UPS chief says company needs to stay hungry
With an improving economy and strong profits, UPS chief executive Mike Eskew says his company’s greatest challenge is to avoid complacency amid growing competition to deliver goods and services.
In an interview with The Associated Press Tuesday, Eskew said the world’s largest shipping carrier plans to open at least 1,200 more UPS Stores, formerly known as Mail Boxes Etc., over the next several years and will use technology to attract more customers and fill planes making overseas deliveries.
UPS makes the most of its $33 billion in annual revenue from small-package deliveries in the United States. But overseas shipments and its supply-chain management services are growing, and the Atlanta-based company has been concentrating more internationally, which is emphasized by its television commercials promoting its delivery workers around the globe.
“The thing I think that we worry about is, are we going to be innovative and create that constructive dissatisfaction that we’re always hungry and always nimble and always young and act like each customer, each package is the only one we have?” Eskew said.
The U.S. Postal Service, Memphis, Tenn.-based FedEx Corp. and German shipping giant Deutsche Post AG are on its radar, but UPS is more focused on what’s going on in-house than on rivals, he said.
“We must never get complacent and always stay focused on the customer,” Eskew said. “I think that’s our DNA. We’ve changed our company several times and we need to keep thinking about where we are going to go in the future.”
Eskew indicated he’s not concerned about FedEx’s purchase earlier this year of the Kinko’s copy shop chain, including plans announced Monday to rebrand Kinko’s under the FedEx name. He said UPS’ purchase of Mail Boxes Etc. in 2001 was the right strategic decision, and the rebranding under the UPS Store name will help the company.
UPS officials said there is no plan to increase marketing of UPS’ shipping centers in Office Depot and Staples chain stores to compete with FedEx-Kinko’s.
UPS last week reported a 24 percent jump in first-quarter profit behind a 11 percent increase in revenue. It said it was led by its international business, especially in China.
Some analysts, though, wonder how UPS is going to keep the momentum going and keep profit margins high, particularly when its annual rate increases have declined. In November, the company said it would raise its 2004 ground shipping rates 1.9 percent, lower than the 3.9 percent in 2003 and 3.5 percent in 2002. FedEx later matched UPS’ 2004 ground shipping rate increase.
