UPS Capital to expand services to Europe

UPS, the express parcel delivery company, will on Wednesday launch a financial services subsidiary in the UK to service Europe.

The move by UPS Capital, the group’s financial division, is part of a wider trend by logistics companies to offer value-added services.

Other logistics companies already offer such higher margin services as packaging, inventory, assembly of goods, and even basic manufacturing.

Bob Bernabucci, UPS Capital Corporation’s president, said the new services would largely be aimed at UPS logistics customers, but were available to all companies in Europe. A similar venture was launched in the US in 1998, and in Taiwan and China last year.

“The bunching of these services can be a very attractive proposition for the customer, as opposed to buying them singly.” said Mr Bernabucci.

Initially, UPS Capital Global Trade Finance UK will offer four main products. Receivables finance will advance sellers their money and collect it from the buyer after up to 180 days, financing the credit period, handling collection and administration, and guaranteeing the vendor against non-payment.

Other services will be pre-shipment finance going back to purchase of raw materials, inventory and stock finance, and letters of credit.

Finance costs will be “comparable” to bank overdraft rates, but overall charges will vary according to the number of services required, volumes, the type of goods, and the risk factor.

The Atlanta-based parent company plans to add more services later and to set up more bases in mainland Europe.

Other UPS Capital subsidiaries in the US covering asset-based lending, payment solutions, leasing, insurance, and card transactions, could also be introduced in Europe.

“It’s our long-term objective to provide the type of breadth of financial services throughout the world that we do in the US currently. It’s just a question of timing,” said Mr Bernabucci.