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UPS Enters The Self-Storage Market With A Different Twist


The $38 billion a year U.S. self-storage industry has a new player – UPS Inc. (NYSE: UPS).

The transport and logistics giant unveiled on October 14 a service called "Storage on Demand," in which it will provide pick-ups and deliveries of stored goods without the customer being required to drop off or pick up the goods themselves. The service has been rolled out in the metro Atlanta area, including UPS' home base in the north Atlanta suburb of Sandy Springs. The service will be expanded to other cities in the near future, UPS said.

Under the service, UPS will deliver storage bins (see photo) for users to load their property. Once the bins are loaded and sealed, users can request an online pick-up. UPS will deliver the bins to a designated shed to be stored. UPS will then pick up the bins and deliver them to the user's destination upon the user's request.

UPS said it will offer the first three months free as a promotion. Monthly rates will start at $5 per bin, and UPS did not disclose how it will price the service beyond that baseline rate. According to 2017 data from CostHelper, a provider of consumer information, it cost between $40 to $50 a month to rent a 5-by-5-foot unit, $75-$140 per month for a 10-by-15-foot unit, and $115-$150 per month for a climate-controlled 10-by-15-foot unit.

In some respects, the UPS program aims to take the word "self" out of the storage name. Typically, users take care of their own deliveries to the facilities, as well as their own pick-ups when the goods are ready to be retrieved. UPS is touting the service as a way of "eliminating the need to leave your home" to execute the storage process.

The self-storage industry has benefitted from a generational shift in consumers' storage behavior. Retirees or near-retirees may downsize to smaller residences and don't need as much furniture or other belongings, yet don't want to part with them. Those transferred to other cities for job-related reasons may need to keep their goods in storage until they get settled. Millennials and others moving to smaller urban locations lack the space for all their goods and need a place to keep them.

The self-storage industry has grown by 7.7% annually since 2012, according to data cited by UPS from SpareFoot Inc., a company that tracks the self-storage sector.

The largest and most well-known company is Public Storage (NYSE: PSA), a storage real estate investment trust whose facilities can be found virtually everywhere in the country. An investment in Public Storage shares over the past two decades has reaped outsize gains for its investors. In the past 10 years alone, PSA shares have rocketed from about $74 a share to $243.75 a share today.

Image Sourced from Self Storage

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