Aware that it takes money to make money, United Parcel Service (UPS) hopes to raise up to $5 billion in an initial public offering (IPO) before the year’s end. “The goal is to create acquisition currency,” says Norman Black, spokesman for the Atlanta-based parcel delivery company. The money will reportedly be used to buy back shares of the company from employees; the stock will then serve as currency in any acquisition deals. “UPS is adapting to the new business world of Internet and e-commerce, where people don’t want to do deals with cash,” Black says.
Though he refuses to comment on what companies the $2.8 billion UPS might buy, Black cites three areas of interest: e-commerce, logistics, and international. “UPS is setting the stage to ensure that it can offer amazing services to catalogers that they can’t even imagine yet,” Black says. “We’re looking at how the world is changing the business equation and acting on it.”
The current UPS e-commerce infrastructure not only tracks packages but also serves as a virtual global warehouse for many companies. A computer, for example, may be made in four countries in four separate boxes. “It’s not until UPS brings those packages together and delivers them to your doorstep that they become your computer,” Black says. “The computer never sits in a warehouse. Think about what that does to the traditional business model.”
The logistics unit, which Black says is the fastest-growing division of UPS, works with client companies worldwide to manage supply chains, including consolidating physical warehouses for better operating and cost efficiencies, as well as managing operations online. In many ways, he says, UPS acts as a consultant to help companies better manage operations.
UPS delivers 12.4 million packages a day worldwide; 80% of those packages are commercial.