Bloomberg News

UPS Says U.K. Bars Cargo Screening at Some Sites on Security

June 17, 2011

(Updates with closing share price in ninth paragraph.)

June 17 (Bloomberg) -- United Parcel Service Inc., the world’s biggest package-delivery company, said some U.K. sites have been temporarily closed since last week after a government ban on cargo screening following a scheduled security review.

Six U.K. facilities, including the main air hub in East Midlands, are still processing packages and flights are going into and out of the country, said Susan Rosenberg, a spokeswoman for Atlanta-based UPS. She declined to say what prompted the closings, other than saying there wasn’t a security incident.

In October last year, a bomb was found in a printer cartridge in a package sent from Yemen via UPS at East Midlands airport. London’s Metropolitan Police said at the time the bomb was timed to explode over the U.S. eastern seaboard. Home Secretary Theresa May said then the U.K. would review “all aspects” of airfreight security as a result.

“Following careful consideration, the department has restricted the number of sites in the U.K. at which UPS Ltd. are permitted to screen air cargo until it has satisfied current security requirements,” the Department for Transport in London said in an e-mailed statement today. “For obvious security reasons we will not comment on the details.”

Volume destined for the affected centers is being re-routed to other locations and operations should return to normal early next week, Rosenberg said. UPS received 22 percent of its revenue, or $11.1 billion, from international package deliveries last year.

‘Right the Ship’

“They’re suspending, they’re not halting operations,” said Kevin Sterling, a Richmond, Virginia-based analyst with BB&T Capital Markets. “I don’t think it’s a prolonged impact, and knowing UPS they’ll right the ship.”

Sterling, who recommends buying UPS stock, said he doesn’t expect the temporary closings to affect the company’s earnings.

“The caveat is if it’s a prolonged shutdown, but I don’t see that right now,” he said.

UPS gained 12 cents to $69.17 at 4:02 p.m. in New York Stock Exchange composite trading. The shares have declined 4.7 percent this year.

Another bomb that originated in Yemen was discovered and defused by Dubai police at a FedEx Corp. facility in the emirate on Oct. 29.

FedEx is operating normally in the U.K., Jim McCluskey, a spokesman for Memphis, Tennessee-based company, said today.

--With assistance from Mary Schlangenstein in Dallas and Thomas Penny in London. Editor: Cecile Daurat

To contact the reporters on this story: Natalie Doss in New York at ndoss@bloomberg.net; Mary Jane Credeur in Atlanta at mcredeur@bloomberg.net

To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net


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