UPS riding global e-commerce boom

MANILA, Philippines - UPS driver Felipe Valenzuela reports for work at around 11 a.m. at the UPS Operations Center near the Ninoy Aquino International Airport. By this time, blocks of neatly wrapped up parcels from various countries get moved on wide conveyor belts and lifted into his huge, brown, rectangular van.  

Clad in the iconic all-brown UPS uniform, Valenzuela drives off at 1:30 p.m. to deliver 29 packages of various weights, shapes, and sizes to their final destinations around the traffic-laden city of Manila.  

Some packages get to offices, some to residences, and some to schools. Getting his job done by 7 p.m., the lanky guy never complains, but instead keeps a light, jolly disposition all day long. Whether he’s aware of it or not, Valenzuela, 39, has somehow a reason to be positive about his work. UPS, his employer for over the past 14 years and the world’s largest package delivery company based in the US, sees great opportunity on e-commerce boom and the impending integration, economy-wise, of Southeast Asian nations, including the Philippines.

E-commerce

“Techonology is changing the way we interact with each other and transforming the way we consume,” says Rob Houck, UPS Asia Pacific vice president for Marketing.  “Constant connectivity to information, products, and services has fueled a consumerist culture of instant gratification that is driving e-commerce growth across the world, especially in Asia Pacific, where it’s forecasted to represent a third of e-commerce sales in 2015.”

Houck’s statement was based on a recent study commissioned by the UPS to feel the pulse of online shoppers worldwide.  

The study reveals Asian online shoppers have the biggest appetite for e-commerce and they are far more demanding than their western counterparts, in terms of alternate delivery locations and, just with the use of their mobile devices, the ability to track deliveries and research on products and services they plan to purchase.

Such scenario paints a rosy picture for UPS, which not only acts as the physical connection between online sellers and customers, but which also provides supply chain management solutions to various industries around the globe – from high-value chrome wheels manufacturers in the US to makers of bamboo amplifiers in the Philippines to niche-market producers like of luxury camel-milk chocolate from Dubai.

Inclusive progress

But better yet, UPS brings the good news to all: the active e-commerce, especially in Asia, coupled with the planned economic integration of the Association of Southeast Asian Nations, might yet bring inclusive economic progress, starting with the small and medium scale enterprises.

“Over the next 15 years, international economic growth and greater consumer demand will be powered by an expanding middle class,” says UPS Philippines Marketing manager Bo Evangelista.  “This growth will likely occur, not in developed markets, such as the United States and the European Union, but right here in our backyard – China, India, Indonesia, and the Philippines.”

Evangelista mentions a World Bank study that says trade in goods and services will triple by 2030 and that the global economy will expand from $35 trillion in 2005 to $72 trillion in 2030. Thanks to e-commerce, over a billion people will be considered middle class by then.

SMEs go global

“Now, it’s true, the world is flat,” says Evangelista, quoting American journalist Thomas Friedman, who included UPS operations in his observations in his book, “The World is Flat: A Brief History of the 21st Century.” The book chronicles technological developments, particularly  world interconnectedness, that have leveled the playing field for almost everyone.

“This means opportunities are now more accessible to businesses, and that barriers to serve these opportunities are lower than before,” says Evangelista.  Simply, he means local SMEs can now more easily go into exporting and manage the risks involved, as long as they prepare and work with the right advisors.

Evangelista talked several months ago in a workshop organized for Filipino SMEs by the US-Asean Business Council, the United States Agency for International Development, and the Department of Trade and Industry.  The workshop aimed to prepare the local SMEs for the impending Asean economic integration.

“You can export, in spite of the challenges,” Evangelista told the SME executives, adding that being small can even work to their advantage. He says small organizations can decide more quickly on sudden changes and adjustments on orders than their giant counterparts.

Evangelista advised the local SMEs to work with multinational companies to take on the latter’s experience and expertise.

Logical logistics

And since exporting means shipping, Evangelista says it pays for the local companies to invest in securing their supply chain, like making sure their products safely move from country to country.

“A secure supply chain is good for your business, good for your customers, and good for your prospects as an exporter,” Evangelista told the local business businessmen.

As a premium logistics company, UPS provides trade firms with tools that make customs nitty-gritty like taxes, tariffs, and clearance seem as easy as ABC.  

UPS even helps traders customize their product packaging and labeling, especially for high-value products that need to reach the customers unscuffed.

Asian trade race

Just recently, UPS implemented several enhancements throughout Asia to improve service coverage and network speed.  Specifically, the company sped up transit times by one day for its intra-Asian shipments, in anticipation of increased trade within the region.  

Now, most of UPS shipments within Asia and from Asia to the US can reach their destinations within 24 hours. Asia to Europe shipments can now arrive within 48 hours.  Currently, UPS offers the industry’s fastest transit time of 24 hours for deliveries from Hong Kong to Europe.

UPS has also extended by more than an hour the cut-off time for picking up packages to as late as 8 p.m. in major export markets, giving businesses more time to finalize orders.

Asia Pacific accounts for 32 percent or the largest freight forwarding market, according to industry statistics, with Asia expected to hold over a third of the market by 2016.