Last Tuesday, leading freight carrier United Parcel Service, Inc. (UPS) announced expansion plans in Brazil with the opening of nine new operating facilities in Sao Paulo.
The expansion is expected to boost the company’s network by 78% covering over 200 cities in the country. We believe the new expansion will enable the company to increase market penetration in international territories, resulting in revenue accretion.
The news impacted the market positively resulting in share prices gaining marginally on Tuesday’s closing.
Apart from opening new facilities, UPS is also seeking to beef up the size of its ground fleet to 115 vehicles. In addition, adding new routes to Santos, Sao Jose dos Campos, Sorocaba, Marilia and Campinas will ensure extension of UPS services.
In the same vein, the company recently added its Full Container Load (FCL) rail solution to its China-to-Europe transportation services. The latest addition of FCL rail solution between China and Europe follows other enhancements made to UPS' multimodal express services last year (read More: UPS Adds Full Container Load Service to China-Europe Rail Route).
Going forward, UPS plans to invest about $500 million in new technology and facility expansion over the next few years in markets like France, Latin America, Vietnam, China and Korea. This investment will not only add to the company’s long-term growth but also lend competitive advantage over other players like FedEx Corp. (FDX), Expeditors International of Washington Inc. (EXPD) and Radiant Logistics, Inc. (RLGT).
UPS projects overall capital expenditure of over $2.5 billion this year, in concurrence with its capital spending estimate of 4% of revenues over the next five years.
At present, UPS has a Zacks Rank #3 (Hold).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment