UPS 2010 Annual Report Download - page 6

* See pages 23-24 of our Form 10-K for explanations of adjustments.
• New relationships were established with local partners
in the key emerging markets of Vietnam, Malaysia,
and Indonesia. These alliances allow us to expand the
coverage of our global network.
• We submitted an application for a domestic service li-
cense in China. This is the next logical step in our strategy
for expansion in the Chinese marketplace.
These investments will enhance the service we give
customers, provide better access to international markets,
and improve efficiencies in the UPS network.
Recognition
Throughout the year, UPS was recognized for leadership in a
variety of areas.
• UPS was named “most admired” in its industry by
Fortune and one of the Top 10 most reputable companies
by Forbes magazines.
• United Way recognized UPS and its employees as
the first company ever to total donations of more than
$1 billion.
• We were honored when President Obama asked UPS
to serve on his Export Council, working with the
administration and business leaders to help achieve the
objective of doubling U.S. exports in the next five years.
• Our efforts in sustainability were recognized by
numerous organizations in 2010, including the Climate
Innovation Index, the Climate Counts Scorecard, and the
Dow Jones Sustainability Index.
Other Significant Events
• Last fall, UPS announced a new global communications
platform. Given the complexities of today’s marketplace,
we designed our advertising campaign to spotlight the
power of logistics. Our experience and worldwide capa-
bilities make UPS uniquely qualified to provide solutions
to customers throughout their supply chains.
• In 2010, we opened our first Olympic Logistics Center
in London. As the Official Logistics and Express Delivery
Supporter of the London 2012 Olympic and Paralympic
Games, UPS has an excellent opportunity to showcase its
capabilities to the world.
Operations Review
Global Package Operations
Improving economies around the world and market gains
led to total package volume growth of 3.4 percent to
3.94 billion packages.
• In the United States, we experienced slow but steady
improvement as customers rebuilt and efficiently
managed their inventories. Strong pricing and effective
management of our network drove a 45 percent increase
in adjusted* operating profit.
• The strength of our International operating model was
evident as the average daily volume in that segment
jumped 14 percent over last year. Operating profits
climbed 39 percent to $1.9 billion, a new record.
During the year, U.S. and International operations showed re-
markable adaptability in the face of a challenging economic
environment. In the first quarter of the year, we announced a
significant restructuring of our U.S. operations. These changes
will improve operational efficiency and allow us to better
serve our customers with our go-to-market strategy.
The International segment showed the strength of our bal-
anced global network and portfolio. We experienced strong
growth in all regions of the world in 2010. In Europe, we saw
impressive growth throughout the year despite the difficult
economic environment.
Supply Chain and Freight
The Supply Chain and Freight segment saw revenue soar
16.5 percent, with total adjusted* operating profit in this
segment up 95 percent to $577 million, a new UPS record.
This developing segment experienced an improvement in
adjusted* operating margin to 6.7 percent in 2010, a 270
basis point jump over last year.
The freight forwarding business unit rebounded in 2010 as a
result of improved market conditions and increased demand.
Revenue management initiatives and more competitive
block-space agreements were key contributors to the success
of the unit.
Logistics saw solid gains as we managed supply chains
for an increasing number of customers. UPS continued to
expand third-party logistics services in the high tech and
healthcare industries.
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