The ubiquitous Brown is more than chocolate-colored trucks or a plain-vanilla delivery business. United Parcel Service (UPS) is the world's largest package delivery company, transporting more than 15 million packages and documents per business day throughout the US and to 220-plus countries. Its delivery operations use a fleet of more than 95,000 motor vehicles and 500-plus aircraft. In addition to package delivery, the company offers services such as logistics and freight forwarding through UPS Supply Chain Solutions, and less-than-truckload (LTL) and truckload (TL) freight transportation through UPS Freight.
The company's international scope is immensely vast; it serves customers in more than 220 countries worldwide. However, the US generates 75% of its total revenue, while other countries account for the remaining 25%. It has about 1,900 operating facilities.
Domestic package delivery is the company's largest business segment, accounting for about 60% of sales. International package delivery is its second largest segment, representing roughly 25% of UPS' total sales. Along with logistics and trucking, the company's supply chain and freight segment, which generates the remainder of sales, includes mail expediting ( UPS Mail Innovations) and financial services ( UPS Capital) businesses, as well as postal and business services store franchiser Mail Boxes Etc. which maintains UPS Store and Mail Boxes Etc. locations in the US and overseas.
After three years of steady, sizable growth, UPS experienced a 2% rise in total sales but a 79% nosedive in profits from 2011 to 2012. The slight increase in sales for 2012 was due to a 3% jump in revenue from its freight segment. This increase was driven by higher LTL revenue per hundredweight and in gross weight hauled. The company was also helped by general rate increases covering non-contractual shipments in Canada, Mexico, and the US. Domestic package delivery revenues also jumped by 4%.
The sizable drop in profits, however, was due to a spike in operating expenses, especially compensation and benefits. UPS' employee payroll costs increased during 2012 largely due to contractual union wage rate increases that took effect under the company’s collective bargaining agreement with the Teamsters, as well as an increase in total union labor hours.
UPS' extensive global reach is a selling point for its supply chain management offerings, which are tailored to customers in industries such as consumer goods and retail, health care, and technology. The company is seeing a growing trend among businesses outsourcing supply chain management, viewing it as a strategic advantage to have effective management of their supply chains. In 2011 the company acted on its health care logistics strategy with the opening of five healthcare shipping facilities providing service to North and South America, Asia and Europe.
Package delivery revenue is increasing overseas, where UPS continues to expand through infrastructure investments and selected acquisitions. A $200 million, 70% expansion of its European air hub in Cologne, Germany, is one of several recent projects in Europe and Asia. In 2012 UPS acquired Belgium-based Kiala, which provides a platform that allows e-commerce retailers to deliver goods to a retail location for pick-up in Belgium, France, Luxembourg, the Netherlands, and Spain.
However, a colossal blow to the company's international expansion efforts occurred in 2013, when European authorities blocked a massive deal involving UPS' pending $6.9 billion acquisition of rival TNT Express. The acquisition would have been the largest in the history of UPS and would have significantly added to its size and scope in Europe and emerging markets. The deal was blocked due to antitrust concerns, and UPS has appealed the European Union regulator's decision to block it.