Shipping giant UPS has sold off its freight division, saying it will allow a “laser-focus” on its core business.
TFI International paid $800 million for the business, which includes UPS’s less-than-truckload and dedicated truckload operations. The deal also includes provisions for UPS Freight to continue using UPS’s domestic parcel network to fulfil orders for five years.
UPS said the move was part of its “better not bigger” strategic positioning, giving three main reasons for the sale. These were the improvements to its operating margin, the reduction of future capital investments in UPS Freight and the influx of cash to pay down its long-term debt.
Estimates released by UPS show that adjusted operating profits fell 48% from 2019 to $39 million in 2020, due to impacts from the Covid pandemic.
UPS Chief Executive Officer Carol Tomé said: “We’re excited about the future and the opportunities this creates for both UPS and UPS Freight as part of TFI International Inc.
“The agreement allows UPS to be even more laser-focused on the core parts of our business that drive the greatest value for our customers.”