United Parcel Service, Inc. (NYSE:UPS) Q4 2022 Earnings Call Transcript

And they refer to that to the sixth punch, which is when people work six days a week, or 22.4 drivers. We share the same concerns. I don’t want people working six days a week unless they want to. So we’re aligned on this. We just need to get to the bargaining table and work it out. And candidly, we think with just a few tweaks to our existing contract, we can work this out. So we’re not far apart, we’re aligned, we just need to work it out. Another matter that’s come up is heat. There can be no disputes, sadly, that the earth is heating up, and that puts an uncomfortable situation on our employees in the height of the summer. Safety is our number one priority for our people, so we’re not a part on this issue. In fact, we’re not waiting for the bargaining table.

We’ve already kicked off a total revamp of our safety program, bringing in new technology, hydration, cooling systems, and a whole lot more to address heat. So we’re not a part, we’re going to do the right thing for our people. So those are just a few examples of where I see a win win win is achievable. In fact, I’m committed to delivering with the rest of the team and win win win contract before the end of July.

Amit Mehrotra: Very good. Thank you very much, everybody. Appreciate it.

Brian Newman : Thanks.

Operator: Our next question will come from the line of Tom Wadewitz of UBS. Please go ahead.

Tom Wadewitz : Yeah, good morning. I wanted to ask if, Brian, if you could run through the productivity programs, and give — put some ballpark around the impact that you expect, smart package smart facility, TSP if you have other programs that are notable, so we can have a little more visibility and how to think about productivity in. And I’m thinking in domestic package in 2023. Thank you.

Brian Newman : Sure, Tom. Well, look, Nando and the team have done a great job in pivoting and really driving productivity in the fourth quarter, they did an outstanding job. And we’re calling for low single digit CPP in 2023. I referenced some of the investments that I think you’re talking about in terms of smart pack smart facility, maybe if I unpack those, you’ll get a sense of where we’re investing. So smart pack smart facility that really drives productivity inside the buildings, but it also improves the customer experience by reducing misloads. I think misloads today are running about one in 400 posts, the smart pack smart facility will be up in one in 800. And there’s a path to something higher beyond that. And then there’s accelerating pilots for Phase 2 which is sort baggage car.

Another area we’re investing in, probably the second largest is healthcare. That’s a great growth business for us. We’re going to be adding about 2.4 million square feet and warehouse space next year. Some of that outside the U.S., half of in the EU and half the Americas. And then DAP has been a great performer for us. We’re going to continue to invest in the DAP program, both domestically and internationally, enhancing the plug and play and adding brokerage in UPS access points in terms of capability. And then there’s further investments into the customer experience and next gen brokerage. So Tom, I think we have a lot of competence in terms of the ability to drive total service plan, the investments we’re making in smart pack smart facility, healthcare, DAP, and that’s what’s contributing to the low single digit CPP in 2023.