UPS will invest heavily in the e-commerce and life science sectors as it sets out plans transform its business by 2022.
The company is focusing on four strategic areas, consisting of continued expansion of high-growth international markets connecting domestic and export customers to its global market; profitable expansion from B2B and B2C e-commerce as US industry package revenue is expected to grow by 40 per cent to 2022, and cross-border e-commerce volumes are expected to grow 28 per cent over the next three years; further expansion in the healthcare and life sciences logistics markets; and enhancing services for small and medium sized businesses.
Chairman and chief executive officer, David Abney says: “Transformation will lift our earnings, as we generate higher-quality revenue and use technology to increase operating efficiency and enhance customer service. UPS is transforming from a position of strength. We are implementing an enterprise-wide transformation that will enable and accelerate our enhanced business strategy.”
UPS says it will invest in its global network along with new and renovated facilities, aircraft and fleet upgrades.
In 2018, 2019 and 2020, UPS will add 350-400,000 pieces per hour sorting capacity in the US, about seven times the upgrade in 2017.
Abney says: “Today nearly 50 per cent of our nearly 35 million sorted packages per day are processed using our new more-automated facilities. When we complete this phase of our Global Smart Logistics Network enhancement by 2022, 100 per cent of eligible volume in the US will be sorted using these new more highly automated sites.”
Seven new ‘super hub’ automated sorting facilities will be opened during the period, with 30-35 per cent higher efficiency compared to less-automated facilities.
UPS has significantly increased international capacity over the last two years with air express rising more than 10 per cent as new, higher capacity cargo jets are added to the fleet.
Efficiency will be improved with common procedures and using technology to streamline back-office activities, outsourcing certain transactional activities and broadening spans of control within management.
Abney says: “The savings we achieve will be reinvested in the company and its people, and will be used to reward shareowners. Our leadership team is collaborating to instil a continuous transformation culture and I am confident our plans will deliver higher levels of UPS profitability and shareowner returns.”