UPS Adds Full Container Load Service to China-Europe Rail Route

Leading freight carrier, United Parcel Service, Inc. (UPS), has announced the addition of its Full Container Load (:FCL) rail solution to its China-to-Europe transportation services.

We believe the new service offering will be accretive to UPS’ revenues in the long term. It will also help attract more new customers with fast and cost-effective shipping solutions as the service is up to 50% faster than ocean freight and up to 70% cheaper than air freight.

UPS’ current China-to-Europe rail transportation network connects Chengdu, China, to Lodz, Poland and Zhengzhou, China, to Hamburg, Germany. Together with truck transportation services, UPS’ services span across the whole of China and Europe.

The latest addition of FCL rail solution between China and Europe follows many other enhancements made to UPS' multimodal express services in 2013. These include expansion of UPS Preferred Less-Than-Container Load (:LCL) ocean freight service from Asia to Mexico and from Europe to the U.S. and Canada. In addition, UPS introduced Worldwide Express Freight service to and from the UAE.

Going forward, UPS plans to invest about $500 million toward new technology and facility expansion over the next few years in markets including France, Latin America, Vietnam, China and Korea. This investment will not only add to the long-term growth of the company but also lend competitive advantage over other players like FedEx Corporation (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 #4 (sell).

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