Report: UPS to invest $1 billion in European operations

A Reuters report released today stated that transportation and logistics titan UPS intends to invest $1 billion into its European operations on the next three-to-five years, primarily with an emphasis on expanding its logistics centers.

The Reuters report cited UPS CFO Kurt Kuehn as the executive commenting on the company’s plans, saying Kuehn made the comments to a newspaper based in Germany called daily Frankfurter Allgemeine Zeitung.

Kuehn told the paper that a large portion of the $1 billion investment will be allocated for the German market, which he said is one of UPS’s fastest growing markets. And he added that this European strategy will be unveiled in November, explaining it is comprised of acquisitions mainly in the healthcare sector, in which the transportation of medicines stands as a “logistical challenge,” due to changes in temperature.

UPS Public Relations Director Susan Rosenberg told LM that this development does not reflect any significant change in the company’s existing capital planning going forward as has been discussed by top UPS management during its year-to-date earnings calls.

“UPS has experienced solid growth in Europe, in fact better than the underlying market growth there,” said Rosenberg. “We continue to invest for growth there.  Long term benefits for all of our ongoing investment is to help our customers expand within and across regions around the world through infrastructure and technology improvements and the solutions that we assemble to meet varying needs of industry segments.

Rosenberg added that UPS is having an investor analyst conference in November to offer more clarity on its forecasts and plans.

First quarter revenue for UPS was up 2.6 percent at $13.8 billion. Total international export shipments for the quarter were up 7.7 percent and paced by a 15 percent increase in Europe, with the company saying in its second quarter earnings that transborder shipments in Europe continue to expand rapidly as customers migrate to Pan-European distribution using UPS solutions. And as part of its strong intra-European growth and intercontinental trade, UPS heralded the completed expansion of its Cologne, Germany, air hub, which represents a $200 million investment that increased facility capacity by 70 percent.

As reported in LM, UPS was an early investor in European operations with Germany as its hub, thereby helping with solid export volume growth over the past decade.

UPS Chairman and CEO Scott Davis said on the first quarter earnings call that in Europe the economy is showing signs of recovery and faster growth.

And in large European markets like Germany, the U.K., France and Spain, exports were up more than 17 percent in the first quarter, according to UPS International President Jim Barber. He added that UPS continues to align its networks to market conditions and regional trade patterns.

Europe has been the foundation for UPS International investment and growth,” Barber said. “Our customers continue to value the capabilities and solutions that we provide to support the single market economy. One of the most rewarding components of our Europe growth is to see the success of our recent acquisitions.”

In February, UPS acquired Polar Speed, a United Kingdom-based provider of temperature-sensitive supply chain solutions.