United Parcel Service (UPS) CEO David Abney said that underlying economic growth in the US isn’t at optimal levels.
“We’re seeing some momentum in industrial production, but not as much as we’d like,” Abney said. “From the US side, we would say things are slightly better, but it’s still mixed.”
While the US may be a bit lackluster, there are growth opportunities abroad, which UPS is expanding into.
Betting on international growth
Chairman and CEO David Abney told Yahoo Finance that he is focused in particular on emerging markets.
The company, which currently gets 75% of revenue from the US, announced on Tuesday that it will be the official logistics partner for Expo 2020 Dubai, an event that is expected to attract millions of visitors between October 20, 2020 and April 10, 2021. (UPS will provide more than 27,000 square meters of warehouse space and a team of 1,000 employees during the Expo.)
“We see it as a big catalyst for our business,” Abney said. “We see it as building our brand value but also as a catalyst for building our business in this part of the world.”
Abney added that the Middle East, along with emerging markets like India and China, are key because of population growth and the rising middle class.
The company is focusing on what it terms the “New Silk Road,” or countries seeking to cooperate economically to enhance trading between the east and west and building cross-border trading relationships.
UPS will help establish Dubai as a transportation hub for global commerce connecting trade from the Middle East to China, Africa, and Europe.
UPS says the international market opportunity is almost $900 billion, which will continue to grow given demographic shifts and income gains.
Last quarter, UPS saw 12% growth in international packages, the best growth since 2010.
The company has increased efforts internationally to provide not only cross-border but also in-country shipments, competing for business even against local carriers.
Nicole Sinclair is markets correspondent for Yahoo Finance.
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