Riding the Wave: UPS Records 2020 as the BEST YEAR- EVER
UPS can count itself as one of a lucky few. It’s a statement not many would make about the year I refuse to name by name. The company reported the highest yearly revenue and adjusted diluted earnings per share in company history. The massive shift to eCommerce thanks to a global pandemic boosted package volume and enabled the company to raise its prices, thus helping the company rise well above forecasts.
The continuance of the pandemic and the need to distribute COVID-19 vaccinations continue to position the company well in 2021.
- Fourth-quarter 2020 consolidated revenue increased 21.0% over fourth quarter 2019 to $24.9B, with growth across all segments.
- Fourth-quarter consolidated operating profit Up 1.6% over the previous years fourth quarter to $2.2B, Up 26.0% on an Adjusted (non-GAAP financial measures) Basis
- Diluted EPS of ($3.75); Adjusted Diluted EPS of $2.66, Up 26.1%
- Consolidated average daily volume increased 10.6% year over year.
- Capital spending this year will drop to about US$4 billion.
Chief Executive Officer Carol Tome’s “better, not bigger” strategy seems to be paying off. Despite the high volumes by adding levy fees onto it’s largest retail customers and holding customers to their agreed-upon levels, the company managed a smooth and profitable holiday season. Announced last week, UPS’ to TFI International Inc. further supports its strategy to remain focused on its core small-parcel business.
“Our financial performance in the fourth quarter exceeded our expectations, and I thank all UPSers for their extraordinary efforts to deliver industry-leading service through the holidays,” said Tomé. “I’d also like to thank our customers who worked with us during this challenging year. As we look past 2020 into the new year, we are optimistic. During the fourth quarter, we began transporting COVID-19 vaccines, and we stand ready to deliver hope and health to people around the world.”
Despite all positive signs, citing “continued economic uncertainty” due to the global pandemic, UPS has chosen not to forecast 2021 earnings—however, it has provided details on its capital allocation plans.
Full-Year 2021 Capital Allocation
- Capital expenditures are planned to be about $4.0 billion.
- Dividends are expected to grow, subject to Board approval.
- Long-term debt maturities of $2.5 billion will be repaid when they come due.
- Effective tax rate is expected to be approximately 23.5%.
- The Company has no plans to repurchase shares or access the debt capital markets in
DHL Claim Multi-Sector Collaboration Key to Fighting COVID
Since January, global logistics leader DHL has distributed more than 200 million doses of the COVID vaccine to 120+ countries around the globe. While the US and UK recently rolled out immunisation plans to most citizens, countries with less developed infrastructure still desperately need more doses. In the United Arab Emirates (UAE), which currently has one of the highest per-capita immunisation rates, the government set up storage facilities to cover domestic and international demand. But storage, as we’ve learned, is little help if you can’t transport the goods.
This is where logistics leaders such as DHL make their impact. The company built over 50 new partnerships, bilateral and multilateral, to collaborate with pharmaceutical and private sector firms. With more than 350 DHL centres pressed into service, the group operated 9,000+ flights to ship the vaccine where it needed to go.
With new pandemic knowledge, DHL just released its “Revisiting Pandemic Resilience” white paper, which examined the role of logistics and supply chain companies in handling COVID-19. As Thomas Ellman, Head of Clinical Trials Logistics at DHL, said: “The past one year has highlighted the importance of logistics and supply chain management to manage the pandemic, ensure business continuity and protect public health. It has also shown us that together we are stronger”.
Multisector partnerships, DHL said, enabled rapid, effective vaccine distribution. While international scientists developed a vaccine in record time—five times faster than any other vaccine in history—manufacturers ramped up production and logistics teams rolled out distribution three times faster than expected. When commercial routes faced backups, logistics operators worked with military officers to transport vaccines via helicopters and boats.
In the UAE, the public-private HOPE Consortium distributed billions of COVID-19 doses to its civilians as well as other countries in need by partnering with commercial organisations such as DHL. For the first time, apropo for an unprecedented pandemic, logistics companies made strong connections with public health and government.
“While the race against the virus continues, leveraging the power of such collaborations and data analytics will be key”, said Katja Busch, Chief Commercial Officer DHL and Head of DHL Customer Solutions & Innovation. “We need to remain prepared for high patient and vaccine volumes, maintain logistics infrastructure and capacity, while planning for seasonal fluctuations by providing a stable and well-equipped platform for the years to come”.
How Do We Sustain Immunisation?
By the end of 2021, experts estimate that we need approximately 10 billion doses of vaccines—many of which will be shipped to areas of the world, such as India, South Africa, and Brazil, that lack significant infrastructure. This is perhaps the greatest divide between countries that have rolled out successful immunisation programmes and those that have not. As Busch noted, “the UAE’s significant investments in creating robust air, sea, and land infrastructure facilitated logistics and vaccine distribution, helping us keep supply chains resilient”.
Neither is the novel coronavirus a one-time affair. If predictions hold, COVID will be similar to seasonal colds or the flu: here to stay. When fall comes around each year, governments will need to vaccinate the world as quickly as possible to ensure long-term immunisation against the virus. This time, logistics companies must be better prepared.
Yet global immunisation, year after year, is no small order. To keep reinfection rates low and slow the spread of COVID, governments will likely need 7-9 billion annual doses of the vaccine to meet that mark. And if DHL’s white paper is any judge of success, multi-sector supply chain partnerships will set the gold standard.