UPS 2014 Annual Report Download - page 14

2
Business Strategy
Customers leverage our broad array of logistics capabilities; global presence in North America, Europe, Asia and Latin
America; reliability; industry-leading technologies; and solutions expertise for competitive advantage in markets where they
choose to compete. We prudently invest to expand our integrated global network and service portfolio. Technology investments
create user-friendly shipping, e-commerce, logistics management and visibility tools for our customers, while supporting our
ongoing effort to increase operational efficiencies.
Our service portfolio and investments are rewarded with among the best return on invested capital and operating margins
in the industry. We have a long history of sound financial management. Our consolidated balance sheet reflects financial
strength that few companies can match. Our Moody’s and Standard & Poor’s short-term credit ratings are P-1 and A-1,
respectively. Our Moody’s and Standard & Poor’s long-term credit ratings are Aa3 and A+, respectively. We currently have a
stable outlook from both Moody's and Standard & Poor’s. Cash generation is a significant strength of UPS. This gives us strong
capacity to service our obligations and allows for distributions to shareowners, reinvestment in our businesses and the pursuit
of growth opportunities.
We enable and are the beneficiaries of the following trends:
Expansion of Global Trade
Transcontinental and trade across borders are predicted to grow faster than U.S. and global gross domestic production for
the foreseeable future. As a result, U.S. and international economies are becoming more inter-connected and dependent on
foreign trade.
UPS plays an important role in global trade and is well positioned to take advantage of trade growth, wherever it occurs.
Our global presence and productivity enhancing technologies allow customers to expand into new markets. We advocate the
expansion of free trade, including the passage of regional trade pacts and the removal of trade barriers. Free trade is a catalyst
for job creation, economic growth and improved living standards; additionally, it propels our growth.
Emerging Market Growth
Emerging market opportunities continue to expand. Over the next ten years, these markets are expected to represent the
majority of global GDP growth, and an increasing proportion of global trade. Emerging markets are understandably a focus of
investment and growth for our current customers; in addition, they will be a source of UPS’s next generation of customers. To
take advantage of these opportunities, UPS will continue to make long-term investments in markets where our customers
choose to grow. Over the past ten years, UPS has established a strong market presence in three leading emerging markets:
China, Poland and Turkey. In the future, the Middle East, Latin America, Africa and Eastern Europe will become increasingly
important for UPS.
Taken together, these two trends (expanding global trade and emerging market growth) underscore why our international
business is a catalyst for UPS’s growth.
Increasing Need for Segment Expertise in the Integrated Carrier, Logistics and Transportation Space
We offer differentiated value propositions in several segments, including automotive and industrial manufacturing, retail,
government, professional and consumer services, healthcare and high-tech.
Our industry-specific solutions are increasingly tailored to align with customer needs in each of these sectors. Staying
abreast of industry trends positions us to anticipate business challenges in each industry. We deepen our understanding by
studying these challenges and engaging with customers at the strategic planning stage. We then align our logistics expertise to
address these business challenges to help our customers compete.
Our understanding of how macro and industry trends impact the stakeholders in each market allows us to develop
commercial insights for our customers. These insights are incorporated into our sales-and-solution process and are shared with
customers through direct engagement, industry forums and publications. By inviting our customers to leverage our capabilities
to improve their overall industry performance, we help them achieve their business objectives and maintain our own
competitiveness.