Global Research ab 12 November 2025 China Logistics Sector APAC Focus: Potential 200bp NPM upside from autonomous driving adoption Following our auto team's deep-dive report on robotaxis, we are among the first on the street to take a closer look at how autonomous driving (AD) technologies might reshape China's logistics industry. Within only two years, robotrucks/robovans have gone from being used by parcel firms for road freight/last-mile deliveries to having the potential for mass deployment in China. We ...

Core Insights - UPS has established a strong B2B parcel delivery model since 1907, creating a competitive moat due to its reputation for service and lower costs [1] - FedEx Ground, originally RPS, has grown from $35 million in annual revenue 40 years ago to over $35 billion today by introducing new features and technology [2] - The parcel market has evolved into three segments, with the lightweight B2C e-commerce segment now representing over 70% of the market, posing challenges for UPS and FedEx's traditional delivery models [3] Company Challenges - UPS faces a significant challenge in the B2C delivery market due to its unionized workforce, which makes it harder to compete with non-unionized companies like FedEx [4] - To regain market share and profitability, UPS needs to adapt its delivery model by integrating lower-cost last-mile delivery agents with its existing Teamster drivers [5] Proposed Innovations - The suggested innovation involves using Teamster drivers for middle-mile deliveries to UPS Stores, where independent gig workers can then handle final-mile deliveries using personal vehicles [6] - This model allows for efficient delivery within a five-to-10 mile radius, reducing the need for long commutes to sortation centers [6] - B2C parcels can be returned to UPS Stores the next day if undeliverable, streamlining the return process [7]

Core Insights - UPS has announced a significant reduction in its workforce, cutting 48,000 jobs in 2025 as part of a consolidation and cost-saving strategy [1][2][6] - The company aims to achieve $3.5 billion in total cost savings by 2025 through its "Network Reconfiguration and Efficiency Reimagined" plan, which is expected to conclude in 2027 [6] Workforce Reduction - The majority of the job cuts, approximately 34,000, are from the operational workforce, including drivers, with 14,000 positions eliminated from management [1][2] - CFO Brian Dykes noted that 90% of the full-time drivers who took voluntary buyouts left the company by August 31 [2] Facility Closures - UPS has closed daily operations at 93 leased and owned buildings during the first nine months of 2025 and is considering further closures as part of its efficiency plan [2][6] - Earlier in 2024, UPS announced plans to lay off about 20,000 workers and close around 73 facilities due to economic conditions and changes in tariffs [3] Financial Performance - For the third quarter, UPS reported revenues of $21.4 billion and a net income of $1.31 billion, translating to earnings of $1.55 per share [5] - The company handled 19.4 million packages in the quarter, reflecting a 9.8% year-over-year decline [5] Strategic Shift - CEO Carol Tomé described the current turnaround effort as "the most significant strategic shift in our company's history," emphasizing the goal to run the most efficient peak shipping season while maintaining high service standards [2]

Core Insights - United Parcel Service (UPS) reported better-than-expected results, indicating progress in its overhaul efforts after a challenging year marked by weak volumes and job cuts [1][2] - UPS shares rose 12.1% in premarket trading, reflecting positive market sentiment following the earnings report [1] Financial Performance - UPS projected fourth-quarter revenue to be approximately $24 billion, surpassing analysts' expectations of $23.8 billion [2] - The company reported an adjusted profit of $1.74 per share for the three months ended September 30, exceeding the average analyst estimate of $1.30 [7] Strategic Initiatives - UPS is focusing on rate hikes, cost reductions, and prioritizing high-margin shipments to stabilize its business ahead of the holiday season [3] - The company is implementing significant cost-saving measures, including closing hundreds of facilities and cutting 48,000 jobs, aiming to save $3.5 billion by 2025 [6] Market Context - The peak holiday shipping season, which can see UPS's daily average volumes double, runs from November to the end of January [5] - UPS is reducing the number of packages delivered for its largest customer, Amazon, to enhance profit margins [4]

Core Insights - United Parcel Service (UPS) exceeded analysts' profit expectations for Q3 and forecasted revenue above Wall Street's expectations for the holiday season, relying on price increases to counteract weak business-to-business demand in the U.S. [1][2] - UPS's shares rose 8.9% in premarket trading, while rival FedEx gained 2.5%. However, UPS shares have declined approximately 28% since the beginning of the year [1]. Financial Performance - UPS projected fourth-quarter revenue to be around $24 billion, surpassing analysts' average expectation of $23.8 billion [2]. - The company reported an adjusted profit of $1.74 per share for the three months ending September 30, exceeding analysts' average expectation of $1.30 [6]. - Consolidated revenue for UPS was $21.41 billion, above the expected $20.83 billion [6]. - The adjusted consolidated operating margin was 10%, an increase from 8.8% in Q2, while the domestic segment margin decreased to 6.4% from 7% in Q2 [7]. Strategic Initiatives - UPS is focusing on rate hikes, cost reductions, and prioritizing high-margin shipments to stabilize its business ahead of the holiday season [3]. - The company is reducing the number of packages delivered for its largest customer, Amazon, to enhance profit margins [4]. - UPS is undergoing a significant overhaul to cut $3.5 billion in costs by 2025, which includes closing hundreds of facilities and reducing its workforce [6]. Market Context - The peak holiday shipping season, when UPS's daily average volumes can double, runs from November to the end of January [5].

Core Insights - United Parcel Service (UPS) exceeded analysts' profit expectations for Q3 and forecasted revenue above Wall Street's estimates for the holiday season, relying on price increases to counteract weak business-to-business demand in the U.S. [1][2] Financial Performance - UPS reported an adjusted profit of $1.74 per share for the three months ending September 30, surpassing the average analyst expectation of $1.30 [4] - The company achieved consolidated revenue of $21.41 billion, exceeding expectations of $20.83 billion [4] Future Outlook - UPS projects fourth-quarter revenue to be approximately $24 billion, while analysts had anticipated an average of $23.8 billion [3] - The company is focusing on rate hikes, cost reductions, and prioritizing high-margin shipments to stabilize its business ahead of the critical holiday season [2] Strategic Adjustments - UPS is reducing the number of packages delivered for its largest customer, Amazon.com, to enhance profit margins [3] - The peak holiday shipping and return season is expected to see daily average volumes double, lasting from November to the end of January [3]

Core Viewpoint - The acquisition of Yodel by InPost for £106 million is currently hindered by legal disputes regarding ownership, primarily due to former owner Jacob Corlett's claims to retain control through contested share warrants [1][2]. Company Overview - Yodel, previously owned by the Barclay family, employs around 10,000 people and serves clients such as AO.com, New Look, and Zara [3]. - The company has faced significant challenges in a competitive delivery market, leading to its sale as part of a broader divestment by the Barclays [3][4]. Acquisition Details - InPost's acquisition of Yodel was announced as a strategic move to enhance growth and redefine delivery services in the UK [1]. - The deal was initially seen as a "bold leap forward" for InPost in the UK market [1]. Legal and Ownership Issues - The takeover is currently entangled in High Court litigation, with Corlett contesting the acquisition and asserting his ownership rights [2]. - Corlett's ownership of Yodel was short-lived, having acquired it for £1 amid a fire sale by the Barclays [4]. Allegations Against Corlett - Corlett is accused of misappropriating funds from Yodel, with allegations of "asset stripping" to benefit his other venture, Shift Group [7]. - Specific claims include £1.5 million paid to Shift Trading without legitimate purpose and £2.7 million linked to questionable invoices [7]. - Corlett also entered Yodel into a costly software licensing agreement with Shift, costing the company £18 million annually [8].

Core Insights - Veho is expanding its delivery service to new markets, including Ann Arbor, Akron, and Greensboro/Winston-Salem, aiming to reach 60 markets and 128 million consumers by the end of 2025, up from 46 markets at the start of the year [3] - The company is experiencing significant growth, delivering over 10,000 parcels per week in Greensboro and Winston-Salem, which is driving investment in its parcel injection, sortation, and distribution capacity [2][3] - The U.S. parcel volume is projected to grow at a compound annual rate of 4% to 26.8 billion by 2027, with alternative carriers like Veho gaining market share from traditional providers [4][6] Company Developments - Veho has appointed Neel Madhvani as the chief product officer to enhance product development and operational efficiency, focusing on creating a differentiated delivery experience for e-commerce brands [8][9] - The company is investing in advanced technology to allow consumers to control delivery instructions and timing, similar to capabilities offered by Amazon [11][12] - Veho has expanded its geographic reach significantly this year, including markets in Southern California, New York City, and several others [7] Industry Trends - Non-traditional last-mile delivery companies are expanding their networks and capabilities amid a competitive landscape where demand has flattened and excess capacity exists [7] - Companies are leveraging gig drivers and self-developed apps to offer lower shipping rates compared to FedEx and UPS, while also enhancing shipment management technology [6] - The market is witnessing a shift as large retailers and independent carriers increasingly capture market share from traditional delivery services [6]

Core Insights - FedEx discontinued its partnership with Amazon in 2019 due to Amazon becoming a competitor in the last-mile delivery space [1] - Walmart is expanding its last-mile delivery capabilities through its app "Spark" and partnerships with gig economy workers [2] - Walmart is utilizing other last-mile carriers like Roadie and DoorDash, and is shifting intercity transportation to OnTrac to reduce costs [3] FedEx's Challenges - FedEx needs to reinvent its B2C delivery model to compete effectively, as its current B2B-focused network is not cost-effective for B2C deliveries [3] - The consumer preference for low-cost delivery options means that brand recognition is less important in the B2C market [4] - FedEx's contractor model, designed for larger B2B packages, incurs higher costs for smaller B2C parcels [5] Competitive Landscape - UPS faces challenges in the lightweight B2C parcel market due to high labor costs associated with its unionized workforce [6] - FedEx's contracted driver costs are lower than UPS, but it still struggles to compete with gig-based carriers that utilize crowd-sourced drivers [6]

Core Insights - Quadient has announced an extended partnership with Evri, enhancing their collaboration in the parcel delivery sector [1][4] - The partnership aims to address the increasing consumer demand for convenient and sustainable parcel services, particularly in the context of consumer-to-consumer (C2C) marketplaces [3][5] Company Developments - Evri will deploy an additional 2,000 Parcel Pending by Quadient smart lockers across the UK, significantly expanding its out-of-home delivery options [2] - The goal is to grow Evri's ParcelShop and Locker network to over 25,000 locations by 2030, more than doubling the current parcel drop-off locations [4] Technology and Innovation - The collaboration will utilize Quadient's open locker network, which is designed to be carrier-agnostic, providing secure 24/7 access for deliveries, returns, and exchanges [4][5] - Evri was the first UK carrier to implement Quadient's Drop Box and Printer capabilities, showcasing a commitment to innovation in last-mile logistics [4] Market Positioning - The partnership reflects a shared vision to create a smarter, more convenient, and sustainable last-mile delivery ecosystem [5] - Evri currently delivers around 900 million parcels annually and aims to enhance its international capabilities through strategic partnerships and acquisitions [8]