UPS And FedEx Will Likely Benefit From The Next Phase Of The U.S. Export Promotion Program

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The U.S. Department of Commerce recently announced the launch of NEI/NEXT, the next phase of its export promotion program. [1] The program is an extension of the National Export Initiative (NEI) launched in 2010 to facilitate growth in U.S. exports.  The NEI/NEXT intends to help American businesses reach out to customers outside of the U.S. and take advantage of opportunities in the global markets.

With increased promotion and assistance available to businesses for exporting their products, U.S exports are expected to grow. Major package and freight delivery companies such as UPS (NYSE:UPS) and FedEx Corp (NYSE:FDX) are bound to benefit from increased exports from the U.S. due to higher export package volumes.

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The NEI/NEXT will bolster U.S. exports

The U.S. Department of Commerce believes that exports have benefited from the NEI. Under the program, exports grew from $1.6 trillion in 2009 to $2.3 trillion in 2013 [1] and also helped add 1.6 million jobs. The number of firms involved in exporting their products grew 10% across the same period. [2] However, this accounts for less than 5% of American businesses.

The administration intends to build on the success from the NEI by launching the NEI/NEXT and reaching a larger audience. The new program will offer financial and informational assistance to help American businesses export their products and will also work towards removing trade barriers. This should help drive growth in U.S. exports by increasing the number of firms participating in the program.

Growing U.S. exports will drive package volumes for UPS and FedEx

UPS and FedEx are leading package and freight delivery companies in the U.S. with significant international presence. UPS and FedEx generate around 16% and 20% of their respective revenues by delivering packages from or to the United States with another country as the destination or origin point. [3] [4] Growth in U.S. exports driven by the promotion and assistance of the NEI/NEXT will help drive package volumes for these companies and thereby boost revenues.

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Notes:
  1. U.S. Secretary of Commerce Penny Pritzker Announces Next Phase of the National Export Initiative — NEI/NEXT, May 13 2014, www.commerce.gov [] []
  2. The Role of Exports in the United States Economy, May 13 2014, www. trade.gov []
  3. UPS’s 2013 10-K SEC Filing, www.ups.com []
  4. FedEx’s 2013 10-K SEC Filing, www.fedex.com []