UPS Says Supply Chain Market Critical to Growth
By sticking to a long-term strategy that emphasizes helping customers across every aspect of global commerce by moving goods, information and money, Kelly said UPS could benefit from what he termed a “supply chain revolution” that will likely separate the “winners from the losers” in the market for transportation services.
Kelly added that UPS has changed from a company competing in a $60-billion domestic transportation market to an end-to-end supply chain provider now competing in a $3.2-trillion global market.
“At a time when companies are smarting, when corporate leaders are rethinking the Internet and re-examining their business models, it is good to remember one important point – there is no single better remedy for a shaky economy than effectively rationalizing a supply chain,” Kelly told Wall Street analysts last week.
Kelly said that UPS’s short-term business conditions remain fairly stable. He reaffirmed that the company expects second-quarter earnings per share to be between $0.55 and $0.60. Kelly added that volume growth trends through April and early May were essentially the same as the company experienced at the end of its first quarter, “flat-to-slightly negative on the ground, and up a few percentage points for air deliveries.”
The key to long-term survival in the transportation market, however, is to look beyond short-term economic concerns to focus on the future of an “old economy” industry that's taken on a new life, Kelly said.
“In just the last 20 years, the value of goods and services shipped by parcel carriers has grown from 2% of the nation’s gross domestic product to about 11%,” said Kelly. “We have every reason to believe that the time-sensitive demands of the economy will continue to increase the significance of smaller, faster package deliveries.”
