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UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
36
Supply Chain & Freight Operations
Year Ended December 31, % Change
2013 2012 2011 2013 / 2012 2012 / 2011
Freight LTL Statistics:
Revenue (in millions) $ 2,502 $ 2,377 $ 2,299 5.3 % 3.4 %
Revenue Per Hundredweight $ 22.05 $ 21.73 $ 21.17 1.5 % 2.6 %
Shipments (in thousands) 10,497 10,136 10,247 3.6 % (1.1)%
Shipments Per Day (in thousands) 41.5 40.1 40.5 3.6 % (1.1)%
Gross Weight Hauled (in millions of lbs) 11,348 10,939 10,858 3.7 % 0.7 %
Weight Per Shipment (in lbs) 1,081 1,079 1,060 0.2 % 1.8 %
Operating Days in Period 253 253 253
Revenue (in millions):
Forwarding and Logistics $ 5,492 $ 5,977 $ 6,103 (8.1)% (2.1)%
Freight 2,882 2,640 2,563 9.2 % 3.0 %
Other 561 530 473 5.8 % 12.1 %
Total Revenue $ 8,935 $ 9,147 $ 9,139 (2.3)% 0.1 %
Operating Expenses (in millions):
Operating Expenses $ 8,261 $ 9,132 $ 8,532 (9.5)% 7.0 %
Defined Benefit Plans Mark-to-Market Charge —(713)(177)
Gains on Real Estate Transactions — — 48
Adjusted Operating Expenses $ 8,261 $ 8,419 $ 8,403 (1.9)% 0.2 %
Operating Profit (in millions) and Operating Margins:
Operating Profit $ 674 $ 15 $ 607 N/A (97.5)%
Adjusted Operating Profit $ 674 $ 728 $ 736 (7.4)% (1.1)%
Operating Margin 7.5% 0.2% 6.6%
Adjusted Operating Margin 7.5% 8.0% 8.1%
Currency Translation Benefit / (Cost)—(in millions)*:
Revenue $ (31) $ (100)
Operating Expenses 25 97
Operating Profit $ (6) $ (3)
* Amount represents the change compared to the prior year.
Revenue
2013 compared to 2012
Forwarding and logistics revenue decreased $485 million in 2013 compared with 2012. Forwarding revenue decreased in
2013, primarily due to lower tonnage and rates charged to our customers in our international air forwarding business. The
reduction in tonnage was caused by several factors, including weak overall market demand, competitive pressures, and our
customer concentration among the technology and military sectors, as demand in these sectors was relatively weaker than the
remainder of the air freight market. The reduction in rates was largely due to industry overcapacity in key trade lanes,
particularly the Asia-outbound market. Revenue for our logistics products increased in 2013 compared with 2012, as we
experienced solid growth in our mail services and healthcare distribution solutions; however, this was largely offset by revenue
declines among our technology customers.