Love Aids Logistics, Biz Up - Analyst Blog
February 13 2013 - 10:20AM
Zacks
With Valentine's Day right around
the corner, lovers are in a mad rush to send gifts to their
sweethearts. This translates into solid business for logistic
companies that make this event worth a smile by delivering gifts at
our doorsteps.
Thanks to the millions of celebrants across the globe, Valentine’s
Day remains special for logistics firms. The event drives a surge
in sales for these firms.
According to latest reports by National Retail Federation, average
Valentine’s Day individual spending is expected to be $130.97, up
from $126.03 last year. This brings total cash outflows to an
estimated $18.6 billion this Valentine’s Day.
The federation also reported that a large chunk (approximately 50%)
of these expenditures would be on candies and other edible products
followed by flower, accounting for approximately 30%. The rest
would include expenditures on valuable items like jewelry and
apparels. If these figures set the retail industry on the go, the
packaging industry will not remain far behind from benefiting from
the love day.
United Parcel Service Inc. (UPS) recently reported
that it expects to ship nearly 95 million flowers through its
network. In addition, it has tied up with companies like Vermont
Teddy Bear Company, LobsterGram Inc. and Fairytale Brownies to ship
Valentine’s Day goodies for incremental revenues.
To support timely deliveries with utmost care these packaging
companies also remain equipped with proper facilities like
temperature control containers, express delivery services, massive
warehousing and hassle-free customs clearance. Companies like UPS
have also set up 130 additional flight services for its
customers.
Globalization has indeed brought the world so close that every
individual is connected with a matrix of various networks governed
by modern technology. Whether this has simplified our lives or made
it more complicated remains subjective, but surely it has driven
trade and economics to a level where any event (good or bad) has a
global impact. Apart from other factors, globalization has
certainly given a boost to e-commerce and largely influenced
consumer behavior.
Reaping benefits from the current trends, logistic companies like
UPS, FedEx Corporation (FDX), Expeditors
International of Washington Inc. (EXPD) and CH
Robinson Worldwide Inc. (CHRW) are generating a good
amount of their business from events like New Year and Christmas,
celebrated worldwide. With the help of an expanded market reach and
advanced infrastructure, freight carriers are now able to maximize
profitability with shipments across the globe.
The usual business days aside, periods like the holiday season and
special events like Valentine’s Day remain important sales
boosters. These generally provide an uptick in sales in an
otherwise lackluster demand environment.
Overall, we expect this Valentine’s Day to cheer up packaging
companies with good volumes that would ultimately reflect in their
quarterly results. Amid economic upheavals, fiscal cliff debacle
and nearing of budget sequester, we believe Valentine’s Day will
bring some relief for the parcel companies.
CH ROBINSON WWD (CHRW): Free Stock Analysis Report
EXPEDITORS INTL (EXPD): Free Stock Analysis Report
FEDEX CORP (FDX): Free Stock Analysis Report
UTD PARCEL SRVC (UPS): Free Stock Analysis Report
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