Interview – UPS wants to get closer to European consumers

UPS Europe has plans to expand its network in Europe over the next year to be “closer to the end consumer” as it settles into post-Covid life and aims to offer more personalised, on demand services, Pablo Ramos, Director of Strategy for UPS in Europe, told CEP-Research in an exclusive interview.

Ramos, who spoke to CEP-Research during The Delivery Conference 2022, outlined the main aims for UPS Europe over the next year and looked at how Covid and Brexit have changed the delivery experience for the better.

He made the remarks following a strong 2021 for the US package giant. Last year, UPS increased revenue by 15% to US$97.3 billion, improved adjusted operating profit by 50.8% to US$13.1 billion and increased its adjusted operating margin to 13.5% from 10.3% in 2020. The company now plans to invest more than US$5 billion in 2022 to further drive innovation and growth.

What are UPS Europe’s key focus areas for the next few years?

“We are looking at extending our solutions for consumers, including offering different service levels, better track and trace, and improving interaction with consumers. We are also looking to further expand our Access Point network and introduce more sustainability projects. We basically want to help our customers improve the end consumer experience and drive consumer loyalty,” Ramos said.

“In terms of our Access Point network, over the past year we have increased locations by 10,000, from 20,000 to 30,000. The expansion of this network is an ongoing project and the more volume we get from customers, the faster the network will grow. We want to make sure we are closer to consumers.”

How do you see the delivery experience changing?

“I believe the delivery experience will become more personalized and on-demand. It will be tailored to meet the needs of specific people and the environments in which they live. Consumers will have even more control over their delivery experience and things like lockers, delivery windows, drones, and autonomous vehicles will all be further developed into all markets over the next few years.

“I also believe the changes that came about due to Covid-19 will be here to stay. A lot more people are now buying goods online. In some studies we undertook we found that around 50% more people now mostly shop online – this figure was 10% pre-Covid. This jump in volumes will be here to stay now, with home delivery continuing to grow as more and more people are staying home. Lockers and Access Point locations will also grow in popularity to help with increased volumes.”

What investments have you made in recent months to increase capacity?

“We have made several strategic investments over the past year. We have bought some new airplanes and launched new flights, such as between Denmark and Germany and connecting Cologne with Larnaca, Cyprus and Tel Aviv, Israel. The latter has opened up new world markets for Israel and Cyprus through our global network. In September we also finished the expansion of our hub at East Midlands Airport (EMA), increasing capacity for the UK market.

“We plan to continue investing in increasing capacity and improve delivery service. Overall, UPS plans to invest about US$5.5 billion this year worldwide. This investment is needed because volumes keep growing and customers keep asking us to deliver more and more. Details on exactly where and how we will invest will depend on where increased capacity is needed and which trade links have fast-growing flows.”

Which markets offer the greatest growth potential?

“We see growth continuing in our main markets, including Poland, Germany, Belgium, Luxembourg, Spain, Italy and the UK. We see Poland in particular experiencing significant growth. Trade links from eastern to western Europe are also increasing – not just for us, but overall.”

Are you still tackling the Brexit challenge?

“We believe that the biggest challenges and struggles related to delivery following Brexit are behind us now. It has been a big learning curve for retailers, especially SMEs and we worked hard to support them in continuing to deliver cross border. We launched a new online portal for example which provided all the information needed to deal with new customs and tax regulations and to ensure that retailers had the right paperwork so there were no delays.

“We also stressed the importance of our shippers and customers informing consumers ahead of time about new customs duties and taxes that need to be paid. Transparency and communication are key. The biggest struggles of Brexit are, however, behind us, but we remain prepared to tackle any issues that do arise and have customer service teams on hand to discuss any questions or problems.”

What trends and challenges do you see emerging over the next year?

“The volatility in market conditions is still a challenge due to Covid, but our IT teams are very diligent in helping us to build solutions to cope with that. I don’t really see any challenges affecting the delivery side of things. I believe in the future it will be about finetuning daily operations, but in terms of challenges, we are well settled and on track.

“We plan to continue supporting companies to deliver cross border. Volumes in this area are growing fast as more and more companies go online. I believe the pandemic forced SMEs to set a new target for their business. They can no longer rely on their neighbourhoods and have now realized they need to move online. This will accelerate further in the future, and SMEs will learn how to export better and market themselves in new countries – all driving cross border growth.

“Covid caused major disruption in the delivery sector. We have been coping with peak volumes for nearly two years now and this has become routine. We have learned to manage it and now we believe things will settle a little in the sector.”