The company formerly known as United Parcel Service; UPS (NYSE: UPS) may have a bright future ahead of it. Many of the omens for UPS’s future look great, just a few developments that might greatly increase UPS’s revenues and income include:
- Falling oil prices. Two of UPS’s biggest expenses are diesel fuel for its trucks and vans and jet fuel for the planes – both of which are made from oil. Anybody who pays attention to the financial news; knows oil prices are falling and talk of an oil glut or oversupply is rampant. This means one of UPS’s biggest and most basic expenses may stay low for the foreseeable future.
- Better vehicle technology. Recent advances in automotive tech hold the key for reduced expenses at delivery services like UPS. Some of the biggest opportunities include:
- Electric vehicles. Electric vans or trucks would be far cheaper to operate because electricity is a far cheaper fuel than diesel. More importantly electric vehicles have fewer moving parts so there might be lower maintenance costs. Also eliminated would be the expensive infrastructure needed to provide fuel for the vans trucks. Electric semi-trucks in particular would greatly reduce operating costs.
- Self-driving vehicles. A self-driving delivery van might reduce costs by eliminating the need for a highly paid driver with a CDL. Instead all you’d need is a laborer to take the packages to the door or gather the signatures. Self-driving vehicles might reduce the number of accidents and insurance costs as well.
- Drones you can use your imagination here. One possibility would be a drone launched from a van which UPS has tested.
- The Hyperloop. This super-disruptive technology would completely transform logistics because it would provide super-efficient ground transportation at speeds up to 700 miles (1,126.54 kilometers) per hour. The unicorn Hyperloop One just tested a full-sized vehicle at speeds of 309 kilometers (192 miles) per hour in its system, Wired reported.
- If it works, Hyperloop would make some astounding advances in logistics; including long-distance same day delivery An example of this would be same-day service between New York and Chicago.
- If it works as advertised Hyperloop would be far cheaper and more efficient than cargo planes. That would greatly reduce shipping costs and make it far easier for UPS to expand its operations. UPS might be able to ship hundreds of cargo containers through the loop for the cost of one plane flight.
- New delivery markets including meal kits, groceries, and items manufactured via 3D printing to name just a few.
There are vast opportunities for new revenue out there that UPS can tap into. It if its management plays its’ cards rights UPS might be highly profitable for decades to come.