TRANSPORTATION AND LOGISTICS COMPANIES AS ENABLERS OF E-COMMERCE, ECONOMIC GLOBALIZATION, AND OUTSOURCING April 8, 2006 EBA 612 Contemporary Issues in

TRANSPORTATION AND LOGISTICS COMPANIES AS ENABLERS OF E-

COMMERCE, ECONOMIC GLOBALIZATION, AND OUTSOURCING

April 8, 2006

EBA 612

Contemporary Issues in Business

Dr. James Coleman

Joel Bulger

Nelton Gaertner

Matt Otto

Stephanie Turpin

Fritz Valsaint

Andri Weathersby

UPS Procurement Services 2

Presentation Overview

Provide brief review of the Transportation and Logistics industry and the key players

Summarize UPS’ position within the industry, provide a few company facts and its SWOT analysis

Introduce our proposed five UPS business strategies as required

Show how each business strategy will be modified to fit rapidly developing and lesser developed countries.


Transportation & Logistics IndustryMarket Size

2002 Transportation and Logistics market size $778.6 Billion Trucking – largest segment with approximately 78% of revenue


In 2005 U.S. Market size is approx. $900 billion More than 10 percent of the U.S. gross domestic product

Global market size is approx. $3.43 trillion

Sample companies and historical revenues in billions

Transportation & Logistics IndustryMarket Size and Key Players

Year UPS FedEx CSX CFN

2000 $24.1 $18.3 $7.9 $5.6

2001 $24.0 $19.6 $7.9 $4.9

2002 $23.9 $20.6 $7.9 $3.0

2003 $33.5 $22.5 $7.6 $3.2

2004 $36.6 $24.7 $8.1 $3.7

2005 $42.6 $29.4 $8.6 $4.2


UPS Facts (2005)

Founded 1907

Headquarters in Atlanta, GA

$42.6 Billion Annual Revenue ($36.6 Package Operations, $6 billion Supply Chain)

407,200 worldwide employees (384,000 U.S., 58,800 International)

3.75 Billion Packages (14.8 million packages/documents daily volume)

Service More Than 200 Countries and Territories

7.9 million customers

10 million daily on-line tracking requests

917,700 Package Cars, Vans, Tractors and Motorcycles

268 Jet Aircrafts; 9th Largest Airline in the World

309 Chartered Aircrafts

1,788 Operating Facilities


UPS SWOT Analysis

Strength WeaknessesLeading market position

Large operating base

Technological edge

Financial strength

Acquisitions of Menlo and Overnite

Brand/Reputation/Trust

Loss of domestic market share

Low presence in Asia

Unionized labor force

Integration of its acquisitions

Speed/response to market due to size

Opportunities ThreatsAcquisitions

Rise in demand for LTL services

Growth in ecommerce services and Smalls Businesses

Expanded access to China

Growth in procurement and supply chain management

Rising oil prices

Government regulation

Quasi government competitors

Seasonality in business


Proposed UPS Business Strategies

1. Develop and market a portfolio that combines procurement and supply chain management services on a web-based platform

2. Expand access to Asia, Europe and South America (inter/intra) via continued organic growth and mergers and acquisitions

3. Develop a comprehensive web-based trade management tool to minimize cross border complexities to enable global commerce

4. Develop greater access to retail and other channels to increase B2B and B2C accessibility to UPS products and services

5. Develop and market a Small Business Resource Center to leverage e-commerce and small business growth




Situation

UPS wants to be the global provider of choice in managing the three flows of commerce: goods, information and funds

Opportunity

UPS will appear at all points along the customer’s supply chain. These points provide:

Global movement of goods

End to end visibility

Finance customer’s supply chain




Situation

UPS’ business is growing at explosive rates in Asia, Europe and Latin America. Capacity is not currently in place to support sustained growth of this magnitude

Opportunity

Growth through Mergers and Acquisitions

Organic growth

Developing countries have the ability to become trail blazers

There is no vested interest to protect and no existing business to cannibalize




Situation:

Today, trade rules are issued by more than 200 countries creating a daunting challenge for businesses

In 2003, $1.25 trillion in goods entered the United States.

By 2020 an estimated 85% of manufactured goods will be sold across borders versus 20% in 2002 (Mckinsey & Company)

Opportunity:

UPS has the ability to help transform cross-border shipping from a daunting challenge to a competitive advantage by:

Helping shippers improve regulatory compliance

Reduce expenses, eliminate rework through standardized processes

Streamline global supply chains




Situation

Explosion of commerce between B2C and individual to individual

Current Retail Access: The UPS Store, 4,400; Mail Boxes Etc., 1,300; UPS Customer Centers, 1,000; Authorized outlets, 17,000; UPS Drop Boxes, 40,000

Opportunity

Position UPS services in high-traffic locations to provide access for consumers and small businesses

Create a self-service or smart kiosk for areas such as airports, convention centers, universities and malls

Other benefits to UPS, businesses and consumer

UPS – treat the consumer like a business – consumer can drop and pickup packages at closest point (no 2nd and 3rd attempt by UPS)

Business/Consumer – Consumer receive product first time - no return

Allows any company with web-access to be a global player




Situation

Help UPS capitalize on the growth and development of Small Office Home Office (SOHO) market and ecommerce.

Opportunity

UPS to offer business starter kit

E-commerce interface to conduct business

Employee hiring, training and development

Accounting/Tax/Finance (access to capital)

Legal services

Healthcare/Discounts

Marketing

Supply chain management consulting


Rapidly Developing Vs Lesser Developed Countries

Developing Lesser Developed

China Afghanistan

South Africa Bangladesh

Chile Cambodia

Argentina Ethiopia

India Gambia

Costa Rica Mozambique

Taiwan Nepal

Saudi Arabia Uganda

United Arab Emirates

Zambia


1. Develop and market a portfolio that combines procurement and supply chain management services on a web-based platform.


Modification of Proposed UPS Business Strategies

Rapidly Developing

• Focus on providing reliability-centered supply chain services for US-based multinational companies

Lesser Developed

• Limited (due to the “digital divide”)

Rapidly Developing

• Focus on expanding trans-continental shipping presence for inter-country, and partner with local carriers for intra-country service

Lesser Developed

• Focus on trans-continental shipping for inter-country, primarily exports leveraging third-party agents


Modification of Proposed UPS Business Strategies




Rapidly Developing

• Limited use for multinational corporations due to infrastructure issues

Lesser Developed

• Limited opportunity due to the “digital divide”

Rapidly Developing

• UPS Stores/Drop Boxes

Lesser Developed

• UPS Stores

Rapidly Developing

• Leverage third party agents/ partners to provide support

Lesser Developed

• Limited opportunity due to the “digital divide”


Proposed UPS Business StrategiesRecap


Key Takeaway: Position UPS in previously untapped areas of the supply chain


Key Takeaway: Expand global footprint for core business


Key Takeaway: Combine localized tools into an enterprise wide systems


Key Takeaway: Increase touch-points for customers


Key Takeaway: Help businesses help themselves

Thank You!

Documents

TRANSPORTATION AND LOGISTICS COMPANIES AS ENABLERS OF E-COMMERCE, ECONOMIC GLOBALIZATION, AND OUTSOURCING April 8, 2006 EBA 612 Contemporary Issues in