UPS marks 100th birthday

UP CLOSE

August 28, 2007|By DOREEN HEMLOCK | DOREEN HEMLOCK,South Florida Sun-Sentinel

FORT LAUDERDALE, Fla. -- They fix computers for Toshiba and other producers. They manage inventory for apparel giant Nike. They operate the world's eighth-largest airline. And they even finance business expansion for clients.

Mention UPS, and many Americans think of employees in brown uniforms bringing packages to homes and offices.

But as the Atlanta company marks its 100th birthday today, its development from a bicycle messenger service in Seattle to a transportation and logistics giant, with $47 billion in annual sales, shows how business has revolutionized in the past century to become global.

The biggest changes have come since the 1970s, when UPS ventured beyond the United States, and especially in the past 15 years, when it has been investing more than $1 billion a year in information technology to better manage supply chains worldwide.

UPS systems, for example, help Ford Motor Co. deliver and track bar-coded vehicles for more efficient distribution to dealers.

"Probably what they'll accomplish in the next 15 to 20 years will be as much or more, because the company is so much larger and the pace of business so much faster today," said Satish Jindel, a transportation specialist at SJ Consulting Group Inc. in Pittsburgh.

To understand the changes, look no further than UPS' Latin American and Caribbean operations, run from South Florida.

As late as the 1980s, countries south of the U.S. border were hardly a concern for the Atlanta-based UPS. But as the company has grown to serve more than 200 nations, the Western Hemisphere has become a key stronghold.

UPS now ranks among the top freight haulers at Miami International Airport, the busiest international cargo airport in the country.

The company flies hundreds of thousands of pounds of international cargo yearly through Miami on its own fleet and other planes: roses from Ecuador; seafood from Central America, and computer parts to Brazil, said Stephen Flowers, president of UPS Latin America and the Caribbean region.

Over the past decade, UPS has been on a buying binge to expand "end-to-end" services to clients in Latin America. UPS bought an information-technology parts and service business that sends technicians to fix computers and critical equipment at banks and other businesses in Latin America, drawing on parts that UPS ships and stores.

"Increasingly, our focus is technology and services. We started with goods, but now, information is as valuable as goods," Flowers said.

One fast-growing business segment is running warehouses and distribution for clients, using its high-tech systems. For example, it handles Latin American distribution for consumer giant Gillette, tracking inventory and dispatching goods as needed, Flowers said.

Services now run the gamut from dispatching some 400 field engineers to fixing computers to financing its customers.

Through UPS Capital, the company helps clients with billing and collections. It offers loans for companies to expand and trade more through UPS.

Analysts say UPS distinguishes itself from fellow delivery giants FedEx and DHL by its attention to detail and well-engineered processes: Driver manuals provide routes with fewer left-hand turns to save time at intersections. It is the only one to offer financing. And it is by far the most profitable, said analyst Jindel.

For the future, opportunities still abound. UPS aims to expand business within countries overseas, such as trucking between Chinese cities.

Challenges remain, too, such as managing relations with the Teamsters union and franchisees that own UPS Stores.

But analysts and UPS managers say the outlook is bright for one of the few publicly traded companies in the U.S. that existed a century ago.

"We'll be dictated by our customers," said UPS Supply Chain Solutions executive Mike Arias in Miami, "to take away the hard part of moving goods, information and money around the world."

Doreen Hemlock is a reporter for the South Florida Sun-Sentinel.

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