UPS to increase investments thanks to U.S. tax reform

The Atlanta-based parcel giant and third-party logistics provider has announced an additional $12 billion in investments in its Smart Logistics Network and pension funding.    UPS Inc. has become the latest company to pledge increased investment as a result of the recent passing of the U.S. Tax and Jobs Acts, which cut the effective federal tax rate for corporations from 35 percent to 21 percent.
   The Atlanta-based parcel giant and third-party logistics provider said in a statement it will use more than $12 billion in additional investments to expand UPS’s Smart Logistics Network, significantly increase pension funding, and position the company to further enhance shareowner value.
   In addition, UPS said it plans to raise future capital spending above its previously committed range of between 6 percent and 7 percent of annual revenue.
   The company said it will invest an additional $7 billion over three years for the construction and renovation of facilities, to acquire new aircraft and ground fleet vehicles, and to enhance the information technology platforms required to support the network, manage the business and power new customer solutions.
   Just yesterday, UPS announced it has placed an order with aircraft manufacturer Boeing for 14 more 747-8 and four 767 freighters in response to increasing customer demand for air cargo capacity after reporting higher than expected earnings for the fourth quarter of 2017.
   The company also recently made a $5 billion tax-qualified contribution to its three UPS-sponsored U.S. pension plans, representing roughly $13,000 per participant. UPS said the voluntary contribution raised the funding level to above 90-percent, “securing retirement benefits on behalf of union-represented and union-free employees eligible for UPS-funded pensions.”
   “This $12 billion investment program is an outgrowth of the opportunity for tax savings created by the Tax and Jobs Act,” said David Abney, UPS Chairman and Chief Executive Officer. “We will increase network investments and accelerate pension funding to strengthen the company for the long term, so that we maximize the benefit to our global customers, employees and shareowners.”
   Abney applauded U.S. President Donald Trump and Congress for the passage of the federal tax reform bill, calling the move a “bold action to improve the U.S. economy.
   “Our investments will create new jobs, secure existing jobs and expand opportunities for our people,” he said. “We are committed to remaining a preferred employer by continuing to provide industry-leading compensation and excellent career opportunities.”
   “Tax reform is a tremendous catalyst,” he added. “We will continue to evaluate additional actions that benefit customers, employees and shareowners as we progress further in the year.”
   UPS arch-rival FedEx earlier this week similarly announced it would be increasing wages and investment in the coming year as a result of expected benefits from the Tax Cuts and Jobs Act.