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Love Aids Logistics, Biz Up

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With Valentine's Day right around the corner, lovers are in a mad rush to send gifts to their sweethearts. This translates into solid business for logistic companies that make this event worth a smile by delivering gifts at our doorsteps.

Thanks to the millions of celebrants across the globe, Valentine’s Day remains special for logistics firms. The event drives a surge in sales for these firms.

According to latest reports by National Retail Federation, average Valentine’s Day individual spending is expected to be $130.97, up from $126.03 last year. This brings total cash outflows to an estimated $18.6 billion this Valentine’s Day.

The federation also reported that a large chunk (approximately 50%) of these expenditures would be on candies and other edible products followed by flower, accounting for approximately 30%. The rest would include expenditures on valuable items like jewelry and apparels. If these figures set the retail industry on the go, the packaging industry will not remain far behind from benefiting from the love day.

United Parcel Service Inc. (UPS - Free Report) recently reported that it expects to ship nearly 95 million flowers through its network. In addition, it has tied up with companies like Vermont Teddy Bear Company, LobsterGram Inc. and Fairytale Brownies to ship Valentine’s Day goodies for incremental revenues.

To support timely deliveries with utmost care these packaging companies also remain equipped with proper facilities like temperature control containers, express delivery services, massive warehousing and hassle-free customs clearance. Companies like UPS have also set up 130 additional flight services for its customers.

Globalization has indeed brought the world so close that every individual is connected with a matrix of various networks governed by modern technology. Whether this has simplified our lives or made it more complicated remains subjective, but surely it has driven trade and economics to a level where any event (good or bad) has a global impact. Apart from other factors, globalization has certainly given a boost to e-commerce and largely influenced consumer behavior.

Reaping benefits from the current trends, logistic companies like UPS, FedEx Corporation (FDX - Free Report) , Expeditors International of Washington Inc. (EXPD - Free Report) and CH Robinson Worldwide Inc. (CHRW - Free Report) are generating a good amount of their business from events like New Year and Christmas, celebrated worldwide. With the help of an expanded market reach and advanced infrastructure, freight carriers are now able to maximize profitability with shipments across the globe.

The usual business days aside, periods like the holiday season and special events like Valentine’s Day remain important sales boosters. These generally provide an uptick in sales in an otherwise lackluster demand environment.

Overall, we expect this Valentine’s Day to cheer up packaging companies with good volumes that would ultimately reflect in their quarterly results. Amid economic upheavals, fiscal cliff debacle and nearing of budget sequester, we believe Valentine’s Day will bring some relief for the parcel companies.

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