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The Brink's Company Message Board

  • snowfencer snowfencer Nov 5, 2004 12:44 AM Flag

    BAX and UPS

    Comment on possiblities for BAX re UPS-Menlo buyout. 1. If UPS just wanted Menlo for the intl routes, then they might absorb Menlo's parcel freight into their system and abandon the heavy freight- since the profit margin on heavy is so low and since they aren't set up in their hubs for heavy frt. Then BAX would have heavy to themselves. 2. If UPS also wanted to earnestly enter the heavy freight competition, they could low ball BAX until it folded, then take over the market, or 3. UPS could ignore BAX, crank up the rates based on name recognition and obviously vast territorial coverage advantage, BAX could ride along with higher rates. One question is, if UPS doesn't want the heavy freight, why did they buy the Dayton hub. Another question is the unions of Menlo and UPS trying to merge. Finally, even if UPS did lowball BAX out of the way, would the profits from heavy frt really be enough to satisfy them? The dedicated trucking industry and heavy air are pretty close competitors so the heavy air price has a very limited ceiling. Tell me if any of this rings true and what direction UPS is likely to go.

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    • I believe that UPS could care less about BAX and would consider them a "pimple on a knats ass". UPS will do exactly what they want regardless of BAX or anyone else in the freight industry. You can bet that they will make money at whatever route that they decide to take.

    • Seems pretty clear that UPS is buying Menlo Forwarding so they can make a bigger splash in heavyweight air freight. According to Menlo's stats book on their website, their average weight per shipment is 441 pounds all in, so heavyweight must definitely be the focus.

      I think the big question is whether UPS is mainly after the international/import/export business or if they also care about the intra-U.S. business, which I gather is a more difficult business. Maybe not. But, as I said before, if they DO indeed intend to also focus on intra-U.S. then they've got the cannons to dominate.

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