UPS 2007 Annual Report Download - page 18

• In 2006, to capitalize on growth opportunities across the whole of Europe, we completed the expansion
of our automated package sorting hub at the Cologne/Bonn airport in Germany. The expansion doubled
the hub’s sorting capacity to 110,000 packages per hour, largely through the use of new automation
technology.
• In 2007, we implemented the largest service expansion of our international shipping portfolio in more
than a decade. UPS began offering customers three, rather than two, daily time-definite delivery
options to and from the world’s most active trading markets, giving customers greater flexibility in
managing their businesses.
Growth in Asia is being driven by global demand, which is stimulating improved demographic and
economic trends throughout the region, particularly in China and India. Over the last few years UPS has steadily
increased air service between the U.S. and Asia.
• In 2005, UPS became the first U.S. airline to launch non-stop service between the U.S. and Guangzhou,
which is located in one of China’s fastest growing manufacturing regions. We also launched express
delivery service for customers within China.
• In 2006, we added another three daily flights between Shanghai, China and the U.S., and another new
flight between Qingdao, China and Incheon, Korea. We also began direct air service between Shanghai
and Cologne. Those flights support international express volume into and out of China, which has seen
dramatic growth in recent years.
• In 2007, we added six daily flights between the U.S. and Nagoya, Japan. This new service
complements our 78 weekly flights into and out of Tokyo and Osaka, Japan. These flights will connect
to Shanghai in 2008, enhancing intra-Asia service.
• In 2007, we also announced plans for a new air hub in Shanghai, the first constructed in China by a
U.S. carrier. Scheduled to open in 2008, it will link all of China via Shanghai to UPS’s international
network with direct service to the Americas, Europe and Asia. It also will connect points served in
China by UPS. Once this hub is operational, we will have the ability to add an unlimited number of
flights between the U.S. and Shanghai.
The international package delivery market has been growing at a faster rate than that of the U.S., and our
international package operations have historically been growing faster than the market. We plan to use our
worldwide infrastructure and broad product portfolio to grow high-margin premium services. We will also
implement cost, process and technology improvements in our international operations. We believe that both
Europe and Asia offer significant opportunities for growth.
Supply Chain & Freight Segment
The Supply Chain & Freight segment consists of our forwarding and logistics capabilities as well as our
freight business unit.
In recent years we extended our service portfolio into heavy air and ground forwarding through two
acquisitions. In 2005 we acquired Menlo Worldwide Forwarding, which forms the basis for our time-definite,
guaranteed air forwarding service. In the same year, we acquired Overnite Corp., a LTL service, which offers a
full range of regional, inter-regional and long-haul LTL capabilities in all 50 states, Canada, Puerto Rico, Guam,
the Virgin Islands and Mexico. Overnite Corp. was rebranded as UPS Freight in 2006.
In today’s global economy, companies’ supply chains are growing increasingly complex, as shown in
Diagram 1 below. Many of our customers, large and small, have outsourced all or part of their supply chains to
streamline and gain efficiencies, to improve service, to support new business models and to strengthen their
balance sheets.
3