UPS is the world’s largest package delivery company, a leader in the U.S. less-than-truckload industry, and a global leader in supply chain management.

2008 Highlights:

• Recessionary conditions muted volume growth
- U.S. package volume declined 2.0 percent
- International export volume increased 6.8 percent, with growth slowing throughout the year
• Highest operating margin in the industry
• Investment in international operations with new Asian facilities
• Strong cash flow and financial condition
• Revenue growth of 5.8 percent led by Forwarding and Logistics
• Significant improvement in segment adjusted operating margin, increasing 110 basis points
• Successful redesign and launch of new air freight forwarding product portfolio
• Major expansion of Distribution capabilities in the healthcare sector
• In worst LTL environment ever, UPS Freight took $548 million goodwill impairment

“The problem before each of us is not only to keep pace with changing conditions, but to keep ahead of them.” — Jim Casey, UPS Founder, 1932

Visit UPS Annual Report 2008 Download Page

Read UPS Annual Report 2008 online, or you can download the entire report in PDF format.

Important Web Sites
Investor Relations http://investor.shareholder.com/ups 
Sustainability/Corporate Responsibility http://www.sustainability.ups.com
Services and Solutions http://www.ups.com/businesssolutions
UPS Corporate http://www.ups.com

Jim Casey’s words are as appropriate today as they were in 1932 when our nation was in economic turmoil. They capture the philosophy of how UPS operates through changing economic and business conditions.

We are resilient and adaptable, with a highly flexible global network that allows our company to meet changing market forces, while creating new solutions to help our customers succeed. At the same time, we never lose sight of the future, taking the steps necessary to ensure UPS remains the world’s leading transportation solutions provider.

Managing through 2008 required all of our skills as the business environment worsened rapidly. At the beginning of the year, global economies and small package markets were expected to grow. However, the U.S. economy weakened, followed by sharply escalating fuel prices. Then the credit crisis erupted, causing substantial slowing of economies outside the United States.

Economic Weakness Restrains Global Package Growth Deteriorating economic conditions led to a 1.3 percent decline in our consolidated package volume, to 3.9 billion pieces. The U.S. recession was apparent in a 2.0 percent decline in our total domestic package volume.

In contrast, international export volume gains increased by a market-leading 6.8 percent from 2007 levels, despite the fact that growth was constrained by declines in U.S. imports and slowing global economies in the second half of 2008.

The unprecedented run-up in fuel prices precipitated very significant increases in our fuel surcharge rates, resulting in a product mix shift from more expensive premium air services to ground. This trend was apparent throughout our global package operation. ...

We may look back at 2008 and 2009 as a real test … a test of the resiliency and management skill that has been our hallmark for more than 100 years. At some point, the recession will end and the economy will improve.

Many companies will not survive. Others will emerge damaged and in a weaker competitive position. But a select few will come out leaner, more focused and better positioned to compete and grow … and I am confident that UPS will be one of those companies.

D. Scott Davis
Chairman and Chief Executive Office

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