By Robbie Whelan
Shipping insurance for luxury goods is emerging as a thorny
issue for logistics companies as they compete for business from
e-commerce retailers.
Sales of personal luxury goods hit a record $271 billion in 2014
-- based on the exchange rate between the euro and the dollar at
the end of 2014 -- consultancy Bain & Co. estimated in a May
report. Sales of hard luxury items like watches and jewelry rose 2%
from 2013, while sales of accessories like shoes and leather goods
rose 4%.
Getting those items to customers is proving tricky. Delivery
services often need to split luxury goods into small shipments to
keep each package below the maximum insured value. Uber
Technologies Inc. has struggled to maintain business arrangements
with some clients, including online retailer Gilt Groupe Inc.,
because it was unable to insure high-price items sold through
Gilt's online store.
Keeping e-commerce companies happy is key to Uber's chances of
transforming itself into an "urban logistics" company that delivers
not just people, but things. On Monday, the Journal reported that
Uber is in talks for a new round of funding that would value the
company at $50 billion or more, about the same size as shipping
giant FedEx Corp.
United Parcel Service Inc. took steps Monday to make sure it
doesn't face the same problems as Uber. UPS Capital, the
financial-services arm of the shipping company, announced it would
acquire Parcel Pro, a firm that provides insurance coverage for the
transport of jewelry, wristwatches and other luxury goods. One
benefit of the deal: UPS should be able to raise coverage limits
for both domestic and international shipments of high-priced
items.
Kevin Sterling, an analyst who covers UPS for BB&T Capital
Markets, interpreted the move as a UPS preparing for an increased
level of business flowing to UPS from luxury-goods
distributors.
"My belief is that it's about scale," he said. "I think [UPS is]
trying to get ahead of the curve."
Write to Robbie Whelan at robbie.whelan@wsj.com