One on One with Mike Eskew, Chairman & CEO of UPS
Tuesday, June 12, 2007
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SUSIE GHARIB: High fuel prices are just one of the challenges that UPS faces as it delivers 15 million packages each day. Joining us now to talk about the outlook for the world's largest package delivery company, Mike Eskew, chairman and CEO of UPS. Mr. Eskew, welcome back to NIGHTLY BUSINESS REPORT.
MICHAEL ESKEW, CEO, UPS: Great to be back, Susie.
GHARIB: Well, UPS delivers packages to just about every sector of the U.S. economy. Based on the volumes of business that you're doing, what kind of shape is the economy in from your point of view?
ESKEW: Well, I think the economists tell us and that's the best source we have is that the economy of the U.S. is a little flatter than it was last year, but around the world it seems to be pretty strong.
GHARIB: And what about fuel prices? Are the higher fuel prices impacting your profits and performance?
ESKEW: Fuel prices are a big thing for us and we do all we can to be able to minimize the fuel we burn and anything we can do to be able to try to find ways to keep those miles down we do that.
Reporter: What strategies are you using to keep fuel costs down?
ESKEW: One, we integrate our fleet. So the same fleet that delivers your ground packages delivers your air packages all in the back of those beautiful brown package cars. But we also, for the large user of the rail, we're doing an awful lot these days with alternate energy, hybrids, CNG, liquefied natural gas, propane and basically anything we can find we're doing our best to be able to minimize fuel costs.
GHARIB: I understand that UPS' international business now accounts for the company's -- a third of the company's revenues. Is the weak dollar helping or hurting you?
ESKEW: Well, there's no question the weak dollar in Europe helps us a little. But our growth has been around the world. We've had great growth in Europe over the last 10 years, but we've had terrific growth in Asia. Last quarter we were growing about 20 percent and there the dollar doesn't do too much for us.
GHARIB: I was going to ask you about Asia because China today reported that its trade surplus increased by something like 73 percent. That's an awful lot of exports. How is your business in China and what are your plans for expansion there?
ESKEW: Our growth in China's been great. China's welcomed us. We've been there for a number of years. The last quarter we grew our exports from China 25 percent. And we do our best to be able to move traffic to and from China. So we try to keep that as balanced as we can.
GHARIB: As you look to the future, do you have any plans to make sizable acquisitions? The last big acquisition that UPS made was in 2001 when it bought Mailboxes, Et Cetera.
ESKEW: We've made a number of acquisitions over the last five or six years. We've made about 35 in LTL (ph) freights and freight forwarding companies and brokerage companies and logistics companies, in technology companies. And we're going to keep finding ways to improve goods and information and funds flow anywhere around the world.
GHARIB: You have something like $2 billion cash on your books and that's after paying dividends and after buying back stock. I mean, what are your plans for that money? That's what I was getting at. Is a big acquisition in the works?
ESKEW: Well, we're going to continue to find ways to reinvest in the business. That's our first priority. And after that we will -- we have done it. We've increased our dividend quite a bit and we bought back a number of our shares.
GHARIB: Looking at FedEx and UPS, it looks like the two business models are looking more and more alike. FedEx is getting more on the ground shipping business. UPS is really immersed in the international freight business. What is your strategy of competing against FedEx?
ESKEW: We're a company that's been transforming our business now, Susie, as you know, for a hundred years. We're in the middle of another transformation right now. If you think about the transformation we're doing right now, it's all about trying to be as personal as we can for each of our customers. Each customer as if it's the only customer we have. We're trying to offer not just products but solutions so that's why we're doing an awful lot with supply chain, with distribution, with aftermarket parts replacement and providing as transparently as possible solutions for customers so they know that they're dealing with just one company.
GHARIB: You mentioned that UPS is celebrating its 100th anniversary. It started in 1907. As you look to the future, 10, 20 years from now, what will UPS - what kind of company will it be like?
ESKEW: I've been Susie with UPS for 35 years and the pace of change is so dramatic these days that I think 10 years from now we'll see a lot more change than I've seen for 35. If you think about that, 35 years ago, we were only in 37 states and we just recorded our first billion dollars of revenue. We're going to be much more personable. We're going to be as if it's the only customer and we're going to be offering customers those great solutions and we'll be thinking about customers, how we make them more successful.
GHARIB: All right. Sounds like you've already been very successful with your company. Thank you very much, Mr. Eskew. We really appreciate you coming on our program.
ESKEW: Thanks, Susie.
GHARIB: MY guest tonight, Mike Eskew, chairman and CEO of UPS.
