AIR SPACE: UPS CHILLS COMPETITIONS' SUMMER

AIR SPACE: UPS CHILLS COMPETITIONS' SUMMER

Memorial Day weekend marks the traditional start of summer, although it sure hasn't felt that way here in the Northeast with the cool, rainy weather we've had the past week. Given the slowdown in most sectors of the air cargo business, it's probably appropriate that we're experiencing weather like this. After all, the sharp decline in traffic certainly represents a cooling off from the torrid growth that the industry experienced in the late 1990s and through most of last year. The forecasts of slow U.S. economic growth the remainder of this year have also dampened hopes that business will heat up during the peak season this fall, although the combination of monetary and fiscal stimulus from interest rate and tax cuts may prove to be the right medicine.

Meanwhile, various companies within the industry are taking steps aimed at brightening their own futures. In a stunning announcement, United Parcel Service revealed Thursday that it has not only completed the acquisition of Fritz Cos., but that it has also purchased seven smaller freight forwarders and customs brokers operating along the borders with Canada and Mexico, this country's two largest trading partners. UPS had not previously disclosed its purchase of the smaller companies, including Miles Group Inc. of El Paso, Texas ('Still a Family Affair,' JoC Week March 5). Now it's part of a $30 billion family that will be one of the dominant players in global trade and transportation during the 21st century. It's hard to argue with the claim by David Abney, the executive who will head the still-unnamed UPS freight forwarding division, that the integrated network being created by UPS is 'unmatched in its scope and range of services.'When it closes the acquisition of First International Bancorp. this summer, UPS will be able to offer shippers an expanded array of trade finance and commercial lending programs to supplement its traditional package delivery business. 'Collaborate or perish' was the theme of a World Trade Week luncheon address in Los Angeles the other day by Tom Weidemeyer, chief operating officer of UPS. In reality, though, UPS will be able to offer such a broad menu of services that it won't have too much need for collaborating with any other providers of supply-chain services. And that's a thought guaranteed to send chills down the spine of UPS's competitors, whether they're integrated carriers, forwarders, customs brokers or airlines. As for the maritime sector, at least UPS doesn't own any ships - yet.

Now, the challenge for UPS as it gets bigger and bigger will be its ability to remain flexible in response to customer demands. It needs to look no further than Fritz for a classic example of a company that sought to grow through acquisitions but ended up failing miserably.