Leading freight carrier United Parcel Service, Inc. (UPS) recently opened a new contract logistics distribution facility in Beijing, China. The new facility includes 6,500 square meters of space and is situated 19 kilometres from Beijing Capital International Airport.
The company expects the new facility to serve the growing demand for freight services across China, fostering revenue generation for the company. The facility will cater to contract logistics requirements with four-hour delivery time in Beijing and its surroundings, and offer next-business-day services for other major cities across the country.
The new Beijing facility will function in addition to the two other distribution centers of UPS in China. Located in Chengdu and Shanghai, these facilities were started in 2013. UPS expects these facilities to offer freight forwarding support to emerging businesses in China including industries like high-tech, industrial manufacturing, aerospace and retail. Services offered by these operation hubs include inventory management, packaging and other value-added services.
Overall, UPS plans to invest about $500 million in new technology and facility expansion over the next few years in France, Latin America, Vietnam, China and Korea, to create a competitive niche against big rivals like FedEx Corporation (FDX).
In sync with this expansion spree, UPS augmented phase 1 of its European hub operations at Cologne/Bonn Airport in Germany to increase capacity by 65%. It had invested about $200 million in 2013, expanding capacity by 70%. In Sep 2013, UPS acquired Costa Rica-based mall package delivery company Union Pak de Costa Rica, S.A. and brokerage company SEISA Brokerage that were already working as its authorized service contractors. UPS expects these acquisitions to facilitate its growing freight transportation business in Costa Rica and other markets.
UPS currently has a Zacks Rank #4 (Sell).
Other Stocks to Consider
Better-ranked stocks in this sector include Air Transport Services Group, Inc. (ATSG) and Atlas Air Worldwide Holdings Inc. (AAWW). Both have a Zacks Rank #2 (Buy).
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