What changed in this filing

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Item 1. Business

2022-02-22 compared with 2021-02-22 · 60 added, 79 removed, 219 unchanged (39% of the section changed)

United Parcel Service, Inc.

(“UPS”), founded in 1907, is the world’s largest package delivery company and a premier provider of global supply chain management solutions.

(“UPS”), founded in 1907, is the world’s premier package delivery company and a leading provider of global supply chain management solutions.

We offer a broad range of industry-leading products and services through our extensive presence in North America;

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Asia Pacific and Latin America.

Our services include transportation, distribution, contract logistics, ground freight, ocean freight, air freight, customs brokerage and insurance.

We operate one of the largest airlines in the world, as well as the world’s largest fleet of alternative fuel vehicles.

Our services include transportation and delivery, distribution, contract logistics, ocean freight, air freight, customs brokerage and insurance.

We operate one of the largest airlines and one of the largest fleets of alternative fuel vehicles under a global UPS brand.

We deliver packages each business day for approximately 1.7 million shipping customers to 11.8 million delivery customers in over 220 countries and territories.

In 2020, we delivered an average of 24.7 million packages per day, totaling 6.3 billion during the year.

In 2021, we delivered an average of 25.2 million packages per day, totaling 6.4 billion packages during the year.

Total revenue in 2021 was $97.3 billion.

Our business sits at the intersection of major economic and societal trends, such as rapid urbanization and e-commerce growth.

As we look ahead, we recognize that our customers are changing, our competitors are changing, and the rate of change is accelerating.

We are guided by our strategy, Customer First, People Led, Innovation Driven , as we transform nearly every aspect of our business.

Our well-defined strategy focuses on growing in the parts of the market that value our end-to-end network, including business-to-business ("B2B"), healthcare, small- and medium-sized businesses ("SMBs") and large enterprise accounts.

We are on a journey to execute our Customer First, People Led, Innovation Driven strategy as we transform our business.

Customer First is about reducing the friction of doing business.

We seek to help our customers seize new opportunities, compete, and succeed by delivering the capabilities that they tell us matter the most;

We help our customers seize new opportunities, compete, and succeed by delivering the capabilities that they tell us matter the most:

speed and ease.

We believe that our best opportunities are captured in, and we are focusing on, our three strategic growth initiatives:

small- and medium-sized businesses (“SMBs”), healthcare and international markets.

We seek to grow in these areas by providing the best digital experience powered by our global smart logistics network.

We will measure our success in this area through improvements in our net promoter score.

People Led specifically focuses on how likely an employee is to recommend UPS employment to a friend or family member.

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We are also enhancing the employee value proposition to align with evolving market practices.

We will measure our success on this strategic initiative through the employee experience.

Innovation Driven is designed to optimize the volume that flows through our network, to focus on increasing value share and drive business growth from higher-yielding opportunities in our target markets.

In the United States, our aim is to improve revenue mix and lower our cost to serve in the U.S.

Domestic Package segment.

Within the International Package and Supply Chain & Freight segments, our focus is on growing operating profit.

We will measure our success on this strategic initiative through our returns on invested capital and operating margins.

Innovation Driven is designed to optimize the volume that flows through our network, to focus on increasing value share and driving business growth from higher-yielding opportunities in our target markets.

We are using technology and automation to deliver sustainable improvements to our network.

In our United States (" U.S.") Domestic Package segment, our aim is to improve revenue mix and lower our cost to serve.

Within the International Package segment and Supply Chain Solutions businesses, we are focused on value share gains and growing operating profit.

Competitive Strengths

Our competitive strengths include:

An Efficient Multimodal Network.

Global Smart Logistics Network.

We believe that our integrated global air and ground network is the most extensive in the industry.

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We serve more than 220 countries and territories.

We have a significant presence in all of the world’s major economies, allowing us to effectively and efficiently operate globally.

Cutting-Edge Technology.

We are a global leader in developing technology that helps our customers enhance their shipping and logistics business processes to lower costs, improve service and increase efficiency.

We have a significant presence in all of the world’s major economies, allowing us to effectively and efficiently operate around the world.

Cutting-Edge Technologies.

We are a global leader in developing technologies that help our customers enhance their shipping and logistics business processes to lower costs, improve service and increase efficiency.

We offer a variety of online tools that enable our customers to integrate UPS functionality into their own websites, deepening our customer relationships.

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Our founders believed that employee stock ownership was a vital foundation for successful business, and the employee stock ownership tradition dates back to our first stock ownership program in 1927.

Our legacy of fairness and equity is the bedrock of our culture and of our relationships with those we serve.

Financial Strength.

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Reporting Segments

We have three reporting segments:

Domestic Package, International Package and Supply Chain & Freight.

We have two reporting segments:

Domestic Package and International Package.

Our remaining businesses are reported as Supply Chain Solutions.

Domestic Package and International Package are together referred to as our global small package operations.

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This includes UPS drivers who can accept packages, UPS drop boxes, UPS Access Point locations, The UPS Store locations, authorized shipping outlets and commercial counters, alliance locations and customer centers attached to UPS facilities.

Our UPS Access Point network includes local small businesses, national retailers and self-serve lockers.

Our UPS Access Point network includes local small businesses and national retailers.

This network allows consumers to ship or redirect packages to an alternate delivery location or to drop off pre-labeled packages, including returns.

We have expanded the UPS Access Point network to approximately 21,000 locations within the U.S.

The UPS Access Point network includes more than 20,000 locations within the U.S.

and 52,000 globally.

We offer a portfolio of returns services in more than 140 countries.

These services are driven by the continued growth of online and mobile shopping that has increased our customers’ need for efficient and reliable returns, and is designed to promote efficiency and a friction-free consumer experience.

These services are driven by the continued growth of e-commerce that has increased our customers’ need for efficient and reliable returns, and are designed to promote efficiency and a friction-free consumer experience.

This portfolio provides a range of cost-effective label and digital returns options and a broad network of consumer drop points.

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ground fleet serves all business and residential zip codes in the contiguous United States.

• Our air portfolio offers time specific, same day, next day, two day and three day delivery alternatives.

• Our air portfolio offers time-definite, same day, next day, two day and three day delivery alternatives.

• Our ground network enables customers to ship using our day-definite guaranteed ground service.

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• UPS SurePost provides residential ground service for customers with non-urgent, lightweight residential shipments.

UPS SurePost combines the consistency and reliability of the UPS ground network, with final delivery often provided by the U.S.

It offers the consistency and reliability of the UPS ground network, with final delivery often provided by the U.S.

Postal Service.

During 2020, as a component of our strategic initiatives focused on SMBs and to increase speed and ease for our customers, we successfully completed our weekend expansion, enabling broader market coverage.

We are the only carrier that provides both commercial and residential pickup and delivery services on Saturdays as a general service offering.

We also improved ground transit times between millions of zip codes in the most populous U.S.

markets and expanded our Digital Access Program by connecting UPS directly to more e-commerce platforms, improving access to our network.

International Package

International Package consists of our small package operations in Europe, Asia Pacific, Canada, Latin America and ISMEA.

International high-growth markets are one of our identified growth opportunities.

We offer a wide selection of guaranteed day- and time-definite international shipping services, including more guaranteed time-definite express options than any other carrier.

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Europe is our largest region outside of the U.S.

and, in 2020, accounted for approximately half of our international package segment revenue.

and, in 2021, accounted for nearly half of our international package segment revenue.

We continue to make major European infrastructure investments to meet growing demand for our services and to improve transit times across the region.

Customers can now reach more than 80% of Europe's population within two business days using UPS Standard.

Customers can reach more than 80% of Europe's population within two business days using UPS Standard.

We serve more than 40 Asia Pacific countries and territories through more than two dozen alliances with local delivery companies that supplement our owned operations.

International high growth markets are one of our strategic imperatives.

Since 2017, we have doubled our air capacity to Dubai.

The introduction of a direct flight from the U.S.

has improved time-in-transit to key destinations in ISMEA for shippers throughout the U.S., Canada and Latin America.

to Dubai has improved time-in-transit to key destinations in ISMEA for shippers throughout the U.S., Canada and Latin America.

In India, we are investing in our network to improve transit times and extend pickup times, allowing businesses to gain faster access to markets in Europe and the United States.

Supply Chain & Freight

Supply Chain & Freight consists of our forwarding, truckload brokerage, logistics and distribution, UPS Freight, UPS Capital and other businesses.

Supply Chain Solutions

Supply Chain Solutions consists of our forwarding, truckload brokerage, logistics and distribution, Roadie, UPS Capital and other businesses.

Supply chain complexity creates demand for a global service offering that incorporates transportation, distribution and international trade and brokerage services, with complementary financial and information services.

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We meet this demand by offering a broad array of supply chain services in more than 200 countries and territories.

The divestiture of UPS Freight was completed on April 30, 2021.

As a result of the divestiture, we renamed Supply Chain & Freight as Supply Chain Solutions.

For additional information on the divestiture, see note 4 to the audited, consolidated financial statements.

We are one of the largest U.S.

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We operate both multi-client and dedicated facilities across our network, many of which are strategically located near UPS air and ground transportation hubs to support rapid delivery to consumer and business markets.

Each of our U.S.

distribution centers can be designated as a Foreign Trade Zone ("FTZ"), allowing businesses the opportunity to defer or reduce tariff burdens on imported and exported goods.

We also have multiple FTZ-compliant facilities in Europe and Asia.

Healthcare logistics is one of our strategic growth initiatives.

UPS Healthcare offers world-class technology, deep expertise and the most sophisticated suite of services in the industry.

Healthcare logistics is one of our targeted areas for growth.

We offer world-class technology, deep expertise and the most sophisticated suite of services in the industry.

With a strategic focus on serving the unique, priority-handling needs of healthcare and life sciences customers, we have increased our cold-chain logistics capabilities to support the rapid deployment of COVID-19 vaccines both in the U.S.

and internationally.

During 2020, we added nearly 2.6 million square feet of capacity and now have approximately ten million square feet of healthcare-licensed warehousing in 82 facilities across fifteen countries.

These facilities are climate controlled and offer validated coolers and freezers for products requiring strict temperature-controlled environments.

UPS Freight offers regional, inter-regional and long-haul less-than-truckload ("LTL") services in all 50 states, Canada, Puerto Rico, Guam, the U.S.

Virgin Islands and Mexico.

UPS Freight also provides dedicated contract carriage truckload services.

User-friendly shipping, visibility and billing technology offerings, including UPS WorldShip, Quantum View and UPS Billing Center, allow customers to create electronic bills of lading, monitor shipment progress and reconcile shipping charges.

On January 24, 2021, we entered into a definitive agreement to divest our UPS Freight business.

This will allow us to be even more focused on the core parts of our business that drive the greatest value for our shareholders.

The transaction, which is subject to customary closing conditions and regulatory approvals, is expected to close during the second quarter of 2021.

For additional information, see note 4 to the audited, consolidated financial statements.

and internationally and we have delivered over one billion doses of COVID-19 vaccines.

Customs Brokerage

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In addition to customs clearance services, we provide product classification, trade management, duty drawback and consulting services.

On October 1, 2021, we acquired Roadie, a technology platform that enables local same-day delivery with operations throughout the United States.

The Roadie technology platform is purpose-built to connect merchants and consumers with contract drivers to enable efficient and scalable same-day local delivery services, including items that are not compatible with the UPS network.

UPS Capital offers integrated supply chain insurance solutions for in-transit goods to both small and large businesses.

Supply chain protection services are available in 19 countries and territories.

UPS Capital also offers insured transportation of high value goods.

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Our global workforce includes approximately 89,000 management employees (44% of whom are part-time) and 445,000 hourly employees (51% of whom are part-time).

More than three-quarters of our U.S.

More than 70% of our U.S.

employees are represented by unions, primarily those employees handling or transporting packages.

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We believe in creating an inclusive and equitable environment that represents a broad spectrum of backgrounds, cultures and stakeholders.

By leveraging diversity with respect to gender, age, ethnicity, skills and other factors, and creating inclusive environments, we can improve organizational effectiveness, cultivate innovation and drive growth.

By leveraging diversity with respect to gender, age, ethnicity, skills and other factors, and creating inclusive environments, we believe we can improve organizational effectiveness, cultivate innovation and drive growth.

Our Board of Directors and Board committees provide oversight on human capital matters through a variety of methods and processes.

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We believe the Board’s oversight of these matters helps identify and mitigate exposure to labor and human capital management risks, and is part of the broader framework that guides how we attract, retain and develop a workforce that aligns with our values and strategies.

In addition, in 2020 we created the role of Chief Diversity, Equity and Inclusion Officer, a new position on the company's Executive Leadership Team, reporting directly to our Chief Executive Officer.

The creation of this role is a significant step forward for UPS to further develop a more inclusive and equitable environment.

Transformation

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We are investing in capabilities that will transform our business, including investments in employee opportunities to support growth.

We are providing further training for 40,000 management employees on professionalism and performance as well as unconscious bias and diversity and inclusion to ensure our actions match our values.

We provide training for management employees on professionalism and performance as well as unconscious bias and diversity and inclusion to ensure our actions match our values.

Additional information on our human capital efforts is contained in our annual sustainability report, which describes our activities that support our commitment to acting responsibly and contributing to society.

This report is available at www.sustainability.ups.com .

This report is available under the heading "Social Impact" at www.about.ups.com .

Collective bargaining

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Department of Homeland Security, through the Transportation Security Administration (“TSA”), have primary regulatory authority over our air transportation services.

The DOT’s authority primarily relates to economic aspects of air transportation, such as operations, authority, insurance requirements, pricing, non-competitive practices, interlocking relations and cooperative agreements.

The DOT’s authority primarily relates to economic aspects of air transportation, such as operating authority, insurance requirements, pricing, non-competitive practices, interlocking relations and cooperative agreements.

The DOT also regulates international routes, fares, rates and practices and is authorized to investigate and take action against discriminatory treatment of U.S.

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and foreign governments or, in the absence of such agreements, by principles of reciprocity.

We are also subject to current and potential aviation regulations imposed by governments in other countries in which we operate, including registration and license requirements and security regulations.

We are also subject to current and potential aviation, health, customs and immigration regulations imposed by governments in other countries in which we operate, including registration and license requirements and security regulations.

We have international route operating rights granted by the DOT and we may apply for additional authorities when those operating rights are available and are required for the efficient operation of our international network.

The efficiency and flexibility of our international air transportation network is subject to DOT and foreign government regulations and operating restrictions.

The FAA’s authority primarily relates to safety aspects of air transportation, including certification, aircraft operating procedures, transportation of hazardous materials, record keeping standards and maintenance activities and personnel.

The FAA’s authority primarily relates to operational, technical and safety aspects of air transportation, including certification, aircraft operating procedures, transportation of hazardous materials, record keeping standards and maintenance activities and personnel.

In addition, we are subject to non-U.S.

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Our airport and off-airport locations, as well as our personnel, facilities and procedures involved in air cargo transportation must comply with TSA regulations.

Our airline, along with a number of other U.S.

domestic airlines, participates in the Civil Reserve Air Fleet (“CRAF”) program.

Our participation in the CRAF program allows the U.S.

We participate in the Civil Reserve Air Fleet (“CRAF”) program.

Our participation in this program allows the U.S.

Department of Defense (“DOD”) to requisition specified UPS aircraft for military use during a national defense emergency.

The DOD is required to compensate us for any use of aircraft under the CRAF program.

In addition, participation in CRAF entitles us to bid for other U.S.

In addition, participation in the CRAF program entitles us to bid for other U.S.

Government opportunities including small package and air freight.

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Pursuant to the Federal Aviation Act, the FAA, with the assistance of the Environmental Protection Agency is authorized to establish standards governing aircraft noise.

Our aircraft fleet is in compliance with current noise standards of the federal aviation regulations.

Our aircraft fleet complies with current noise standards of the federal aviation regulations.

Our international operations are also subject to noise regulations in certain other countries in which we operate.

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Communications and Data Protection

Because of our extensive use of radio and other communication facilities in our aircraft and ground transportation operations, we are subject to the Federal Communications Act of 1934, as amended.

Because of our use of radio and other communication facilities in our operations, we are subject to the Federal Communications Act of 1934, as amended.

In addition, the Federal Communications Commission regulates and licenses our activities pertaining to satellite communications.

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For additional information, see “Risk Factors – Business and Operating Risks – A significant data breach or information technology system disruption could materially adversely affect us”.

Health and Safety

We are subject to numerous federal, state and local laws and regulations governing employee health and safety, both in the U.S and in other countries.

Compliance with changing laws and regulations from time to time, including those promulgated by the United States Occupational Safety and Health Administration, could result in materially increased operating costs and capital expenditures, and negatively impact our ability to attract and retain employees.

For additional information on governmental regulations and their potential impact on us generally, see “Risk Factors – Regulatory and Legal Risks”.

Where You Can Find More Information

We maintain a website at www.ups.com .

Our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to those reports filed with or furnished to the SEC pursuant to Section 13(a) of the Securities Exchange Act of 1934 are made available free of charge through our investor relations website at www.investors.ups.com under the heading "Financials - SEC Filings" as soon as reasonably practical after we electronically file or furnish the reports to the SEC.

We maintain websites for business and customer matters at www.ups.com , and for investor relations matters at www.investors.ups.com .

Our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to those reports filed with or furnished to the SEC pursuant to Section 13(a) of the Securities Exchange Act of 1934 are made available free of charge through our investor relations website under the heading "SEC Filings" as soon as reasonably practical after we electronically file or furnish the reports to the SEC.

We have a written Code of Business Conduct that applies to all of our directors, officers and employees, including our principal executive and financial officers.

It is available under the heading "ESG - Governance Documents" on our investor relations website.

In the event that we make changes in, or provide waivers from, the provisions of the Code of Business Conduct that the SEC requires us to disclose, we intend to disclose these events within four business days following the date of the amendment or waiver in that section of our investor relations website.

Our Corporate Governance Guidelines and the Charters for our Audit Committee, Compensation Committee, Executive Committee, Risk Committee and Nominating and Corporate Governance Committee are also available under the heading "ESG- Governance Documents" on our investor relations website.

Our sustainability report, which describes our activities that support our commitment to acting responsibly and contributing to society, is available at www.sustainability.ups.com .

We provide the addresses to our internet sites solely for information.

It is available under the heading "ESG" on the Governance Documents page of our investor relations website.

Our Corporate Governance Guidelines and the Charters for our Audit, Compensation and Human Capital, Risk and Nominating and Corporate Governance Committees are also available under the heading "ESG" on the Governance Documents page of our investor relations website.

Our sustainability report, which describes our activities that support our commitment to acting responsibly and contributing to society, is available under the heading "Social Impact" at www.about.ups.com .

We provide the addresses to our websites solely for information.

We do not intend for any addresses to be active links or to otherwise incorporate the contents of any website into this or any other report we file with the SEC.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business