UPS to focus on service rather than price cuts
United Parcel Service will rely on service rather than price cuts to counter competition for ground shipments, Chief Executive Officer Michael Eskew said.
“We don’t think price is the only value proposition here,” Eskew said in an interview with Bloomberg News. “Service is the real differentiator when it comes to some of that competition. With service and technology and our people, we think we’ll stack up real well.”
Atlanta-based UPS holds about 70 percent of the U.S. market for ground deliveries, based on volume. During the past four years, its market share has fallen about 4.8 percent, according to UBS Securities LLC. FedEx Corp. has risen 3.4 points to 15.3 percent, and Airborne Inc., recently acquired by a unit of Deutsche Post AG, has gone from zero to 1.7 percent in two years.
UPS may have a hard time holding off FedEx with service alone because “both are capable of offering service and information systems to customers superior to everyone else in the marketplace,” said Donald Broughton, an A.G. Edwards & Sons Inc. analyst who rated UPS a “sell” and doesn’t own its shares.
Eskew said UPS has no plans now to acquire a trucking company to carry heavier freight. FedEx has a trucking unit, FedEx Freight, and the industry has consolidated in the past year through acquisitions and the closure of Consolidated Freightways Corp.
