UPS 4Q13 Earnings Call Notes

A digest of some of the top insights that I’ve gathered from this week’s earnings calls.  Full notes can be found here.

Far short of expectations

“I would like to start my comments today by saying UPS fourth quarter results fell far short of our expectations. ”

Huge e-commerce volumes, and late season surge

“Shipments produced by e-commerce significantly exceeded even our most optimistic forecasts as more and more Americans shopped online.”

“In addition, we experienced a much later peak day than expected as purchasing decisions by consumers shifted closer to Christmas.”

Weather complicated things

“In addition, we experienced a much later peak day than expected as purchasing decisions by consumers shifted closer to Christmas.”

Europe emerging from recession

“on a positive note, Europe began to emerge from recession. Also, cross border trade improved in 2012, express shipments out of Asia remains sluggish.”

E-commerce growing worldwide, not just US

“e-commerce continues to evolve at a rapid pace, not only here in the United States, but around the world.”

Customers care more about price than time

“customers put greater emphasis on cost rather than time in transit.”

Four key areas that need to be improved to avoid repeat of 4Q mess

“First, UPS volume forecasting methods were challenged. The paradigms for planning no longer apply due to the rapidly evolving marketplace.”

“second issue we need to address. UPS network capacity. We are in the process of identifying ways to enhance the throughput of our network. We will make appropriate investments such as facility expansions, process automation, job simplification and the acceleration of the technology implementations”

“we plan to expedite the progress of updating our legacy buildings with automation to streamline the thought process.”

“A third area for improvement is timely and accurate visibility of shipments. As more customers work with UPS to optimize their supply chains, a growing number of trailers were dropped at our facilities with limited visibility to their contents.”

“Lastly, improved communication with our shippers and receivers is needed.”

Holiday season 2014 compressed again

“We are going to spend extra money operationally. We are going to accelerate investments and we are little cautious about exactly how the next peak turns out. It is another compressed holiday season although we get one extra day.”

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