Analysis of the United Parcel Services

free essayUnited Parcel Services (UPS) is a logistics company which offers package delivery and specialized logistics services. The company was started in 1907 by Claude Ryan and Jim Casey in Seattle, Washington. It has grown over the years to become the world’s leading parcel carrier in terms of volume and revenue, and a premier provider of global logistics services (Schmidt, 2015). It has its presence in more than 220 countries and domains. In 2013 UPS delivery capacity was 16.9 million packages per day, globally.

UPS has three operating and reporting segments: (1) The US Domestic Package segment which provides a wide range of domestic ground and air transportation services, (2) International package segment which offers small package delivery services across the continents (3) Supply Chain and Freight Segment which consist of a global offering of transportation, distribution, trade and brokerage services (UPS, 2015).

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The global logistics industry in highly competitive. The industry has a global value of $4 trillion which is equivalent to 10 percent of global GDP. In the US, the value of logistics and transportation industry totaled $ 1.33 trillion in 2012, representing 8.5% of the GDP.  The global logistics industry is projected to grow as emerging markets of India and China are expected to exert influence in global logistics (Robinson, 2015).

UPS is the world’s largest package courier in terms of both volume and revenue and among the leading specialized logistics services provider. In view of the wide range of services the company provides, it faces intense competition from many distinctive local, regional, national and global firms. The competitors include freight forwarders, motor carrier, air couriers and firms that provide worldwide postal services. UPS’s supply chain service segment further competes with a number of players in the supply chain, finance and information technology industries (Schmidt, 2015).

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UPS has been able to retain its leadership in package carriage services despite stiff competition, particularly from Airborne Express and FedEx by investing in leading edge technology.  The firm’s core technologies include delivery information acquisition device (DIAD) and order management system (OMS). DIAD is a handheld computer device with the capacity to access wireless networks used by cell phones. When a UPS’ driver logs on, his day’s route is downloaded onto the   DIAD.  The device   is also able to capture client’s signatures and pickup delivery details which are then sent to the company’s computer network for processing and storage to facilitate package tracking (Baker, Dudley, Holt & Stockton, 2009).

Order Management System manages international service orders and inventory.  The system enables firms that ship critical parts such as medical and aerospace equipment to review the critical parts of the inventory and decide on the most optimal routing strategy to fulfill customer needs, place orders online and monitor parts from the store to the end user (Baker, Dudley, Holt & Stockton, 2009).

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UPS is certainly one of the most acceptable and well-reputed brands in the logistics industry. The company has consistently featured in the fortune list of the most admired companies, ranking position 34 and 32 in 2014 and 2015 respectively. The strength of the company’s brand derives from several attributes including high innovation capacity, social responsibility, quality management and global competitiveness (Schmidt, 2015).

UPS has depicted a steady growth in its financial position over the recent years. In its most recent quarter (third quarter of 2015), all segments save for the US Domestic Segment reported increase in operating profit. The US Domestic segment’s operating profit was $1.3 billion, representing a 1.6% decrease from the previous quarter. The international segment’s profit was $507 million, 10% increase from the previous quarter.  The Supply Chain and Freight segment’s profit was $219, 9% increase from the previous quarter (UPS, 2016).

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UPS has rolled out a number of capital projects in an effort to increase its presence in both local and international markets.  As part of expanding it domestic market, UPS is currently constructing a $310 million facility in Louisville, Kentucky. The project is aimed at increasing the company’s ground transportation capacity (UPS, 2016). In 2014, the company increased its supply chain network by over 2 million square feet (Schmidt, 2015).

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In summary, UPS   has grown to become a leading multinational firm in provision of logistics service with presence in over 220 countries. Despite facing stiff competition, particularly from other domestic and global logistics providers, UPS’s brand image has gained acceptability in both the local and domestic market and has constantly featured in the fortune list of the most admired companies.  The revenue and profits have steadily grown in the recent years. The firm leverages in investing in high-end technology to maintain a leading position in the market.