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UPS Delivers on Brand Value - Brand Finance

06-Mar-2018 | Source : Brand Finance | Visits : 5285
LONDON - UPS remains the world’s most valuable logistics brand, according to the latest Brand Finance Logistics 25 report, despite 1% year-on-year decrease in brand value to US$22.0 billion.

UPS’s profits decreased by 7% as did its forecast revenue growth by 10%. Nevertheless, UPS remains at the top of the table as it continues to lead the way in technological advances. The company recently invested US$3 billion to revamp its network and completed the first phase of the ORION project, a cutting-edge navigation system offering the most up-to-date routes for drivers, generating around US$400 million in savings.

According to Brand Finance, the top six brands collectively had a stagnant year, with aggregate brand value growth of just 0.2% between them, despite increased online retailing and the consequent demand for delivery services. In effect, it appears that the big logistics brands are being squeezed on both ends, by both customers and competitors.

This is because local delivery brands are providing increased competition, and the large online retailers are able to demand lower prices.

Richard Haigh, Managing Director of Brand Finance, commented:
“There is no doubt that forging a distinct brand helps a business to build resilience. As Amazon prepares to launch ‘Shipping with Amazon’, having a strong brand can help protect incumbents from this new competition. Powerful brands alone will not be enough to prevent Amazon from gaining a foothold in the industry, however, they will allow breathing room for the existing brands to riposte and limit their loss of market share.”

FedEx Posts Steady Growth 
Meanwhile, FedEx (up 6% to US$18.2 billion) retained second place supported by its acquisition of TNT Express. With this purchase, FedEx is taking steps to create a truly global network, and the first phase is complete as TNT Express packages can now be handled by FedEx drivers and enquiries to one platform can be solved from both.

However, the TNT acquisition has also caused problems for FedEx as the Petya cyber-attack created a loss of revenue due to decreased volumes at TNT Express as well as incremental costs associated with contingency plans and amending affected systems. Although TNT services have been substantially restored, the economic consequences for future brand value could be considerable.

MTR: Brand Strength Going Places  
The strongest brand this year is Hong Kong’s public transport brand, MTR, increasing its Brand Strength Index (BSI) score to 82.2 with a brand rating of AAA-. MTR operates one of the most efficient rapid transit systems on the planet, with 99.9% of passengers arriving within 5 minutes of the scheduled time. Its focus on high-quality services is attractive to customers, and protects the brand amongst key stakeholders. At the same time, MTR has a stated policy of minimizing environmental impacts while delivering safe, fast, and reliable public transport services.

Brands from mainland China also fared well, largely driven by their expected business growth and focus on serving their domestic markets. Following fast year-on-year increase in brand value, CRSC (China Railways Signal Communication Corporation, up 54% to US$1.3 billion) and SIPG (Shanghai International Port, up 47% to US$1.2 billion) entered the Brand Finance Logistics 25 league table at 24th and 25th place respectively.

Mail Services Push the Envelope
The flagship of UK logistics, Royal Mail (down 20% to US$2.2 billion) continues to struggle as it experienced the largest drop in brand value in the sector. Along with a decline in letter delivery, the company is facing fierce competition from other parcel delivery services, such as UPS which offers services globally. French mail service, La Poste (down 6% to US$3.7 billion), faced similar challenges.

By contrast, Poste Italiane (up 20% to US$4.8 billion) and Deutsche Post (up 29% to US$4.3 billion) have both recorded significant brand value growth in the past year. Poste Italiane revamped its structure, and today, almost 90% of its revenue comes from insurance or financial services. With increased revenue and favorable forecasts, the company is positioned well for the future. Similarly, Deutsche Post has grown to include more parcel services in conjunction with DHL, which is part of the same corporation.

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