UPS 2006 Annual Report Download - page 16

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PART I
Item 1. Business
Overview
United Parcel Service, Inc. (“UPS”) is the world’s largest package delivery company and a global leader in
supply chain management. We were founded in 1907 as a private messenger and delivery service in Seattle,
Washington. Today, we deliver packages each business day for 1.8 million shipping customers to 6.1 million
consignees in over 200 countries and territories. In 2006, we delivered an average of 15.6 million pieces per day
worldwide. In addition, our supply chain solutions capabilities are available to clients in over 175 countries and
territories.
Total revenue in 2006 was over $47.5 billion. Although our primary business is the time-definite delivery of
packages and documents, we have extended our capabilities in recent years to encompass the broader spectrum of
services known as supply chain solutions, such as freight forwarding, customs brokerage, fulfillment, returns,
financial transactions and even repairs. We are also a leading provider of less-than-truckload (“LTL”)
transportation services. We have established a global transportation infrastructure and a comprehensive portfolio
of services and integrated solutions. We support these services with advanced operational and customer-facing
technology. Our supply chain solutions provide visibility into moving inventory across the global supply chain.
We believe the future is bright for this industry, for the following reasons:
• Globalization of trade is a worldwide economic reality, which we believe will continue to expand as
trade barriers are eliminated and large consumer markets, in particular China, India and Europe,
experience economic expansion.
• We believe package shipments will continue to increase as a result of just-in-time inventory
management, the increased use of the Internet for ordering goods and direct-to-consumer business
models. UPS is enhancing its ability to be a “warehouse in motion” for inventory on the move. The
company is also an industry leader in the delivery of goods purchased over the Internet.
• We believe the drive toward outsourcing supply chain management will continue, as customers
increasingly view effective management of their supply chains as a strategic advantage rather than a cost
center.
Our vision for the future is to synchronize the world of commerce, managing the complexities of our
customers’ supply chain needs. Our goal is to develop business solutions that create value and competitive
advantages for any size customers through product differentiation, better customer service and improved cash
flow.
Competitive Strengths
Our competitive strengths include:
Global Reach and Scale. We believe that our integrated global ground and air network is the most
extensive in the industry. It is the only network that handles all levels of service (express, ground, domestic,
international, commercial, residential) through one integrated pickup and delivery service system.
We operate a ground fleet of approximately 101,000 vehicles, ranging from custom-built package cars to
large tractors and trailers, and utilize approximately 600 airplanes. In the contiguous U.S., we reach all business
and residential addresses. We are the eighth largest airline in the world. Our primary air hub is in Louisville, KY.
Regional air hubs are located in Columbia, SC; Dallas, TX; Hartford, CT; Ontario, CA; Philadelphia, PA; and
Rockford, IL. Our largest international air hub is in Cologne, Germany, with other regional hubs in Hong Kong,
Singapore, Taiwan, Miami, FL and Pampanga, Philippines.
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