UPS 2008 Annual Report Download - page 23

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• Possible disruption of supplies, or unanticipated changes in the prices, of gasoline, diesel and jet fuel
for our aircraft and delivery vehicles, as a result of war, actions by producers, or other factors. We
require significant quantities of fuel and are exposed to the commodity price risk associated with
variations in the market price for petroleum products.
• Cyclical and seasonal fluctuations in our operating results due to decreased demand for our services.
Item 1B. Unresolved Staff Comments
Not applicable.
Item 2. Properties
Operating Facilities
We own our headquarters, which are located in Atlanta, Georgia and consist of about 735,000 square feet of
office space on an office campus, and our UPS Supply Chain Solutions group’s headquarters, which are located
in Alpharetta, Georgia and consist of about 310,000 square feet of office space.
We also own our 27 principal U.S. package operating facilities, which have floor spaces that range from
about 310,000 to 693,000 square feet. In addition, we have a 1.9 million square foot operating facility near
Chicago, Illinois, which is designed to streamline shipments between East Coast and West Coast destinations,
and we own or lease over 1,100 additional smaller package operating facilities in the U.S. The smaller of these
facilities have vehicles and drivers stationed for the pickup of packages and facilities for the sorting, transfer and
delivery of packages. The larger of these facilities also service our vehicles and equipment and employ
specialized mechanical installations for the sorting and handling of packages.
We own or lease almost 600 facilities that support our international package operations and over 900
facilities that support our freight forwarding and logistics operations. Our freight forwarding and logistics
operations maintain facilities with about 35 million square feet of floor space. We own and operate a logistics
campus consisting of approximately 3.5 million square feet in Louisville, Kentucky.
UPS Freight operates approximately 200 service centers with a total of 5.9 million square feet of floor
space. UPS Freight owns 135 of these service centers, while the remainder are occupied under operating lease
agreements. The main offices of UPS Freight are located in Richmond, Virginia and consist of about 240,000
square feet of office space.
Our aircraft are operated in a hub and spokes pattern in the U.S. Our principal air hub in the U.S., known as
Worldport, is located in Louisville, KY. The Worldport facility consists of over 4.1 million square feet and the
site includes approximately 596 acres. We are able to sort over 300,000 packages per hour in the Worldport
facility. We also have regional air hubs in Columbia, SC; Dallas, TX; Hartford, CT; Ontario, CA; Philadelphia,
PA; and Rockford, IL. These hubs house facilities for the sorting, transfer and delivery of packages. Our
European air hub is located in Cologne, Germany, and we maintain Asia-Pacific air hubs in Shanghai, China;
Pampanga, Philippines; Taipei, Taiwan; Hong Kong; and Singapore. Our regional air hub in Canada is located in
Hamilton, Ontario, and our regional air hub for Latin America and the Caribbean is in Miami, FL.
In 2008, work continued on our Worldport facility expansion that will increase sorting capacity by 37
percent to 416,000 packages per hour. The expansion involves the addition of two aircraft load / unload wings to
the hub building, followed by the installation of high-speed conveyor and computer control systems. The overall
size of the Worldport facility will increase by 1.1 million square feet to 5.2 million square feet, and the facility
will be able to accommodate the Boeing 747-400 aircraft currently on order. The expansion will cost over $1
billion and is expected to be completed by 2010.
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