Popularly referred to as UPS, world’s largest package delivery company United Parcel Service (UPS, Financial) is in expansion mode in Europe under which it plans to invest $1.06 billion in the region. The news was officially reported by a German magazine WirtSchaftswoche in which officials of UPS have confirmed adding to the number of parcel shops and sorting facilities in the European market and Germany in particular. The news came in after the company was denied a mega-merger with Netherlands based TNT (TNTEY, Financial) by the European government in 2013 on competitive issues. It has been acquired by FedEx Corp (FDX, Financial) for $4.66 billion as pointed in our last article titled: "FedEx Might Bag TNT To Gain A Strong Foothold In Europe"Â ringing competition bells for rivals like UPS and Deutsche Post (DPSGY, Financial).
Why Europe
Headquartered in Georgia, USA, United Parcel service Inc. was founded in 1907 by James E. Casey. The company is the world’s largest package delivery company and global provider of supply chain management solutions. It delivers more than 15 million packages per day to more than 6.1 million customers in more than 220 countries worldwide. Some also nickname it as ‘brown’ after it brown color delivery trucks and uniforms. With its own airline and air cargo, UPS has a major lead in the market.
Europe currently is the talk in the company and major expansion plans are in the pipeline for the region by UPS. Focusing majorly on the logistics hub across the continent, UPS plans to invest the majority of the $1.06 billion investment in the German market since it is the fastest-growing market for the company. The company plans to make major acquisitions in the Health sector with the help of which UPS shall be able to provide logistic solutions for medicines transportation and overcome the challenge of changing temperatures.
UPS was an early entrant in the German in 1978 which gave it a lead with notable export volume growth over the past 10 years. UPS has a market share of 23 % in Europe which is considerably good and post the investment, it further plans to increase that by a few more notches. The company derives more than 50% of its revenues from the European market and the second largest market share in Europe after DHL.
The impact on UPS & European markets
In the past, UPS acquired a lot of companies to strengthen its business and increase growth options. Compared to the past, UPS stocks have been gaining momentum and are at a higher end compared to its competitors in the industry. Europe is on top of the list of UPS where there are several other players to give competition. However, UPS is confident on not only providing logistic solutions to European consumers but also increase its ranking in the European market. Europe is undergoing an e-commerce boom and UPS is keen on leveraging its business from the new shopping trend. The increasing online businesses and with more and more e-retailers joining in, Europe has recorded approximately 3.5 billion parcel deliveries each year. To tap this opportunity, UPS plans to do acquisitions to simplify their goal and also open more access points.
Final take
Although, Europe has been going through a rough phase vis a vis GDP growth rate, but the prospects are bright, with the economy gradually picking up, better trade prospects, growing ecommerce and increasing FDIs are making Europe a desired destination to invest among Delivery and Logistic companies. UPS also is all set to cash in and so is Europe to embrace the advanced services by companies like United Parcel Service Inc.
