UPS chief executive looks to deliver more services

Posted 2:06PM on Tuesday 5th November 2002 ( 22 years ago )

SAN FRANCISCO - With its "What Can Brown Do For You?" ad campaign, United Parcel Service Inc. uses its familiar brown-garbed workers and brown trucks to remind people of the company's role in their lives and work. The ads also show a different UPS - a one-stop problem solver that handles a range of chores for corporate customers. They're part of CEO Michael Eskew's drive to develop services to complement the company's bread-and-butter package delivery business. Under Eskew's plan, more companies would hire UPS to serve as a distribution hub, an inventory warehouse, a high-tech repair shop and even a telephone call center for customer inquiries. "He has clearly articulated this vision - no ifs, ands or buts about it," said industry analyst Stephen Jacobs of U.S. Bancorp Piper Jaffray. "It's an absolutely pivotal strategy for UPS." To diversify, Atlanta-based UPS has spent $1.3 billion on 27 acquisitions since 1998. The biggest deals came last year, when UPS picked up retail shipping chain Mail Boxes Etc. and freight forwarding service Fritz Cos. The shopping spree helped UPS's non-package business generate revenue of $1.93 billion through the first nine months of this year, a 36 percent increase from the same time last year. UPS operates in 200 countries, generating more than $30 billion in annual revenue while delivering about 3 billion packages each year. Although this year's shipping volume is slightly lower than last year and the company isn't making as much money as investors hoped, UPS stock has held up well amid Wall Street's turmoil. The company's shares are up 13 percent so far this year, compared with a 21 percent decline in the Standard & Poor's 500 index. Eskew, who became CEO 10 months ago, recently talked to The Associated Press about UPS's performance and his plans for the future. AP: Why do you think UPS stock is doing well in a tough market like this? Eskew: We are a 95-year-old company that people trust. With all the bad actors, the crime and all the bad things that have gone on this year ... people are looking for a port in the storm. Our mission and strategy may change, but the values never change. AP: Are you delivering what you envisioned when you took over as CEO? Eskew: Well, the economy has a long ways to go before it recovers. When we look at all the external factors - consumer confidence, what's going on with unemployment, with industrial production - (they) don't look very optimistic. So we are going to be cautious for the next short period of time. AP: You say UPS is much more than a package company. How so? Eskew: Over the last several years, our purpose has moved from satisfying the small-package needs of our customers to enabling global commerce. When you think about enabling global commerce, that's more than just small packages in the United States. It's whatever our customers need - freight, shipments, it's goods, it's information about the goods. We give companies one point of contact to solve their problems. We know how to manage networks. Those are the skills that we bring to the table and that's how we are starting to brand ourselves. We don't talk about what can "brown" ship for you. We talk about what "brown" can do for you. AP: What are some of the challenges that worry you? Eskew: We can never get complacent. We always have to be aggressive and hungry and think like a small company. We have 370,000 employees. Keeping them engaged, making them realize that this is the way we play - those are the kinds of things I think about. It's easy for the drivers to understand because they look the customers in the eye and see what they need. But it goes beyond the drivers - it's the sorters, the people who keep our package cars clean, it's the people who write code and program for us. All those people who perhaps don't get to see the customer, they are so important. AP: How do you rate your relationship with your employees? Eskew: Those relationships have never been higher. We know we are only as good as our people. We have an organization that is close to the customer and that gives us an awful lot of strength. AP: Has e-commerce helped you guys? Eskew: No question. In 1997, at Christmas time, we had 600,000 customers call in and say, 'Where is my package? Has it been delivered?' Last Christmas, we had 10 million inquiries. None of them called. They did it all on the Internet. The 600,000 inquiries (in 1997) were done at $2 per phone call. The 10 million were done at 3 or 4 cents apiece via Internet connection. So, e-commerce has made all the difference in the world. AP: How do you think you stack up against FedEx? Eskew: We think our service is certainly superior. We think in terms of product, in terms of value, nobody comes close. And nobody else has that "brown" driver, which is a big advantage for us. AP: How did Sept. 11 affect UPS? Eskew: It put a lot of value on trust and a lot of value on information like, "Who is the shipper and receiver and who has touched it along the way?" Our information system allows you to say, "I know where all my packages are at any time and who shipped it." AP: What do you think UPS will look like at its 100-year anniversary? Eskew: We think a lot about that. We want to make it so you don't think of UPS product by product. We want to build seamless solutions. We are a growth company and we are going to continue to be a growth company.

http://accesswdun.com/article/2002/11/188063