Tight Capacity and Rising Volume Means to Improve Logistics Rate in UPS' Favour: UBS Research

A combination of tight capacity and rising volume means logistics costs will continue to "improve" in UPS' favor, according to a research note from UBS, penned after a meeting between analysts at the bank and UPS' investor relations team. "UPS is transitioning to a slower pace of capacity addition in 2021 and we believe broader package industry capacity expansion is also likely to be modest," the research note reads. "Assuming a backdrop of economic growth in 2021, we believe the package market is likely to remain tight and support a path of pricing gains for UPS." UBS expects UPS' revenue from surcharges to be "significant," but the carrier didn't provide any guidance on the expected size of its peak surcharge revenue.