The world’s largest express carrier, UPS, will look to international markets for growth as the U.S. economy continues to weaken, chairman and chief executive Scott Davis told an investors conference in New York Wednesday. The company is “well-positioned in relation to global trends” with an international strategy designed to ensure growth “despite any short-term economic challenges,” Davis said in comments at the conference broadcast on the Internet.
Chief Financial Officer Kurt Kuehn told the meeting that the U.S. package segment experienced a solid January, but volume declined in February across virtually the entire customer base. “If these trends continue through March, our earnings guidance for the first quarter will be difficult to achieve,” Kuehn said. International average daily volume, including U.S. export volume, continues to show strong growth. Kuehn also indicated the international and supply chain segments remain on target for the quarter. Despite short-term economic challenges, UPS’s annual earnings guidance remains $4.30-4.50 per share. “Today, only 20-to-30 percent of trade actually crosses a country’s borders,” Davis said. “By 2025, that statistic is expected to be 80 percent. This means there’s a lot of opportunity going forward” in the $225-billion global market.
The company’s initiatives in 2008 include:
-- Launch of a new airfreight product portfolio;
-- Delivery of seven 747-400 freighters;
-- Opening of a new air hub in Shanghai;
-- Expansion of UPS-owned operations in China;
-- Acquisition of UPS’s package agent in Romania;
-- Addition of Express morning delivery to five more countries;
-- Acceleration of delivery times on thousands of UPS Freight lanes in the United States.
Davis said UPS has made significant progress in developing its global, multi-modal integrated transportation network. The UPS network now handles freight forwarding and less-than-truckload shipping as well as small package transportation on UPS-owned or third-party assets. Kuehn said UPS remains on target to achieve long-term goals set for 2005-10, including revenue growth of 6-8 percent per year; compound annual earnings per share growth of 9-14 percent, and return on invested capital of 23-25 percent.
Journal of Commerce
