authorization does not indicate a strike at the company. Nonetheless, it gives union negotiators the authority to call for a strike in the event negotiations are inconclusive.
United Parcel currently has a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .
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