Consultant Insight: UPS looks to tech and asset-light network to fuel international growth

Coming off a record year in 2020 and with a solid start to 2021 , Atlanta-based integrator UPS sees growth potential for its international group and will pursue market share gains through a focus on asset-light expansion, and by improving customer-facing technologies, the company said this week during a virtual conference for investors and analysts. While Europe comprises the largest part of the International group’s revenue, UPS International is gaining ground in Asia after years of investment in the region. [caption id="attachment_76185" align="alignright" width="298"] Cathy Roberson[/caption] During the first quarter, UPS added 25% more flights outbound from Asia compared to the same quarter in 2020, resulting in a 43% increase in Asia export volume compared to a 27.7% YoY increase in exports from Europe. UPS does not expect airline belly space for Asia outbound to return until 2023 and, like FedEx, will take advantage and likely gain market share. UPS’ international group identified 40 markets in Asia, West Africa, and Latin America that are currently underpenetrated by UPS but have the biggest opportunities to gain market share to offer intra-country delivery services via joint ventures, agents, and outside service providers (OSPs). To assist these service providers, UPS developed a program called Partner Hub that will provide tools including route optimization to help lower delivery costs, improve customer service and gain market share. The strategy is a nod towards the growing importance of emerging markets and perhaps the growth in e-commerce opportunities in these areas. Infrastructure has always been a significant draw back in emerging markets in terms of e-commerce logistics requirements. By offering a program such as Partner Hub, local delivery providers will benefit by lowering their costs to deliver, a competitive advantage, and a win for UPS. UPS also plans to shorten international delivery times by emphasizing its air and ground networks and focusing on Europe in terms of speed. UPS may be feeling some heat from its closest competitor FedEx, which announced earlier this year that it is also speeding up delivery times within Europe and cross-border to assist its e-commerce customers. Along with the leading integrator in and out of Europe DHL, shippers will benefit from the increased competition through faster delivery times and competitive rates. UPS will differentiate itself from the competition by expanding its digital access program (DAP) internationally. Small to medium-sized business (SMB) customers are offered discounted shipping rates through the program to embed UPS as part of platforms such as Stamps.com and Descartes ShipRush. In addition, UPS is also introducing digital tools such as its International Knowledge Base to assist shippers with customs documentation and other cross-border services and a mobile app that allows a UPS customer to manage international shipments. Note: Cathy Roberson was formerly employed by UPS and owns stock in the company.

Consultant Insight: UPS looks to tech and asset-light network to fuel international growth

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