Competitive Strengths

Growth Strategy

Growth Targets

Competition

UPS is the world's largest package delivery company, in terms of revenue and volume, and a global leader in supply chain solutions. We deliver packages each business day for 1.8 million shipping customers to 6.1 million consignees in over 200 countries and territories. In 2006, we delivered an average of more than 15.6 million pieces per day worldwide - or 3.9 billion for the year. In addition, our supply chain solutions capabilities are available to clients in over 180 countries and territories.

Although our primary business is the time-definite delivery of packages and documents, we have extended our capabilities in recent years to encompass the broader spectrum of services known as supply chain solutions, such as freight forwarding, customs brokerage, fulfillment, returns, financial transaction and even repairs. We are also a leading provider of less-than-truckload transportation services.

Competitive Strengths
Global Reach and Scale. We believe that our integrated global ground and air network is the most extensive in the industry. It is the only network that handles all levels of service (express, ground, domestic, international, commercial, residential) through one integrated pickup and delivery service system.

Technology. We are a global leader in developing technology that improves our customers' business processes.

Broad, Flexible Range of Services and Integrated Solutions. Our portfolio of services enables customers to choose the delivery option that is most appropriate for their requirements.

Customer Relationships. We focus on building and maintaining long-term customer relationships by treating each customer as if they were our only customer.

Brand Equity. We have built a leading and trusted brand in our industry - a brand that stands for quality service, reliability and product innovation.

Distinctive Culture. We believe that the dedication of our employees results in large part from our distinctive "employee-owner" concept. Our employee stock ownership tradition dates from 1927, when our founders, who believed that employee stock ownership was a vital foundation for successful business, first offered stock to employees. To facilitate employee stock ownership, we maintain several stock-based compensation programs.

Financial Strength. Our balance sheet reflects financial strength that few companies can match.

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Growth Strategy
Our growth strategy takes advantage of our competitive strengths while maintaining our focus on meeting or exceeding our customers' requirements. The principal components of our strategy are:

• Build on our leadership position in our U.S. business
• Continue international expansion
• Provide comprehensive supply chain solutions
• Leverage our leading-edge technology
• Pursue strategic acquisitions and global alliances.

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Growth Targets
Our growth strategy aims to create deeper connections with customers. Here's what we expect to accomplish in 2007:

• Grow operating profit in all three of our business segments
• Generate a healthy cash flow once again
• Increase adjusted earnings for 2007 between 6 and 10% over 2006 results.
• Grow our small package business by market rates in the U.S. and faster than market rates in major regions of the world.
• Aggressively expand freight services in specific markets.
• Focus our supply chain activities on the high-tech, healthcare and retail sectors where connectivity across all UPS businesses is strong
• Operate a sustainable enterprise that balances the economic, social and environmental consequences of our business practices.

At UPS we believe stronger customer relationships lead to growth, and we operate according to that belief. Our products and services are deeply embedded in the fabric of our customers' businesses. The purpose - to make our customers more successful. In doing that, we become more successful, too.

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Competition
We are the largest package delivery company in the world, in terms of both revenue and volume. We offer a broad array of services in the package delivery industry and, therefore, compete with many different local, regional, national and international companies. Our competitors include the postal services of the United States and other countries, various motor carriers, express companies, freight forwarders, air couriers and others.

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