DC Velocity - December 2013

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By Scott Davis Chairman and CEO UPS

Over the past couple of decades, one constant in business has been the accelerating pace of change—but past experience may pale compared to what lies ahead. If anything, it’s likely the pace of change will accelerate even more in 2014 and beyond, thanks to transformative forces that are remaking the world.

One transformative force is the shift in the economic balance of power. In coming decades, more of the world’s economic growth will come from emerging economies such as Brazil, Mexico, Indonesia and Nigeria.

This shift is already under-
way. Roughly 1 billion people
from developing countries are
now entering the market for
goods and services they see
on display in the developed
world, setting the stage for
a new boom in global trade.

According to a study by HSBC and Oxford Economics, global trade in goods is expected to increase at an average annual rate of 8 percent between now and 2030.

If that prediction bears out, ;;;;;;;;;;;;;;;;;;;;;;;;;;;;; than triple over the next generation. The implications could be enormous: As a consumer, the world becomes your store. As a businessperson, the whole world becomes your customer.

We just need global trade agreements to catch up to this surge in demand. Proposed trade pacts between the U.S.

and Europe, and the U.S. and

Asia are a step in the right direction, and should be enacted.

For U.S. manufacturers, big and small, this shift creates the opportunity—if not the imperative—to think globally. But too few companies are seizing the opportunity. Today, less than 1 percent of the 30 million U.S. businesses export—and of those, nearly 60 percent ship to just one country. There’s no reason why those numbers couldn’t be higher.

Another transformative force
is the rise in disruptive new
technologies like 3D printing,
a service that is currently being
tested at select locations of The
UPS Store. 3D printing allows
businesses to create prototypes
more easily, and thus acceler-
ate the time to full production.
These disruptive technologies
could require many companies
to rethink the logistics of their
businesses, including how and
where they source, manufac-
ture and distribute their goods.
The changes don’t end
there. As public pressure to
reduce greenhouse gas emis-
sions increases, we will also
see greater use of alternative
fuels and alternative vehicles.
UPS isn’t waiting. With more
than 2,700 alternative fuel and
advanced technology vehicles,
UPS already operates one of
the largest private alternative
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to invest in nearly 1,000 more
trucks running on natural gas
by the end of 2014.
UPS is also trying to drive
smarter, and its new route
optimization system ORION
will, in time, sharply reduce
the miles and amount of fuel
its drivers need to make their
deliveries. The system, which
was developed using advanced
algorithms, is just one example
of how companies increas-
ingly will use operating data to
streamline their operations and
better serve their customers.
As daunting as these changes
might appear, there is cause
for greater optimism than ever
about the opportunities that lie
ahead. A Chinese philosopher
once wrote, “When the wind
rises, some people build walls.
Others build windmills.” That’s
the choice each of us will face
in 2014 and beyond.
Today, less than 1 percent
U.S. businesses export,
and of those nearly 60
percent ship to just one
country. Those numbers
could be a lot higher.