UPS to Buy Service Parts Operating Network

BOSTON (06/02/2000) - UPS Logistics Group Inc. in Atlanta, a division of United Parcel Service of America Inc., announced yesterday that it will purchase the national service parts operating network of Burnham, an Atlanta-based supplier of logistics services. The companies are not disclosing the terms of the sale.

The deal, an apparent effort to gain a leg up on UPS' arch rival, Memphis-based FedEx Corp., is expected to be completed within the next two to three weeks. It will create the nation's most extensive critical parts delivery network, with the capability to deliver to 88% of all U.S. businesses within two hours, said UPS Logistics spokeswoman Lynnette McIntire.

"The acquisition will continue to expand the service parts logistics infrastructure we already (have in place)," she said. "SonicAir, the UPS Logistics Group subsidiary, will operate the service parts logistics network from Scottsdale (Arizona)."

McIntire said the service parts logistics network manages the shipment of parts for, and the repair and refurbishment of, high-tech equipment for its customers. It also includes order and inventory management as well as distribution and technical support.

McIntire said the acquisition will open up new markets for UPS Logistics and will enhance the company's own U.S. network by adding Burnham's expertise to UPS' existing infrastructure. UPS Logistics said the combined infrastructure will benefit customers by improving the speed of delivery as well as reliability.

"This is a highly fragmented market," she said. "And the industry can benefit from one infrastructure, so it makes sense for us to be in this market."

Burnham spokesman Michael Runniger said his company agreed to sell its national service parts operating network to UPS Logistics because it "presented a (delivery) model our customers were looking for."

Runniger said that following the sale, Burnham will continue to focus on its core business - developing and implementing supply-chain services for the ATM, computer electronics, copier/office machines, health care and hospitality industries.

Donald Broughton, a transportation analyst at A.G. Edwards & Sons Inc. in St.

Louis, said UPS' Logistics purchase of the Burnham division fits in with exactly where both UPS and FedEx are headed - toward being more than just transportation providers.

He said UPS and FedEx are responding to the change in the way companies get their goods - a change brought about by the advent of e-commerce.

"With the technology we have now, companies don't need a distributor or wholesaler to get their goods to their customers because their customers are going to their Web sites and telling them what they want," he said. "So with Burnham, you've got customers (going to its Web site) and saying 'this is what I need' and UPS is saying 'we'll take care of the physical demand (of getting the goods to the customer)'. And if UPS can (do that) it will (make money)."

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