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The Competition
USPS, DHL, Amazon, Drones, etc.
dhl isnt doing too well
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<blockquote data-quote="freeloader" data-source="post: 266564" data-attributes="member: 12163"><p>Long ago, UPS didn't need to advertise. Other than USPS there really wasn't any competition, so there was no need to advertise. However, times change and competition increased. I'd say the 1980's is when UPS really started to advertise and it just snowballed from there. </p><p></p><p>As far as profitable segments, ground is no doubt UPS's biggest segment, but no way is it the most profitable. The Air and International segments don't generate nearly the volume that ground does, BUT Air and International generate MUCH more revenue and profit per piece.</p><p></p><p>It might take 20 ground packages to generate the same revenue and profit that 1 NDA package does.</p><p></p><p>For International, it might take 50 ground packages to generate the same revenue and profit that 1 International package does.</p><p></p><p>It's obvious why UPS has been focusing on the Air and International segments - they get more bang for their buck. And they have the entire ground segment to try to sell these premium services to. </p><p></p><p>Take a look at FedEx - they have annual revenues almost as high as UPS's yet their volume is way less. That's because they have a much higher percentage of premium service volume. I'm sure UPS would love to have that ratio. But there's no way UPS would ever sell off their ground segment no matter how un-profitable it is. As long as they keep the ground segment, they will have a never ending supply of shippers to push premium services on.</p><p></p><p>DHL is the same way - smaller company, way less volume than UPS, but yet they make tons off the premium packages because that is the majority of their business. They don't have the huge overhead that UPS does to run its ground segment.</p><p></p><p>Being smaller also allows them to react to market conditions quicker. Think about it this way - UPS is a big ship, it takes a lot of effort to make the slightest change of course. Smaller company, changes can be implemented quicker.</p></blockquote><p></p>
[QUOTE="freeloader, post: 266564, member: 12163"] Long ago, UPS didn't need to advertise. Other than USPS there really wasn't any competition, so there was no need to advertise. However, times change and competition increased. I'd say the 1980's is when UPS really started to advertise and it just snowballed from there. As far as profitable segments, ground is no doubt UPS's biggest segment, but no way is it the most profitable. The Air and International segments don't generate nearly the volume that ground does, BUT Air and International generate MUCH more revenue and profit per piece. It might take 20 ground packages to generate the same revenue and profit that 1 NDA package does. For International, it might take 50 ground packages to generate the same revenue and profit that 1 International package does. It's obvious why UPS has been focusing on the Air and International segments - they get more bang for their buck. And they have the entire ground segment to try to sell these premium services to. Take a look at FedEx - they have annual revenues almost as high as UPS's yet their volume is way less. That's because they have a much higher percentage of premium service volume. I'm sure UPS would love to have that ratio. But there's no way UPS would ever sell off their ground segment no matter how un-profitable it is. As long as they keep the ground segment, they will have a never ending supply of shippers to push premium services on. DHL is the same way - smaller company, way less volume than UPS, but yet they make tons off the premium packages because that is the majority of their business. They don't have the huge overhead that UPS does to run its ground segment. Being smaller also allows them to react to market conditions quicker. Think about it this way - UPS is a big ship, it takes a lot of effort to make the slightest change of course. Smaller company, changes can be implemented quicker. [/QUOTE]
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