UPS Still in the Slow Lane

In 1999, UPS went public and the public as well as private sectors bought in. Now with after 40 acquisitions and large investments in China as well as the 3PL, they have, closed the perceived gaping holes in their global profile. Focusing on Supply Chain and Distribution networks in the last ten years, as well as business services such as the UPS Store, they have come a long way from being just a courier.

It is probably the most well established courier/business logistics company in North America. They are a freight forwarder as well, but these services seem to have been somewhat neglected since forwarding freight requires reliance on extra-company resources such as steamship lines, containers, and airlines. UPS of course is an airline, however they do not commit their aircraft to the normal every day forwarding as their craft have a very high revenue to cost ratio, that only courier revenue provides.

Freight Forwarding also requires an element of entrepreneurship and creativity at the desk level, as there are many milestones of the shipment and conditions that are varied and uncontrollable. It may well be that UPS with it's tight structure and organization of human resources does not lend well to this type of flexibility exercised by employees.

Having a significant part of the North American and global market share for small package and supply chain, they may have reached their saturation limit and this could be an affect on their share price. There is still much work to do for them however especially in the area of forwarding globally, those cargoes that are dependent on extra-company assets, vehicles, ships, aircraft to move.

Gathering the talent is not that hard, since they have the resources and deep pockets to pay for it. Making inroads into the market share of KN International, DB Schenker, Panalpina, DHL Global and many others is the real task and......it can't be done by a fancy commercial.

Recent article discusses UPS's weakness and strengths. At the end of the day, this huge company is still a very strong organization and a viable stock to buy.

newsworthy: Ten years after IPO, Big Brown still trying to deliver – DC Velocity

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