"UPS slips as rivals' fortunes on the rise"

[wkmac]

This news title on the Browncafe Home page caught my eye so I checked out the article. Being from a Memphis paper I can understand a positive twist toward FedX as I know the Atlanta papers also give UPS more leeway in it's reporting. Nothing wrong with this, hometown loyality is normal.

However the article had a few items that stood out. For starters, UPS average daily volume is currently at 10.9 million according to the article and I have no problem with that figure but I remember a couple of years ago, our average daily volume was around 12 million per day. So much is made of the Teamster contract and I agree this had a negative effect on volume but I still believe the economy itself has had more to do with the situation than is given credit. Sure, FedX and Airbourne has taken volume but to what extent has it been a positive to their bottomline? You would think this kind of rapid volume growth would generate to the EPS side but have we really seen that?

On the other hand, UPS is no doubt busting some chops in the air and international front and as hard as it can be sometimes for those of us in the trenches, UPS is running leaner with increasing efficency as the goal. Also weigh in our service level goals compared to a few years ago and this ain't your daddy's old UPS.

My question is, after watching the "One UPS" video, is this company in the midst of a major market reposition/refocus that plans to exploit it's services to become the 900 lb. Gorilla or is this just smoke and mirrors from Glenlake? I personally think it's a market reposition myself but hey I'm wrong more time than not. I use to firmly believe that in time UPS would build the logisitcs side, break it off from the whole package delivery operation and just allow the union and management left to devour one another. I honestly didn't get that sense from Eskew and when you consider UPS will allow some unionization of logisitcs in the later years of the current contract I truly believe these guys are thinking "One UPS" so maybe instead of looking at logistics as a negative from a union perspective, there might be some great opportunities in the form of jobs and growth within the logisitcs side.

Any thoughts? Or do we continue to discuss the so-called effects of diesel fumes and driver farts?

 

[dannyboy]

Interesting. I think that Eskew knows that if we do not become the gorilla again, we are doomed to be the next REA.

I watched and listened. HE made some strong points. The labor problems are IMHO a small part of the volume loss. I too think that it has more to do with the economy than any thing else. In years past, during a slow economy, business allows inventory to get lower. Instead of having 100,000 of the product on hand, they only keep 10-15,000. And instead of ordering a trailer load, they order a few cases. So after a while, our volume picks up as we are the perfect ones to handle that.

On the other hand, it used to be that we could convince customers that instead of having their delivery personel deliver their packages, we could do it better and more cost effective. In some cases it is no longer that way. One of the customers I deliver to has many local vendors and these vendors have used us for quite some time, some or 35 years or more. Within the last two years, we have started revenue enhancing many of their packages, causing the cost to them to skyrocket. Example, A NDA letter is about $12. The revenue enhancement is $10. For ground they are $5 per piece. This action, while bringing in revenue now, is costing us revenue for the future. That might be another reason why volume is down, I know it is here as within the last three years we have gone from the 2nd choice for incoming shipments to the least prefered method. And now when we go to them asking for outbound volume.......

So some things we are shooting ourselves in the foot with. But over all I think we are on the right track, and have positioned ourselves for when the economy starts to roar back. I think it will be later this year.

d