Paint It Black

Latin Trade,  Sept, 1999  by Sergio R. Bustos

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WHEN UNITED PARCEL SERVICE LAUNCHES service to a city or region, insiders say the city or region is "going brown" for its trademark color. But with its late-June purchase of Challenge Air Cargo, a major player in the Latin American and Caribbean air cargo business, the Atlanta-based firm is adding so much new service that it's painting the region black.

"It would have taken years to extend our reach into Latin America on our own, says Robert Elizondo, UPS vice president of Latin America operations. Indeed, Miami-based Challenge Air Cargo makes 120 weekly flights to 16 cities in 13 countries. UPS' strength lies in only two markets: Mexico and Puerto Rico.

The acquisition, says Elizondo, is part of UPS' strategy to boost its meager market share against competitors Federal Express and DHL.

The company is buying share at a time when the cargo business is going through a rough ride. Bill Spohrer, Challenge's founder and president, says the only 'bright spots" in the region are Central American routes.

UPS and Challenge executives were mum on terms of the deal, but UPS is buying the company's assets, which include the operating rights to fly in and out of Latin America. No airplanes are included because Challenge leases planes from others. In 1998, Challenge had $131 million in revenue; UPS' Latin American revenues were about $1 billion.

COPYRIGHT 1999 Freedom Magazines, Inc.
COPYRIGHT 2008 Gale, Cengage Learning