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UPS Inc. s (NYSE: UPS) sale of its less-than-truckload business, UPS Freight, to Canadian firm
TFI International Inc. (NYSE: TFII) works out well for both parties as it relieves UPS of a noncore, low-margin asset and puts the business in the hands of a more freight-centric carrier, UPS CEO Carol Tomé said Tuesday.
The $800 million all-cash deal, which was announced last week, is expected to close at the start of the second quarter, Tomé (pictured) told analysts on a conference call Tuesday to discuss UPS fourth-quarter and full-year results. UPS will use the proceeds to pay down debt, she said. Montreal-based TFI will rebrand the unit as TForce Freight. UPS will sell the new TFI service for no less than five years and will provide back-office services for three years. All 14,500 UPS Freight employees, including 11,500 Teamsters union members, will join TFI.
Dive Brief:
UPS expects demand for its services to continue to exceed the capacity in the market for the foreseeable future, CEO Carol Tomé said on the company s earnings call Tuesday.
UPS customers expect e-commerce demand to remain even after the pandemic is under control, Tomé said. U.S. non-store retail sales were up nearly 21% YoY in Q4 2020, Chief Financial Officer Brian Newman said.
The increased demand translates to a capacity shortfall, candidly, Tomé said in discussing the continued demand for e-commerce moving forward. And if you look forward into 2021, you would expect that shortfall to consist, which just gives us an opportunity to continue to optimize our network.
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UPS Inc. (NYSE: UPS) on Tuesday reported solid fourth-quarter results as delivery demand roared during a holiday shipping season amplified by soaring e-commerce activity as the COVID-19 pandemic raged in the U.S. and most of Europe.
The nation s largest transportation company also reported all-time annual records for revenue at $84.2 billion and adjusted diluted earnings per share of $8.23.
On an adjusted diluted basis, UPS posted a fourth-quarter gain of $2.66 a share, way above consensus estimates that ranged between $2.10 and $2.14 a share. The adjusted EPS figures were 55 cents per share higher than the adjusted 2019 results, equating to a 26.1% year-on-year gain, Atlanta-based UPS said.