United Parcel Service, Inc. (UPS) has announced expansion plans for two of its distribution centers in the Houston region. UPS plans to strengthen delivery capabilities at the Mykawa and Conroe distribution facilities in order to meet the rising shipping demand during the peak holiday season. We believe the expansion will serve as a long-term growth driver for the company, remaining accretive to its revenues.
According to the press release, the company will modify the Mykawa facility to dispatch 30% more delivery vehicles to support quick loading and unloading of packages. Similarly, in Conroe, the building will also be modified to facilitate the dispatch of over 40% more delivery vehicles.
Further, UPS expects to hire over 100 additional temporary employees to support peak season sale at both facilities. Currently, over 4,000 employees serve UPS facilities in the Houston area across eight distribution locations.
Going forward, UPS is hopeful of a change in the scenario in the U.S. and global economy. While markets in the U.S. are likely to exhibit growth trends in some time, the European economy is already showing signs of recovery. However, political disturbances in Ukraine may impede growth in Europe. The company foresees mid-single digit economic growth in Asia, which should prove accretive to its business.
Further, Latin American markets are projected to witness increased demand for merchandise exports. The overall momentum build-up in emerging and established markets should also prove beneficial to firms with global operations, like UPS. The company is also banking on the forthcoming enactment of the trade promotion authority (TPA) bill. Through TPA, the Congress expects to present guidelines to be followed during trade negotiations, which is likely to support global trade.
UPS currently has a Zacks Rank #4 (Sell).
Other Stocks
Better-ranked stocks in this sector include Atlas Air Worldwide Holdings, Inc. (AAWW), CH Robinson Worldwide Inc. (CHRW) and Air Transport Services Group, Inc. (ATSG), all of which carry a Zacks Rank #2 (Buy).
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