UPS' intentional approach to tight capacity will mean higher rates for shippers: UBS

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UPS' intentional approach to tight capacity will mean higher rates for shippers: UBS - Supply Chain Dive

Dive Brief:

• 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.