It’s that gift-giving time of the year again and freight forwarding carriers like United Parcel Service Inc. (UPS) are bracing up to make the most of it. UPS – which is seeing its 107th holiday season – announced several promotional events on Nov 22 that will benefit customers and small business houses.
The news stirred optimism in the market and the company’s share price gained nearly 1% since opening last Friday.
The company has tied up with Twentieth Century Fox Home Entertainment, which is a home video distribution unit of Twentieth Century Fox Film Corporation for the release of Blu-ray, DVD and Digital HD release of Percy Jackson-Sea of Monsters. Both these companies will co-host a special media event on Dec 16 in Atlanta.
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UPS is also hosting a ‘Pin It To Win It’ promotional event in which customers can put up their favorite holiday wish list images on the photo-sharing websitePinterest’s board titled “UPS Delivers Holiday Gifts.” Further, the company is offering discounts of up to 16% off air and international shipping and 8% on ground services to support small businesses.
We expect UPS to win more customers with its host of promotional events and see record shipment on peak days. This would in turn translate into revenue growth.
We attribute the surge in the shipment largely to the growing market of e-commerce. The easy access to products through online shopping has not only benefited consumers but has also uplifted freight forwarding business of companies UPS and FedEx Corp. (FDX), which are major providers of shipping services in e-commerce.
To benefit further, UPS has also raised its fright rates. Recently, the company announced rate hikes for 2014. The company is increasing rates for UPS Ground, Air and International, and Air Freight in U.S., Canada and Puerto Rico and across these markets by 4.9%. We believe the rate hikes will add to the company’s revenues and expand margins going forward.
Given the strengthening of freight market fundamentals, UPS remains successful in implementing rate hikes. Further, the softness in U.S. postal service’s business has also aided it to gain significant market share.