The USP of United Parcel Service, Inc (NYSE:UPS)

Denver, CO, 07/15/2013 (Avauncer.com) – The Number One package delivery company in the world, United Parcel Service, Inc (NYSE:UPS) has projected its Q2 profit to be below analyst expectations as its international customers have speeded-up their movement from air transport to cheaper waterway ones. UPS shares dropped 5% after it chopped its 2013 earnings projections to $4.65-$4.85/share from the previous $4.80-$5.06.

When transportation is good

These two companies are considered to be the two market indicators simply by virtue of the humungous volumes of goods that they transport across the world. In June, FedEx said that it will be hiking shipping rates, cutting costs and jobs as well. In contrast, UPS has a stronger foothold in North America and a very expansive network there. On the whole, this puts it in a much better position than FedEx which concentrates largely on global air shipments.

Q2 results soon

On Friday, UPS said that its projected Q2 earnings to be $1.13/share while the average analyst estimate was $1.20/share. The company said there had been a slowdown in its package volume growth because of labor negotiations. UPS said that it has now extended an agreement which covers its employees from the domestic small-package segment, by the International Brotherhood of Teamsters. The company’s Q2 results are expected to be announced on July 2013.

The e-commerce effect

Every year, a larger number of customers are turning to online shopping even for the most basic things. Though this spells doom for brick and mortar stores, it means roaring business for the companies that actually ship all these packages. UPS had rolled out a service named “My Choice” over a year and a half ago. Customers get to reroute their packages for a $5 fee and get some added perks for annual services. On April 2013, as competition to UPS, FedEx launched a very similar service called “Delivery Manager” and the courier wars began heating up.

The company

UPS is a company that delivers packages. Every business day it delivers packages each for 1.1M shipping customers to 7.7M consignees across more than 220 territories and countries. In the year ended 31 December 2012, on an average its global deliveries touched 16.3M pieces, or totaled 4.1B packages. The company’s USP has always its expansive network and innovative solutions at down to earth prices.