United Parcel Service, Inc. (UPS) recently announced a $17.5 million facility expansion project at Menifee, CA.
The infrastructural development is expected to boost shipping volumes in the region once it becomes operational in September. We believe the capital investment will offer significant long-term growth for the company and also increase service efficiency attracting more customers.
The expansion is expected to support package processing capability utilizing advanced technology and a conveyor system. It is expected to boost processing capacity to 10,000 pieces per day.
The facility will also have expanded vehicle parking and a larger UPS Customer Center. Over all, it is expected to cover an expanded space of over 49,407 square feet and consist of 10 tractor-trailer doors and room for 108 delivery vehicles.
In the coming years, UPS plans to invest about $500 million in new technology and facility expansion across the globe including 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 #3 (Hold).
Other Stocks to Consider
Notable 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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