A Roadmap to Success

The UPS Freight Value Proposition

Brian Kaman
®
UPS Freight Marketing
AMA – Richmond
January 21st, 2010

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Agenda

•Brief Background on UPS Freight

•Share Gain Strategy
•Major Value Proposition Enhancements
•The Value of Bundling

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UPS Freight Background
UPS acquired Overnite Transportation in 2006 and dramatically expanded
our portfolio

May 2005 May 2006 Jan 2007

UPS acquires UPS rebrands LTL unit Rollout of technology and product
LTL carrier as UPS Freight
® enhancements begin
Overnite
Transportation

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Why acquire Overnite Transportation?

•Expand the Portfolio

•Penetrate new markets

Market Segment Market Size

Ground Small Package $36B

Less-than-Truckload (LTL) $30B

Truckload (TL) $500B plus

•Improve growth with current customers

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Market Size
UPS Freight is fourth largest carrier in $30B LTL market and share has
improved since 2006
2008 Market
Carrier
Revenue (M) Share
YRC / USF* $8,299 27.2%
FedEx Freight / National LTL $4,568 15.0%
Con-Way* $3,016 9.9%
UPS Freight $2,246 7.4%
ABF Freight System* $1,759 5.8%
Estes Express $1,619 5.3%
Old Dominion* $1,538 5.0%
SAIA* $1,030 3.4%
R+L Carriers $864 2.8%
Southeastern Freight Lines $740 2.4%
Other Regional Carriers $4,332 14.2%

Source: Total market size and share based on preliminary NTD 2008 data. *Carrier revenue sourced from BIA’s ‘Freight Financial Metrics’ document for 2008. All other
carriers, except UPGF, sourced from SJ Consulting Group estimate in Journal of Commerce, March 9,2009.

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Share Gain Strategy…Leverage the enterprise by
creating a common customer experience

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Creating a Value Proposition
Five components became the foundation for the
new UPS Freight value proposition

Reliability Speed Coverage Flexibility Information &

Technology
Shipments One- and two-day Regional, Customized
picked up and lanes and long-haul interregional solutions for Automated shipment
delivered on service, along with and long-haul your particular processing, tracking
time and intact urgent shipping capabilities all shipping needs and billing capabilities
options with pickup that work for you

The value proposition served as an early marketing roadmap and provided

our sales force a clear way to present our new company

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Key Enhancements
Several key enhancements helped differentiate
UPS Freight from many competitors

Reliability Speed Coverage Flexibility Information &

Technology
Shipments One- and two-day Regional, Customized
picked up and lanes and long-haul interregional solutions for Automated shipment
delivered on service, along with and long-haul your particular processing, tracking
time and intact urgent shipping capabilities all shipping needs and billing capabilities
options with pickup that work for you

No-Fee Guarantee Coverage Bundled Pricing Quantum View

More than 20,000 TNT enhancements to more
lane enhancements (Package & Freight) UPS WorldShip
DIADs than 1,000 ZIP codes
since 2006 Trade Show,
Pickup Reservation Billing Data Tools
North American Associations
System Technology Tools network changes Customer Technology
improved our service Canada Program
to Canada & Mexico Urgent LTL

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LTL Customer Needs
Market research helped us prioritize and justify enhancements

Category Rank
Shipments delivered with no shortages or 1
damages
Shipments delivered when promised 2 Customers want Reliability
Shipments picked up when promised 3
Competitive Pricing 4
Effective Problem Resolution 5
Proactive Communications 6
Professional and courteous customer service 7
Highly trusted supplier 8
Pricing terms are easy to understand 9
Consistent Transit Times 10

Source: Mastio LTL Study 4th Edition

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Changing Perception
An on-time guarantee quickly changed customer’s
perceptions of our service and paid big dividends

• Introduced No-Fee Guarantee in January 2008

Reliability
• Expanded guarantee application to US-Canadian shipments in July

Benefits

• Enhanced perception of our on-time reliability

• Attracted profitable customers
• Aligned LTL service with UPS portfolio of services
• Fueled $113M in new revenue growth in two years

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Customers rate our reliability much higher than 2005

Customer Satisfaction – On-Time Delivery

8.7

8.5 Largest improvement followed

launch of a guaranteed feature

8.3

8.1

7.9

7.7
2005 2006 2007 2008 2009

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Pursuing new markets
Creating a faster network improved our ability to
compete in more regional markets

Speed • Improve time-in-transit in more than 20,000 lanes since 2006

• Introduced time-saving technology to customers

Benefits
• Enhanced perception of our regional time-in-transit
• Strengthened ‘one-stop shop’ value proposition
• Aligned LTL service with UPS portfolio of services
• Removed competitive barriers

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Promoting Speed
Customized emails delivered
‘Speed’ message

About the E-mail

• Customized email to more than 100K
impacted customers
• Highlights major lanes improved
• Link to TNT Maps
• Link to TNT Landing Page
E-mail Results
• 32K customers opened the email
• 2,500 clicked on a link within the
email

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Customers have noticed our faster time-in-transit

Customer Satisfaction – Competitive Transit Times

8.5

8.3
Aggressive promotion
of enhancements
8.1 First set of large scale
enhancements

7.9

7.7

7.5
2005 2006 2007 2008 2009

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Leveraging Technology
Visibility and Shipping Tools are driving
growth and reducing churn

Information & • Introduced Quantum View Manage ® in January 2007

Technology • Introduced UPS WorldShip ® in January 2008

Benefits

• Customers rate our technology among industry leaders

• Attracted profitable customers
• Aligned LTL service with UPS portfolio of services
• UPS WorldShip ® users are growing 30% over last year
• Technology users churn at half the rate of other customers

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Technology investments have significantly changed
customer perception

Customer Satisfaction – Effective Technology & Tracking

9.1

8.9
Launched UPS WorldShip ®
8.7 Launched QVM
application
8.5

8.3

8.1
2006 2007 2008 2009

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The enhancements allow UPS to position the
entire portfolio

Creating a Similar Customer Experience The creation of a single

customer experience allows the
enterprise to bundle.
1,000 -
20,000 lbs

UPS Freight LTL Bundling involves more than

just price. It’s components are:
150 -
1,000 lbs
UPS Ground
• Product
Hundredweight
• Product & Technology
• Product, Technology &
UPS Commercial Price
Up to Ground
150 lbs.

Multi-Piece Heavy Weight

Single-Piece Non-palletized Palletized
Shipment Shipment Shipment

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Bundling is a “win/win” for UPS Freight & UPS
Higher volume/shipment growth is coming from bundled accounts compared to
non-bundled accounts

Average Daily
Average Not
Volume Growth Bundled
Growth Bundled

Total Commercial
Ground + CWT

UPS Freight LTL

Note: Bundled defined as a customer using both business units (UPS Freight LTL & UPS Package); Illustrations based on 3Q09 volume figures

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Thank You

Questions?

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