ATLANTA -- UPS Inc., the world's biggest shipping carrier, is stepping up expansion of its freight delivery business with its $1.3 billion purchase of the trucking company Overnite Corp., a move that drew quick response from rivals who vowed not to be deterred.
The deal, disclosed yesterday, is UPS's largest single acquisition, and follows the Atlanta company's decision last week to spend $24 million to build and equip five regional freight hubs at airports nationwide. Overnite shares soared 43 percent; UPS shares closed at $73.18, up $1.03, on the New York Stock Exchange.
Shipping heavy freight has been a small percentage of UPS's overall business, but the company wants to make it a bigger emphasis -- and there's plenty of money in it. Freight hauled by trucks in the United States generated $671 billion in revenue for delivery companies in 2004, according to the American Trucking Associations.
''That's an area where we want to be able to offer every option to our customers, whatever they need," said Scott Davis, UPS's chief financial officer.
Rivals that carry freight, like Memphis-based FedEx Corp. and Overland Park, Kan.-based Yellow Roadway Corp., wasted little time weighing in.
''This transaction doesn't create a new competitor; it's a competitor we're familiar with," said Doug Duncan, the chief of FedEx's freight division. He said his company has been working since 2001 to integrate its freight business with other services it provides, to offer total solutions to customers. ''As long as we focus on the customer . . . that will have a lot more impact on our success."