Consultant’s Insight: UPS bets on One UPS Advantage

UPS highlighted innovations and plans at an investor and analyst day meeting on March 26 — its first such meeting since June 2021. [caption id="attachment_69752" align="alignright" width="195"] Cathy Roberson, Air Cargo Next columnist[/caption] Chief Executive Carol Tome commented on how the market and the company have changed since 2021. “The convergence of several megatons and macroeconomic forces has us at a critical crossroads, where we either disrupt ourselves or be disrupted. And we’ve elected to disrupt through reimagination,” she said. As such, the emphasis will be on the company’s One UPS Advantage, a plan to offer end-to-end services within UPS’ framework. “We can orchestrate our customers’ entire supply chain from manufacturing to customs brokerage, freight forwarding, distribution, transportation to the end recipient or the store, and even returns in reverse logistics,” UPS Executive Vice President Kate Gutmann , who oversees International, Healthcare and Supply Chain Solutions, said. “But it’s not just about that expansive portfolio. It’s how we weave the services together to meet each customer’s needs. This is what we call the One UPS Advantage.” Emphasis on health care and international trade lane shifts are among the company’s top priorities for the next few years. Health care The health care logistics market is especially attractive to UPS because it has year-round demand and is more resistant to economic downturns, Gutmann said. This enables more predictability for operations across the whole supply chain. Most UPS Healthcare customers buy more services across UPS’ supply chain than customers in any other segment. Health care is a large user of UPS premium services like Next Day Air, reverse logistics and UPS Premier, representing about 10% of UPS’ total revenue in 2023, more than 7% of international package revenue and more than 25% of UPS Supply Chain Solutions ’ revenue, Gutman said. “We’ve come a long way since expanding health care logistics services in 2015, doubling our revenue to $10 billion, and we intend to do it again by 2026,” she said. Trade lane shifts Of the world’s 80 largest trade lanes, 49 involve an Asian country on at least one end and 22 involve an Asian country on both ends, according to Gutmann “With the trade lane shifts, our customers now need us to enable their expansion of manufacturing, sourcing and distribution to broader Asia and India markets,” Gutmann said. “We are unlocking growth acceleration with intentional diversification of our Asia business.” A new automated hub at Hong Kong International Airport (HKG) accounts for 37% of all of China’s exports, and a new air hub is under construction at Clark International Airport (CRK) in the Philippines. Once completed, these network and routing changes will enhance UPS time in transit in 205 Asia lanes, according to UPS. UPS executives vaguely discussed the company’s capabilities from Asia to Mexico to the U.S., with goods eventually being drop-shipped into UPS’ small-package network or the postal network for final-mile delivery. While Trade Direct Cross-Border was not specifically mentioned, this service keeps packages within UPS’ network, and offers consolidation, customs clearance, deconsolidation and last-mile delivery, providing door-to-door service across North American borders. Additional emphasis Increasing business-to-business volume and continued penetration of the SMB market were also discussed. Even though business-to-consumer was not mentioned, UPS executives noted that it would continue to focus on “select enterprise volume.” In addition, Executive Vice President and President U.S. Nando Cesarone told analysts, “We don’t see a need for retailers to go out and create their own solutions. … We can deliver hyperlocal. With Roadie , we can deliver same-day or oversized packages. And we have a whole host of UPS stores that provide service and access for our customers and of course there are great returns of solutions.” Roadie is a private, same-day delivery service for urgent and scheduled service across the U.S. One UPS Advantage One UPS Advantage is like FedEx ’s DRIVE initiative and other initiatives from supply chain providers like Maersk . These companies aim to keep freight and parcels within their networks by providing end-to-end solutions. The success of each provider will depend on customers’ willingness to accept a single supply chain provider, end-to-end visibility and tracking capabilities, and costs.

Consultant’s Insight: UPS bets on One UPS Advantage

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