UPS hasn’t had the easiest go in the past two years amid weak demand for freight and falling volumes, but the Atlanta-based parcel delivery giant’s brand is still the most valuable in all of logistics, one brand valuation consultancy says.
Target to Open Detroit Sortation Center to Amp Delivery Capabilities
According to Brand Finance , UPS’ brand value is $34.6 billion, down 2.4 percent from the year prior but still enough to keep the company at the top of its Logistics 25 report for the 10th year in a row. UPS edges out chief rival FedEx for the top spot, with the Memphis-based shipping company valued at $28.6 billion, a 1 percent decline from 2023 numbers.
These values are a far cry from either company’s market cap of $109.3 billion and $72.9 billion, with Brand Finance defining “brand value” as the value of the trademark and associated marketing IP within the branded business.
To calculate its valuations, Brand Finance uses a combination of four metrics: brand impact; brand strength; brand impact and brand strength; and a forecast of brand value calculation credibility.
Brand impact measures what companies pay in royalties, and how the brand impacts sector profitability versus generic brands. This results in a royalty range that could be charged sector-wide, such as 0 percent to 2 percent of total revenue.
Meanwhile, brand strength ties in research on the activities supporting future success, current perceptions of the brands and performance metrics like market share to assign a Brand Strength Index (BSI) score out of 100.
Together, brand impact and brand strength combine the royalty range and BSI to come up with a royalty rate. That means that if a sector’s royalty range is 0 percent to 5 percent and a brand has a BSI score of 80 out of 100, then an appropriate royalty rate for the use of this brand would be 4 percent
The final metric forecasts revenues by analyzing historic revenues, equity analyst forecasts and economic growth rates. From there, Brand Finance applies the royalty rate to the forecast revenues to calculate brand value.
“ Brand valuation can be useful in the event of a merger or acquisition, as it can help determine the value of the brand being acquired,” David Haigh, chairman and CEO of Brand Finance, in the report. “A strong brand can also help a company command a higher price for its products or services, as consumers are willing to pay more for a brand they perceive as high-quality and trustworthy.”
Walmart Enables Marketplace Sellers to Fulfill From Third-Party Sites
UPS and FedEx are well ahead of the pack when it comes to total brand value, with Germany’s DHL and the Japan Railways Group (JR) coming in at third and fourth, respectively at $12.2 billion and $11.9 billion. DHL saw its brand value increase 2.7 percent, while JR took a tumble of 13.5 percent.
The tough year across logistics has mostly had a negative impact on the brand value as a whole, with only two of the top 10 brands by ranking seeing an increase in value.
Ironically, the largest positive swing of brand value came from Canadian Pacific Kansas City (CPKC) , which saw an increase of 28 percent to $2.7 billion. CPKC is one of the two Class I Canadian railroads that locked out its employees earlier this month in anticipation of a labor strike. This effectively shut down CPKC’s rail operations from Aug. 22 before resuming Aug. 26, with the company saying it would take several weeks for the railway network to fully recover.
UPS got a major boost from a “sustainability perceptions value” applied by Brand Finance, which is calculated at $3 billion.
The logistics company aims to have 28.8 percent of its ground operations running on alternative fuels and has already planted 34.2 million trees as part of its goal to plant 50 million trees by 2030. The report also highlighted the recent unveiling of a UPS cycle hub in Cambridge, England, where the company is testing electric-assisted “eQuads” to congested cities in areas inaccessible to cars and trucks.
In assessing the gap between sustainability perceptions and performance, UPS also has the highest positive gap value of $224 million among logistics brands—well ahead of the second-biggest gap value of $82 million at the China Post.
A positive gap value means that brand sustainability performance is stronger than perceived by the public, illustrating that UPS has more opportunities to better promote their current sustainability initiatives.
“Brands can add value through enhanced communication about their sustainability efforts, so that perceptions are raised to fully account for the brand’s actual sustainability performance,” said the report. “UPS’s gap value suggests that it could generate an additional $224 million in potential value for shareholders through enhanced communication of its impact and accomplishments in sustainability.”
Inside the Challenges of Transportation and Logistics at the Module Level
Most Popular
Comments / 0