UPS: Making Air Package Deliveries

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UPS started delivering packages by air as early as 1929 with United Airlines operating ford Tri-motors. UPS’s first airline venture started as a 50/50 partnership with DHL in a company called International Parcel Express (IPX). IPX hired a group of former Transamerica employees to gain the air carrier certificate. With 60 aircraft in the fleet of IPX by 1987, it was becoming difficult to manage with all the different contract carriers and aircraft. UPS announced it would be taking over all air operations in 1988 and using the IPX certificate as the basis for UPS airlines. UPS Airlines started on January 28th 1988. Ten months after receiving the operating certificate from the FAA, UPS Airlines had grown to an operation of 94 aircraft. UPS airline was the fastest growing airline in FAA history.

Financial performance and current economic standing
UPS has always been a cost conscious business. However, raising the necessary capital to compete on a global scale meant seeking additional revenue. In 1999, UPS held the largest initial public offering in US stock history. The once privately held United Parcel Service went public creating five and a half billion dollars of revenue. In addition, investors have watched the stock increased 26 percent since the initial public offering.

Route structure and airport hub strategies
UPS has seven regional hubs in the US with operations worldwide. UPS uses its own hub-and-spoke system to expedite its cargo around the world, but its principal hub is Louisville International Airport. The UPS air hub at Louisville is called Worldport. UPS selected Louisville has their hub for two reasons. First, because of its location as UPS can reach the majority of the US population within two or three...

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...n 185 countries reaching over four billion people.

Cargo Operations in the US
In 2003 in an unprecedented move, UPS teamed up with rival FedEx to keep DHL from entering the US parcel market. DHL had purchased Airborne Express in an attempt to enter the US market. UPS and FedEx identified that DHL would distort US competition because DHL could subsidize its competitive activities with revenues gained from its postal monopoly in Germany. Unable to compete against the two US shipping giants, DHL announced in 2013, it would close its North American operations. In May 2013 DHL started outsourcing some of its operations to UPS.

In Conclusion, What is next for the shipping giant of UPS? In just 25 years UPS airlines has grown to be the second largest Cargo Airline in the world. Time will only tell what is next for the global shipping giant. “What can Brown do for you?”

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