The company’s headquarters in Atlanta is comprised of a 735,000 square feet of space. UPS owns 27 package operating sites in the United States to manage traffic between the East and West Coast. Other than these, UPS also owns or leases 600 facilities to manage its international courier services, and 900 facilities for its logistics and freight forwarding. UPS has a ground fleet numbering about 100,000 vehicles, all with the Pullman Brown color. The classic delivery vehicles were built using chassis from General Motors or Ford, with manual transmission and steering, and no aircon or radio.
The new UPS cars have chassis from Navistar or Freightliner, with power steering and automatic transmission. Other delivery cars are vans and minivans from Dodge. The usual service life for a UPS vehicle is up to 25 years, after which time, the vehicle is dismantled or painted white to be used internally. To respond to rising fuel costs, the company has began using hybrid vehicles, which are known to be fuel-efficient. For its air fleet, UPS Airlines has approximately 600 aircraft, according to its securities filing. The company adopts the hub and spoke system.
UPS’ primary hub is in Louisville in Kentucky, with regional hubs in Columbia, Dallas, Miami, Hartford, Ontario, Philadelphia, and Rockford, and international hubs in Germany, Hong Kong, Taiwan, Singapore, and Philippines. Its airline fleet is comprised of Airbus, Boeing, Douglas, and McDonnell Douglas aircraft. The airline’s fleet has adopted two color schemes since its inception in 1988. At the start, the fuselage was painted white with a gray bottom. A brown stripe was found on window lines. Above the brown stripe were the words United Parcel Service.
Currently, the newer aircraft still have gray at the bottom but the brown stripe has been replaced with an arch design. The company name has been replaced with “Worldwide Services. ” Other than its physical equipment, UPS is highly dependent on technology for the processing of its orders. Its online site, UPS. com, takes care of processing millions of transactions globally. Aside from the processing, the Web site also offers tracking requests and viewing of package and freight status, pickup requests, and rate quotes, among others.
The company’s global operations are manned by about 425,000 employees, more than half of which are hired under master and supplemental agreements with unions. For its airline business, UPS employs 2,900 pilots and a number of ground and airline mechanics. IV. Operations As part of its operational philosophy of integrity in conducting business. UPS enforces this maxim using the Code of Business Conduct, which is translated into 29 languages and cascaded to the company’s offices worldwide.
The company’s compliance departments adapts the code of conduct in such a manner that it becomes meaningful to the local personnel. The guidelines include an explanation of UPS’ ethical and legal responsibilities. To reinforce the application of the code of conduct, UPS also holds trainings and seminars on areas that are relevant to the company’s operations. These include: anti-trust, anti-corruption, insider trading, government contracts, health and safety, and records managements.
Limitations/Problems The company is a defendant in a number of litigation involving wages and hours. UPS is a defendant in a class-action lawsuit involving 1,200 supervisors who alleged that UPS denied them overtime payment. The plaintiffs are also demanding for penalties to be imposed on the company for missed rest and meal periods. Another class-action lawsuit has been filed and resolved against the company involving 23,600 drivers who want to be compensated for back wages.
Aside from the class action lawsuit facing UPS, the company also has to contend with work stoppages by some of its employees, which could hamper customer service and possibly direct some business to the competitors’ doorsteps. UPS is also cooperating with the U. S. Antitrust Division, the European Union, and the New Zealand Commerce over air cargo and freight forwarding pricing. In 2007, UPS’ Domestic Package division incurred a $6. 1 billion charge due to its withdrawal from pension funds of the Central States.
This division has also suffered a low growth in revenue, charges for aircraft impairment, and charges for voluntary separation. The performance of this division is affected by the seasonality and cyclicality of demand in the industry. The same could happen to the company’s other divisions. On the international arena, UPS has to contend with fluctuations in the currency that could result to higher operating expenses. On the domestic front, UPS is facing higher wage demands from unions, including higher stock-based packages and pension programs.
Like many businesses in the country, UPS has also been affected by high jet fuel prices. It incurred more than 20% hike in its fuel expenses for 2007. Other areas of operation are also indirectly affected due to crude prices. The consolidation in the industry is a problem for UPS since it could mean bigger and stronger competitors. UPS can only maintain is leadership if it rides the bandwagon and absorb smaller companies in its fold. Aside from mergers, UPS is also facing tougher aviation and transport laws as an after-effect of the 9/11 incident.
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