United Parcel Service (UPS)

Ever since the teamsters strike in 1997 when management thought they could break the teamsters union, but instead got crushed and ran home like puppies with their tails between their legs, UPS management has continually made one bad decision after another. They eventually will own the teamsters pension fund and just like GM and Chrysler need the U.S. tax payers to bail them out. Managers at UPS have very little common sense and worry more about their pay checks and bonuses than their customers. So many times I toured their so called "hubs" and could not believe what I saw. I visited one in Hartford, CT and witnessed hundreds of packages destroyed or crushed in a four hour shift. I also saw many packages stepped on, thrown and drop kicked. I brought this to several managers attention and they tried to tell me this was an "industrial engineering" problem and I would have to speak with those managers. I can't beleive OSHA has not shut this place down because I also many employees injured on the job and these supervisors just ignored them and continued to try to get the "last package" done. UPS has many law suits for racial and sexual discrimination and is even being sued by its own store--the UPS Store for unfair business practices. UPS is the perfect example of corporate greed, incompetence and unaccountability and will soon join GM, AIG, and Lehman Brothers on the corporated dung heap.

For decades UPS management has enjoyed better compensation packages than its competitors--or even management in other industries--but after the 1999 IPO, management has increasingly lost the "culture of ownership" that dominated the company since its founding: after the Enron collapse many in management are reluctant to hold their UPS stock to retirement, as the company encourages. With fewer incentives to stay with UPS, management will bleed to other industries, leaving the remaining management of the company weakened.

United Parcel Service Inc (UPS) warned that its second-quarter outlook would likely fall below analysts’ expectations and reported lower-than-expected profit as fewer packages shipped amid the global economic downturn, sending its shares down as much as 7.5% yesterday (Thursday), Reuters reported. The U.S. economic bellwether and said that while the economic recovery could begin as soon as the end of this year, it would more likely come in 2010.

UPS is by far the most uncustomer friendly, rudest, arrogant, unethical, dishonest, greedy, irrational, uneducated and ignorant shiiping company in the shipping busniness. I have never been so disrespected and insulted by any company or its employees in my life. Phone calls and complaints rarely get answered and when they do there is no resolution to the problem. Many times I have been sitting at home waiting for a package to be delivered and witnessed drivers just dropping their pakcages without ringing or knocking on my door. Other times they claim to have made delivery attempts when they really haven't. Management seems afraid of their employees and is afraid of disciplining them yet they always blame them and refuse to accept accountability or responsibility for anything. Do yourself and your customers a favor ship Fedex or the USPS.

lots of cost cutting means more packages will not get to the customer when they are suppose to. Lots of cost cutting means even more of a work load on remaining employes not to mention faded uniforms and even dirtier trucks

Labor and fuel costs continue to hamper the company's bottom line (fuel costs represent only 5-7% of operating expenses each year, too little to be a driver of growth or share price). There is a bright side: UPS is a large investor in alternative fuel vehicle research, and problems with Teamster mismanagement of pensions has left the union with few chips at the bargaining table. Despite this, UPS's fleet will remain gasoline-powered for the foreseeable future and the Teamster union will continue to push labor costs upward.

UPS hasn't made a public pronouncement yet about lower quarterly profit expectations (as opposed to FedEx, which did make an announcement like that on May 12th) and the average quarterly earnings estimate of analysts that follow the company is presently in the range of $0.96 to $1.05 per share this quarter. On an annual basis, UPS is expected to earn around $4.07 per share this year (2008 average estimate of 18 analysts) although this number has been reduced lately from a target of $4.44 per share ninety days ago. Next year's estimates (2009's) have also been cut from a level of nearly $5.00 per share to a standing $4.64 average expectation now. We think there's more downside to these estimates.

Y-O-Y growth in top line sales estimates appears to be around 6% to 7% on UPS current revenue run rate of approximately $52 billion in sales per year. Like FDX, we think that while showing an increase over 2008's fiscal year results, UPS will struggle to maintain its profits or even show profit growth in an environment of such sharply rising fuel costs. We are convinced that margins are going to be compressed in this industry, even if UPS or its competitors try to pass on the costs to consumers with fuel surcharges.

UPS faces increased competition in its core U.S. market and emerging European market from DHL. While diversifying the company through acquisitions gives it leverage in the expanding global market, it has frequently come at the expense of the quality of the U.S. market that drives its profits.