Fighting talk as UPS defends US market share
United Parcel Service yesterday vowed to defend its share of the US package delivery market against competition from FedEx and DHL, amid signs that its troubled domestic business is back on track.
Mike Eskew, chairman and chief executive, said the domestic parcel business was “well ahead” of expectations in the second quarter of this year, following several months of sluggish performance.
He set a long-term target for UPS to grow in the US at the same rate as the broader market, halting erosion of the company’s dominant position in its home territory.
“We believe we will be growing at the market rate by the latter part of this year and that means we will be maintaining our share,” Mr Eskew told a meeting of investors in New York.
The bullish comments set the stage for an intensification of the already bitter competition between UPS, FedEx and DHL in the world’s biggest package delivery market.
FedEx has been gaining ground on UPS for years and DHL, owned by Germany’s Deutsche Post, is mounting an aggressive expansion in North America.
UPS also said it was hunting for acquisition opportunities as the company expands beyond parcel delivery into a broader range of logistics services.
“We do believe that there are opportunities out there,” said Scott Davis, chief financial officer.
There has been persistent speculation among analysts and investors that UPS could launch a bid for UK-based Exel, one of the world’s biggest logistics companies.
UPS said the integration of Menlo Worldwide Forwarding, a global freight forwarder acquired last year, was progressing well and forecast annual synergies of at least Dollars 200m by 2007.
Mr Davis said there was “good momentum” throughout the company in the first five weeks of the second quarter, with international export volume continuing to climb at double-digit rates.
Rapid expansion in shipments from Asia, especially China, has helped UPS offset weak growth in North America over recent months.
Mr Davis said UPS remained on course for a “strong 2005” with full-year net income growth of 16 per cent to 20 per cent, in line with previous guidance.
Recovery in the domestic market was attributed to an increased focus on medium-sized customers.
“Momentum in the US domestic business is visible in the early weeks of this quarter,” said Mr Davis. “Through the first week of May, we are well ahead of our 2 per cent guidance for total volume growth.”
