TRANSPORTATION AND LOGISTICS
COMPANIES AS ENABLERS OF
ECOMMERCE, ECONOMIC
GLOBALIZATION, AND OUTSOURCING
April 8, 2006
EBA 612
Contemporary Issues in Business
Dr. James Coleman
Joel Bulger
Nelton Gaertner
Matt Otto
Stephanie Turpin
Fritz Valsaint
Andri Weathersby
Presentation Overview
Provide brief review of the Transportation and Logistics
industry and the key players
Summarize UPS’ position within the industry, provide a few
company facts and its SWOT analysis
Introduce our proposed five UPS business strategies as
required
Show how each business strategy will be modified to fit
rapidly developing and lesser developed countries.
UPS Procurement Services
2
Transportation & Logistics Industry
Market Size
2002 Transportation and Logistics market size $778.6 Billion
 Trucking – largest segment with approximately 78% of revenue
UPS Procurement Services
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Transportation & Logistics Industry
Market Size and Key Players
 In 2005 U.S. Market size is approx. $900 billion
 More than 10 percent of the U.S. gross domestic product
 Global market size is approx. $3.43 trillion
 Sample companies and historical revenues
in billions
Year
UPS
FedEx
CSX
CFN
2000
$24.1
$18.3
$7.9
$5.6
2001
$24.0
$19.6
$7.9
$4.9
2002
$23.9
$20.6
$7.9
$3.0
2003
$33.5
$22.5
$7.6
$3.2
2004
$36.6
$24.7
$8.1
$3.7
2005
$42.6
$29.4
$8.6
$4.2
UPS Procurement Services
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UPS Facts (2005)
Founded 1907
Headquarters in Atlanta, GA
$42.6 Billion Annual Revenue ($36.6 Package Operations, $6 billion Supply
Chain)
407,200 worldwide employees (384,000 U.S., 58,800 International)
3.75 Billion Packages (14.8 million packages/documents daily volume)
Service More Than 200 Countries and Territories
7.9 million customers
10 million daily on-line tracking requests
917,700 Package Cars, Vans, Tractors and Motorcycles
268 Jet Aircrafts; 9th Largest Airline in the World
309 Chartered Aircrafts
1,788 Operating Facilities
UPS Procurement Services
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UPS SWOT Analysis
Strength
Weaknesses
Leading market position
Loss of domestic market share
Large operating base
Low presence in Asia
Technological edge
Unionized labor force
Financial strength
Integration of its acquisitions
Acquisitions of Menlo and Overnite
Speed/response to market due to size
Brand/Reputation/Trust
Opportunities
Threats
Acquisitions
Rising oil prices
Rise in demand for LTL services
Government regulation
Growth in ecommerce services and
Smalls Businesses
Quasi government competitors
Seasonality in business
Expanded access to China
Growth in procurement and supply chain
management
UPS Procurement Services
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Proposed UPS Business Strategies
1. Develop and market a portfolio that combines procurement and
supply chain management services on a web-based platform
2. Expand access to Asia, Europe and South America (inter/intra) via
continued organic growth and mergers and acquisitions
3. Develop a comprehensive web-based trade management tool to
minimize cross border complexities to enable global commerce
4. Develop greater access to retail and other channels to increase B2B
and B2C accessibility to UPS products and services
5. Develop and market a Small Business Resource Center to leverage ecommerce and small business growth
UPS Procurement Services
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Proposed UPS Business Strategies
1. Develop and market a portfolio that combines procurement and supply chain
management services on a web-based platform

Situation


UPS wants to be the global provider of choice in managing the three flows of
commerce: goods, information and funds
Opportunity

UPS will appear at all points along the customer’s supply chain. These points
provide:

Global movement of goods

End to end visibility

Finance customer’s supply chain
UPS Procurement Services
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Proposed UPS Business Strategies
2. Expand access to Asia, Europe and South America (inter/intra) via
continued organic growth and mergers and acquisitions

Situation


UPS’ business is growing at explosive rates in Asia, Europe and Latin
America. Capacity is not currently in place to support sustained growth of
this magnitude
Opportunity

Growth through Mergers and Acquisitions

Organic growth

Developing countries have the ability to become trail blazers

There is no vested interest to protect and no existing business to
cannibalize
UPS Procurement Services
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Proposed UPS Business Strategies
3. Develop a comprehensive web-based trade management tool to
minimize cross border complexities to enable global commerce


Situation:

Today, trade rules are issued by more than 200 countries creating a
daunting challenge for businesses

In 2003, $1.25 trillion in goods entered the United States.

By 2020 an estimated 85% of manufactured goods will be sold across
borders versus 20% in 2002 (Mckinsey & Company)
Opportunity:

UPS has the ability to help transform cross-border shipping from a
daunting challenge to a competitive advantage by:

Helping shippers improve regulatory compliance

Reduce expenses, eliminate rework through standardized
processes

Streamline global supply chains
UPS Procurement Services
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Proposed UPS Business Strategies
4. Develop greater access to retail and other channels to increase B2B and B2C
accessibility to UPS products and services


Situation

Explosion of commerce between B2C and individual to individual

Current Retail Access: The UPS Store, 4,400; Mail Boxes Etc., 1,300; UPS
Customer Centers, 1,000; Authorized outlets, 17,000; UPS Drop Boxes, 40,000
Opportunity

Position UPS services in high-traffic locations to provide access for consumers
and small businesses


Create a self-service or smart kiosk for areas such as airports, convention
centers, universities and malls
Other benefits to UPS, businesses and consumer

UPS – treat the consumer like a business – consumer can drop and pickup
packages at closest point (no 2nd and 3rd attempt by UPS)

Business/Consumer – Consumer receive product first time - no return

Allows any company with web-access to be a global player
UPS Procurement Services
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Proposed UPS Business Strategies
5. Develop and market a Small Business Resource Center to leverage ecommerce and small business growth

Situation


Help UPS capitalize on the growth and development of Small Office
Home Office (SOHO) market and ecommerce.
Opportunity

UPS to offer business starter kit

E-commerce interface to conduct business

Employee hiring, training and development

Accounting/Tax/Finance (access to capital)

Legal services

Healthcare/Discounts

Marketing

Supply chain management consulting
UPS Procurement Services
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Rapidly Developing
Vs Lesser Developed Countries
Developing
Lesser
Developed
China
Afghanistan
South Africa
Bangladesh
Chile
Cambodia
Argentina
Ethiopia
India
Gambia
Costa Rica
Mozambique
Taiwan
Nepal
Saudi Arabia
Uganda
United Arab
Emirates
Zambia
UPS Procurement Services
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Modification of Proposed UPS Business
Strategies
1. Develop and market a portfolio that combines procurement and supply
chain management services on a web-based platform.
Rapidly Developing
Lesser Developed
•
•
Focus on providing reliabilitycentered supply chain services
for US-based multinational
companies
Limited (due to the “digital
divide”)
2. Expand access to Asia, Europe and South America (inter/intra) via
continued organic growth and mergers and acquisitions
Rapidly Developing
Lesser Developed
•
•
Focus on expanding transcontinental shipping presence
for inter-country, and partner
with local carriers for intracountry service
UPS Procurement Services
Focus on trans-continental
shipping for inter-country,
primarily exports leveraging
third-party agents
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Modification of Proposed UPS Business Strategies
3. Develop a comprehensive web-based trade management tool to minimize
cross border complexities to enable global commerce
Rapidly Developing
Lesser Developed
•
•
Limited use for multinational
corporations due to
infrastructure issues
Limited opportunity due to the
“digital divide”
4. Develop greater access to retail and other channels to increase B2B and
B2C accessibility to UPS products and services
Rapidly Developing
Lesser Developed
•
•
UPS Stores/Drop Boxes
UPS Stores
5. Develop and market a Small Business Resource Center to leverage ecommerce and small business growth
Rapidly Developing
Lesser Developed
•
•
Leverage third party agents/
partners to provide support
UPS Procurement Services
Limited opportunity due to the
“digital divide”
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Proposed UPS Business Strategies
Recap
1. Develop and market a portfolio that combines procurement and
supply chain management services on a web-based platform
Key Takeaway: Position UPS in previously untapped areas of the supply chain
2. Expand access to Asia, Europe and South America (inter/intra) via
continued organic growth and mergers and acquisitions
Key Takeaway: Expand global footprint for core business
3. Develop a comprehensive web-based trade management tool to
minimize cross border complexities to enable global commerce
Key Takeaway: Combine localized tools into an enterprise wide systems
4. Develop greater access to retail and other channels to increase B2B
and B2C accessibility to UPS products and services
Key Takeaway: Increase touch-points for customers
5. Develop and market a Small Business Resource Center to leverage ecommerce and small business growth
Key Takeaway: Help businesses help themselves
UPS Procurement Services
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Thank You!