B2B Payments

UPS’s $1.8B Logistics Buyout

Early on in the summer, UPS announced plans to acquire shipping logistics firm Parcel Pro in a bid to strengthen its B2B parcel delivery operations. Last week the shipping giant announced another acquisition that further boosts its ability to serve businesses’ packaging and delivery needs.

On Friday (July 31), reports said UPS inked a buyout deal to acquire Coyote Logistics in a $1.8 billion transaction. According to analysts, the buy is part of UPS’s efforts to avoid another holiday season fiasco.

The company faced a wave of criticism in 2013 after failing to fulfill orders by Christmas Day. Analysts attributed the debacle to shortcomings in UPS’s logistics capabilities.

The acquisition of Coyote Logistics adds to UPS’s growing roster of subsidiaries. The company, which operates out of Chicago, reportedly has 35,000 contract carriers and utilizes logistics software to fulfill short-term fleet service needs. The companies had already established a relationship as Coyote helped UPS during last year’s holiday season.

In a statement, UPS said Coyote “has played a growing role in supporting UPS peak operations over the past few years and the company expects to leverage Coyote’s carrier network even further for this purpose in the future.”

The companies said they expect to close the deal within a month. Coyote will continue to operate as a subsidiary under UPS and boost the company’s B2B supply chain management capabilities, reports said.

While UPS may still be on damage control following the 2013 holiday shopping season, bolstering its logistics capabilities is likely a good strategy considering current market trends. Supply Chain Management Professionals’ latest report on global logistics and shipping trends found that shipping costs for businesses are likely to rise, and that if demand spikes, companies may not have the logistics and warehouse capabilities to handle it. Strengthening UPS’s ability to advise other companies on their supply chain management needs, analysts said, could help the firm regain market share and improve its reputation among business clients.

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