UPS Not Sweating Amazon's Transportation Network
With reports Amazon (NASDAQ:AMZN) is planning to create its own transportation network, UPS (NYSE:UPS) CFO Richard Peretz weighed in on whether shipping companies are concerned about the potential competition.
“We think about how UPS provides solutions not to just Amazon, but to many different companies around the country and around the world. And when we look at it, we understand it, it’s really a mutually beneficial relationship not only for Amazon but for every customer that uses UPS because we have that shared economics,” Peretz told the FOX Business Network’s Neil Cavuto.
Peretz then gave an example of how UPS works with the U.S. Postal Service to deliver packages.
“There is a product called SurePost, where the last mile is delivered by the Post Office. So it goes through UPS’ hub and spoke system and then moved to the local post office. But almost a third of the time now, we’re keeping that package because the economics say ‘I’m already going to that stop.’”
According to Peretz, this system does not only benefit UPS, but its customers as well as consumers.
“So, that’s something we can do because of the integrated network that we run across all of our products – one driver and allows [us] to take advantage of those kind of economics and obviously the customers share in that economics.”
Peretz is optimistic heading into the holiday shopping season.
“When we think about peak season, we actually talk about that we’re going to deliver over 700 million packages this year, which is a 14% increase. Fortunately the calendar is in our favor this year as well as there’s two additional operating days from Thanksgiving to the end of the year.”
Peretz then explained what is behind the boost in hiring for retailers as well as shippers leading up to the holiday shopping season.
“Well, you know, I think there is two sides to it. The first is, the National Federation of Retailers came out with a forecast in the mid-3%, 3.6%, growth this year. But more importantly, it’s also the shift to online and as we continue to see more online, not only is that impacting companies like UPS, but it’s also the traditional retailers who are growing their online businesses as well. So we all need additional hires.”
