Expansion Is Part and Parcel of UPS Plan : Competition: The company is in the midst of a campaign to dominate the international package delivery market. Its efforts in Europe place emphasis on air express packages.
Country by country, United Parcel Service is allying itself with companies worldwide in a campaign to dominate the international package delivery market.
Since 1985, UPS has snapped up companies in Spain, France, Italy, the United Kingdom, Denmark, Finland, Belgium, Ireland, the Netherlands and Switzerland.
In July, it bought its 12th European parcel delivery company, spending $50 million on Prost Transport of France--the company’s largest acquisition so far. UPS has also gone on its own into Canada, Mexico and Australia, while getting a foothold in Japan and the Soviet Union through joint ventures.
The company hopes to operate internationally in much the same way it does business in the United States, but with a special emphasis on air express packages, said Donald W. Layden, senior vice president and head of UPS’s international operations.
To get there, UPS is building the foundation for a ground and air delivery system throughout Europe, Layden said. The so-called “pan-European network” will enable UPS to take advantage of the easing of trade barriers among 19 European countries by 1993.
John Mullen, chief executive of TNT Express Worldwide, an arm of the Australian conglomerate TNT Ltd., said he considers UPS the biggest threat in the European market. “They will go for volume and we’re not well-equipped to handle it at this time,” he said recently.
To combat UPS, TNT formed a joint venture with five European postal systems, giving it ready-made mail deliveries and express volume.
UPS has invested millions of dollars in its overseas expansion, analysts say. But the Greenwich-based company has deep enough pockets to face its major international competitors, they say.
“They have a lot of staying power,” said Doug Rockel, a freight analyst with Merrill Lynch & Co. in New York.
Rockel and other analysts stopped short of pronouncing UPS the future winner in the international package delivery market, one of the hottest prospects in the delivery industry. UPS has formidable opponents, including DHL and Federal Express Corp.
Federal Express isn’t worried, despite its own problems internationally, said Daniel N. Copp, spokesman for the Memphis, Tenn.-based company. FedEx, which has acquired 22 foreign package delivery companies since 1984, lost $271 million on its international operations last year.
UPS started its first international operation in Ontario, Canada, in 1975, where the company later established ground service within the country. A year later, UPS initiated service in West Germany. Today, UPS employs 10,000 workers in Germany, the company’s largest international site.
Layden said about 15% of the company’s business is from the international side, and the near-term goal is to expand that to 20% or 25%. UPS delivered about 2.9 billion parcels and documents in 1990 in the United States and more than 175 countries worldwide.
