UPS 1Q13 Earnings Call Notes

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This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call. Other posts in this series can be found by clicking here. Full transcripts can be found at Seeking Alpha.

[on same day delivery for e-commerce] “I think that’s what it is right now, an experiment, trying it out. I’m not sure yet the economic feasibility is going to be there for this to be a big service ongoing.”

“Yeah, I think same-day is really going to be a niche offering [for e-commerce] that’s out there. The real story is about omnichannel. We’ve got about 25 or more major retailers that are either using or moving to the UPS omnichannel solutions.

And it’s really about leveraging UPS’s shipping and visibility technologies. It helps enable a seamless connectivity between the retailer’s website, the fulfillment warehouses, the brick and mortar stores, and the consumers and returns. For the retailer, it enables inventory optimization and less markdowns, and for the consumers, it enables faster click to deliver times and greater access to retailer inventory and a broader variety.

So that’s really one of the big stories that’s driving ecommerce and why customers are coming to UPS”

“We do disagree with furloughing of the air traffic controllers, and we also disagree on certain closing of night operations. We think there are more efficient ways that they can cut cost that will not impede commerce. And I think that more and more people are agreeing with that as we go through.”

“Domestically, we’re fairly confident that the U.S. economy will be stable, if unexciting. Internationally, the trade flows have been very volatile, and so we have to stay attuned to that.”

“B2B volume remains fairly sluggish…the omnichannel that Alan referred to actually, when it’s done well, does drive B2B volume. Because in effect your forward stocking inventory in the stores has to be replenished. It shrinks shipment sizes, and so the state of the art retailers are now actually doing more frequent deliveries to stores to keep inventories balanced.”

“the vast majority of our growth was driven by ecommerce in the first quarter. And easy returns are obviously an important part of driving consumers to shop online at a retail website. ”

“I think it’s very difficult to replicate the network that UPS has built over the 105 years we’ve been around.”

“As the world shifts, and we look at what’s manufactured in China, now we see a lot of that manufacturing going down to Vietnam. After Vietnam it could be Indonesia. After Indonesia, India.

So we’re very bullish on the fact that there will be manufacture all around the world. Global trade will certainly increase, although it’s been a little choppy here for the last few quarters. And that will require air freight. And that’s perfectly in our sweet spot.”