00:07:20 · Romaine Bostick, S1, Carol Tomé, S0
[00:07:20] S3: It did. 18% growth, roughly. [00:07:21] S1: It's still only, what, less than 15% of your business overall. How much further can you get that in terms of as a share of your business and in what time frame? [00:07:31] S2: So we're very excited about the opportunities for growth in that side of our business, which is really forwarding and logistics. [00:07:37] S0: And let's just focus on forwarding. That would be ocean freight and air freight. [00:07:42] S2: We saw 17% growth in that business in the quarter, driven really by two things. [00:07:46] S0: One, premium healthcare. data centers. [00:07:50] S2: So yes, with the explosion of data center growth here in the United States, the builders of these data centers, well, they need materials to construct. [00:07:59] S0: The data centers. [00:08:00] S2: And most of those materials, many of them are being manufactured outside the United States. They need to come over to our country and some sort of a forwarding asset, be it ocean or air. So we can bring it here, we can then warehouse it for them, and then we can get it delivered to their construction site. Once things are at the construction site, there's a small package need as well. So we assess the opportunity for data centers in the logistics space. Well, it's over $ 15 billion. [00:08:28] S1: Is that, though, just a short-term story? Once these centers are built, does that business go away? How do you make that a longer-term business?
00:08:28 · S1, Carol Tomé, S0, Romaine Bostick
[00:08:28] S1: Is that, though, just a short-term story? Once these centers are built, does that business go away? How do you make that a longer-term business? [00:08:33] S2: Well, what I know about assets, we're a capital intensive business. What I know about them is they have to be refreshed. So this isn't one and done. This is something that's going to continue. [00:08:43] S1: Well, then you have to obviously have been paying close attention to what's been going on in the tech space with regards to the data center build out. Based on your own internal projections for UPS, are you seeing any delays or any potential road bumps in that data center build out? [00:08:58] S0: We aren't. [00:08:59] S2: Now, it's early days for us, and we're nascent in this space, I will say, but we haven't seen any delays. [00:09:05] S1: So you think that this could also be a material part of the business longer term? [00:09:09] S0: I do. [00:09:09] S1: Because I'm trying to get at sort of what UPS looks like five, 10 years, 20 years from now, maybe, when you're gone. [00:09:17] S3: I assume you'll be gone then, right? Yeah. [00:09:19] S1: There's been a lot of speculation about how. [00:09:21] S3: Long you're going to stay around. [00:09:22] S1: I heard you on the conference call today saying that, you know, you want to be around to negotiate the next Teamsters contract. [00:09:27] S0: That's in 2028. It is. [00:09:28] S3: You've been here six years. It is. You plan to be here through 2028?
00:09:28 · Romaine Bostick, Carol Tomé, S0
[00:09:28] S3: You've been here six years. It is. You plan to be here through 2028? [00:09:32] S2: So I want to see this through. I am committed to seeing it through. And then I'm looking forward to getting. [00:09:37] S0: To my farm. I've got to get this through. So I'm committed to seeing this through. [00:09:42] S3: But you came off your farm for this job. You came out of retirement. [00:09:44] S0: Why? I did. There were a number of reasons why. [00:09:48] S2: One, I'm a values-based person and so is UPS, a values-based company, so I knew that our values were aligned. [00:09:54] S0: I love to develop people. I love to develop people. [00:09:57] S2: And I thought if I get in, I can develop the next CEO of UPS. [00:10:02] S0: Because it's always risky when you go to the outside. [00:10:04] S2: And I thought, if I get in, I can develop the next CEO, and I've got an amazing leadership team, really top-notch talent that we're investing in to see how high it's up for them. I also thought I could create some value. You know, when I got here, I said, we'll double the market cap in three years. We did it, and we lost it, but we're back up, we're growing again. And then finally, candidly, I've been married for 42 years. And my husband said to me, would you please go back to work? [00:10:29] S0: You are driving me crazy. So I'm like, all right, well, it's time. I've been called. I've been called to go back in. [00:10:34] S2: And I'm really, it's been an honor and a privilege to be here. [00:10:38] S3: Well, talk about some of those management changes.
00:10:38 · Romaine Bostick, S1, Carol Tomé, S0
[00:10:38] S3: Well, talk about some of those management changes. [00:10:40] S1: You recently sort of reorganized the structure of this company, a focus on obviously the international health care, the U.S. business, the global operations, and then commercial strategy. You've pretty much put in people for all of those roles, except for the commercial strategy role. [00:10:53] S3: Yes. Why? [00:10:54] S1: What's the holdup there? It's been a couple of months since that announcement. Are you looking for someone? [00:10:57] S2: So, I am so pleased with how the RE-ORG has developed in just a short period of time. You know, we run the most efficient global smart integrated network. But the truth is, we ran it like an international business, not like a global business. [00:11:13] S3: I'm sorry, what does that mean? [00:11:14] S0: Well, we had different standards. [00:11:15] S2: Some of the building standards that we had in the United States were different than the standards that we had outside the United States. Automation was different inside the United States than outside the United States. We run an airline, but our gateways were managed locally, not under the airline. [00:11:32] S0: I'm like, we have so much opportunity to.
00:11:32 · S0, Carol Tomé, S1, Romaine Bostick
[00:11:32] S0: I'm like, we have so much opportunity to. [00:11:34] S2: Globalize with standards and SLA service level agreements to support the commercial businesses. As efficient as we are, we have the best margins in the industry, as efficient as we are, we can be even more efficient. So we put our best operator, Nando Cesarone, in charge of that, and I couldn't be more pleased with what he's doing. Then we've got two P & L leaders. These are experienced UPSers, one running the U.S. and one running international health care and supply chain. And they're one of the reasons why the results were so good and why we've got so much confidence in the fourth quarter and beyond. [00:12:09] S1: A lot of analysts took note of the expansion of Nando Cesarone's duties, kind of overseeing all the physical stuff. And they immediately looked at that and said, that must be the successor to Carol Tomei. [00:12:19] S2: Oh, well, there's not been. I've got a bunch of potential candidates here. There's not been a successor called. And isn't that what leaders should do? They should develop strong succession plans. [00:12:29] S3: And you're doing that? [00:12:30] S0: And that's what I'm doing.
00:12:30 · S0, S1, Carol Tomé
[00:12:30] S0: And that's what I'm doing. [00:12:31] S1: When you are doing that, what is the ultimate goal here? Because we get back to this idea of growth. And you mentioned your stock price doubling the market cap. But, of course, this share has peaked back in 2022. They're down significantly from that. Investors are asking the question as to what are they buying? Are they buying a value company? Are they buying a growth company? I mean, what is your successor or, for that matter, you actually carrying forward here? [00:12:59] S0: Precision growth. This is a big, important value equation. precision growth. [00:13:06] S2: We want to be selective, focused, and balanced, grow in the right parts of the market, serve our customers better than anybody else, and create a whole lot of money doing that. So you'll see top line growth and profit growth. And in an addressable market, that's healthy. [00:13:19] S0: That's focused. [00:13:22] S2: And we're all excited about the future and lined up and ready to go. [00:13:27] S1: Is most of the cost cutting done? I know there's still a little bit left in the efficiency program. I know you said it was going to run through 2027.