UPS Capital, the financial-services arm of shipping company
United Parcel Service Inc. announced Monday that it would acquire
Parcel Pro, a logistics firm that provides services and insurance
coverage for the transport of jewelry, wristwatches and other
luxury goods, mainly for business customers. Terms of the deal
weren't announced.
Most shipping insurance is limited to $50,000 for U.S. domestic
parcels and $500 for international packages, forcing companies to
split up shipments into multiple packages, which is costly, UPS
said in a statement announcing the deal. Under the tie-up with
Parcel Pro, UPS will be able to insure domestic shipments of as
much as $150,000 in value and international shipments of as much as
$100,000 a package.
"This is a much quicker way for them to get scale in the
insurance of jewelry business, rather than starting from scratch,"
said Kevin Sterling, an analyst who covers UPS for BB&T Capital
Markets. "Parcel Pro is already in all the major jewelry markets.
Customers already know them. Customers know UPS too, but don't
really think of them as an insurer."
Parcel Pro has offices in Los Angeles, New York, Miami, San
Francisco, Hong Kong, Japan and Singapore and has a business
agreement to provide preferred shipping services to Jewelers
Mutual, the largest jewelry insurer in the U.S., according to
UPS.
"The increased maximums allow companies to ship more items in
one package, which is logistically easier and more cost effective,"
UPS said.
The Parcel Pro acquisition is part of UPS's effort to grow its
business-to-business segment, which in many cases is more
profitable than its consumer-shipping business because of economies
of scale. However, UPS's consumer business is growing much faster.
B2B volume grew 3% in 2014 on the back of growth in shipments in
the industrial, auto and government sectors, according to the
company's annual report, compared with 12% growth in
business-to-consumer shipments.
"They'd love to be more B2B, because it's more profitable, but
of course B2C is the one that's growing, because of the natural
progression of the growth in online shopping and e-commerce," Mr.
Sterling said.
Write to Robbie Whelan at robbie.whelan@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires