Investors Ignore News On United Parcel Service Inc. (NYSE:UPS)
United Parcel Service, Inc. (NYSE:UPS)’s stock did not take into account delayed shipping during Christmas holiday and surged to $105.09 mark on Friday, to mark fresh 52 week high. The stock has delivered close to 44% returns year to date. The company has hit the headlines in recent days due to alleged delay in shipping packages to customers who trusted last minute “in-time service delivery” promises offered by many of the online retailers.
The Christmas Load
The online retailers largely rely on giant players in shipping industry, namely United Parcel Service, Inc. (NYSE:UPS), FedEx Corporation (NYSE:FDX) and the U.S. Postal Service. As a result, when customers turned to believe in last moment shopping with assured service delivery on Christmas, these giant players get overburdened with loads of packages from number of online retailers. Moreover bad weather also contributed to delay in service delivery.
The Wall Street Journal reported that packages were piling up at United Parcel Service’s main air hub in Louisville in early hours of Dec. 24th and many employees worked at stretch to as long as 100-hour week to sort those packages and making them ready for their onward journeys. The company recently announced that it has cleared the backlog of packages and will also refund the shipping costs to customers to whom it failed to delivery Christmas packages on time.
Opportunities for Small Players
While the shipping industry giants including United Parcel Service, Inc. (NYSE:UPS) could not deliver the packages on time during this Christmas, it offers an excellent opportunity for small regional players as the online retailers would seriously consider the alternatives to ensure smooth, timely deliveries during peak sales. Recently the smaller shipping companies account for just about 2% of the market.
A senior air freight and logistics analyst, Anthony Gallo said to Reuters, “I do think it creates an opportunity for companies other than UPS and FedEx to make some inroads here.”