UPS’s Second-Largest Segment: International Package Segment

In the previous article, we reviewed the Domestic Package segment of United Parcel Service (UPS). In this part, we will take a look at the company’s International Package segment.

In 1975, UPS first forayed outside the US. In 1976, UPS entered Europe by starting services in what was then West Germany. Currently, the company’s global small package operations offer time-bound delivery services for express letters, documents, small packages, and palletized freight through air and ground services.

The company faces stiff competition internationally from players like TNT Express N.V. (TNTEY), Deutsche Post (DPSGY), Royal Mail, Yamato Holdings (YATRY), and Singapore Post (SPSTY). According to Statista, USP’s share in the global package delivery market was 19.6%, followed by FedEx Corporation (FDX) at 14.2% in 2014.

UPS makes up 8.37% of the iShares Transportation Average ETF (IYT). The other prominent transportation and logistics companies forming part of the ETF are J.B. Hunt Transportation (JBHT) with 6.7% and Norfolk Southern (NSC) with 6.4%.

United Parcel Service’s international package segment includes small package operations in Europe, Asia-Pacific, Canada, Latin America, the Indian subcontinent, the Middle East, and Africa. The company’s time-sensitive express options include Express Plus, Express, and Express Saver.

In 2015, UPS expanded its UPS Worldwide Express service to include 41,000-plus new postal codes around the world. This service provides guaranteed delivery on the next possible business day by 10:30 AM, noon, or 2:00 PM, depending on the destination. It is available in 65 countries.

For customers with no time-bound preference, UPS offers the UPS Worldwide Expedited guaranteed day-definite service option. Under this service, the company delivers parcels in two to five business days in more than 220 countries. It also offers UPS Transborder, which includes express, expedited, and standard delivery within Europe, between the US and Canada, and between the US and Mexico.

In 2013, UPS launched UPS Worldwide Express Freight for palletized shipments over 150 pounds. The company expanded this service to include 58 points of origin and 56 destinations in 2015. The primary driver of UPS’s International Package segment is Europe, which accounts for nearly half of this segment’s revenues.

A major part of Europe’s GDP includes exports. Plus, it has highly fragmented markets, which provides a greater opportunity for delivery services.

In the subsequent part of this series, we will explore UPS’s Supply Chain and Freight segment.