The Facts Behind United Parcel Service's New International Game Plan

[cheryl]

The Facts Behind United Parcel Service's New International Game Plan - Motley Fool

Soon-to-be United Parcel Service (NYSE: UPS) CEO David Abney told Reuters earlier this month that expansion in emerging markets is "our No. 1 priority." So far the courier giant has focused more on its home market, which has led its international revenue to stagnate in the last few years. But market conditions are changing fast, and the company ultimately expects 95% of consumers to live beyond the U.S.

UPS realizes that it has to step up its international game if it wants to generate sustainable growth in the years to come.

 

[Indecisi0n]

I see forced transfer to Japan in out futures.

 

[oldngray]

I was thinking more of driving a goat cart in a third world country.

 

[Floridacargocat]

It is inevitable that with an erosion in domestic margins, external (international) factors will have to compensate (including foreign currency exchange rates). Therefore, statements like investments into areas of healthcare activities (abroad) and other margin-enhancing activities indicate that UPS Management is quite aware that its bread and butter business in the USA is getting less. Forward thinking would indicate that acquiring smaller healthcare oriented transportation companies would be more cost-effective than to develop them on our own. What UPS needs is distribution capability, which it does not yet have. Europe (very positive contribution due to the weak dollar vs. the Euro) will grow in importance. China will be influenced by governmental decisions on how far foreign interests will be allowed to take a part of their domestic transportation capabilities. India is not far behind China, and where is UPS there? South Asia (India, Pakistan, Sri Lanka, Bangladesh) is an area with more than 1 billion inhabitants and with a developing middle-class.
IMHO UPS needs to ask itself where to allocate investments in order to improve margins while compensating for factors outside the sphere of UPS control (currency fluctuations). Europe and Healthcare is a good area, but do not forget the potential of high-margin markets like South Asia.

 

[Floridacargocat]

I was thinking more of driving a goat cart in a third world country.

What counts - even in a so-called third-world country - is distribution and getting it to the customer. UPS is investing in distribution - one way or the other - but it will have to overcome entrenched infrastructures and vested interests. It depends on UPS personnel to demonstrate - day by day - that it will be able to deliver.
The ""goat cart" in a third world country" should be seen under the aspect of "adjusting to changing conditions" (example Venice/Italy - you do the distribution by gondolas, sibstituting for the "classic" package car.)
If the OP would have been exposed to conditions in a country and city like New Delhi, Bombay (sorry Mumbai), Madras (sorry Chennai), then he might realize that the classic package car is not the most suitable vehicle for an efficient distribution, once he/she/it has been exposed to local traffic conditions. The final "last mile" distribution by "oxcart" might not be the worst and least cost-efficient idea.