The Wall Street Journal: UPS Leaves 'Brown' for New Love

September 13, 2010: Package-delivery giant United Parcel Service Inc. is launching a global ad campaign to promote its expanding logistics business to small and medium-sized businesses that want to sell their wares globally.

In what the 103-year-old company calls its largest marketing campaign ever, UPS is replacing its memorable slogan "What can Brown do for you?" with the slogan, "We [Heart] Logistics." Print, television and digital-media ads in the U.S., China, Mexico and the United Kingdom will start running on Monday.

Logistics essentially involves the critical steps that allow a company to get its product to customers—stocking and running a warehouse, filling orders, clearing goods through customs, choosing a shipping method and handling returns.

In an interview, Scott Davis, chairman and chief executive of Atlanta-based UPS, said he was inspired to create the company's first global campaign partly by UPS statistics indicating that70% of UPS's U.S. customers export to just one country, typically Canada.

"They are somehow intimidated by the cultural challenges of shipping to other countries," he said. Mr. Davis sits on President Barack Obama's President's Export Council, a group of labor and business leaders who are working to double U.S. exports in five years. Mr. Obama's export goal is "not going to happen" unless small and medium businesses get comfortable with cross-border trade, Mr. Davis said.

He said that the U.S. is in a "mild recovery" but that "if you're looking to grow over the next 10 or 20 years, you've got to look at a customer base beyond the U.S."

UPS runs warehouses for larger companies, such as Merck & Co., overseeing the distribution of vaccines and medicines, and handles returns for online retailer Zappos. Computer technicians at the company's Louisville, Ky., hub repair Toshiba Corp. laptops and UPS then ships them back to customers.

Merck spokesman Ronald Rogers said, in a statement, that partnering with UPS "is part of Merck's ongoing strategy to evaluate and—where it makes good business sense—to outsource, to experienced third parties, activities that are not core to our business."

In China, the campaign is trying to reach businesses that are serving a rising middle class, he said.

Conceived by Ogilvy & Mather Worldwide, a unit of WPP PLC, the campaign aims to educate businesses that logistics done well can be a competitive advantage, Mr. Davis said.

The TV ads feature a new UPS jingle set to the tune of the Dean Martin classic "That's Amore," sung in Mandarin, Spanish and English with lyrics such as, "When it's planes in the sky, for a chain of supply, that's logistics," and "There will be no more stress, 'cause you've called UPS, that's logistics."

The jingle will also be blasted at Grand Central and Penn stations in New York in October as part of the pitch. UPS declined to disclose how much it's spending on the campaign.

Third-party logistics is a growing area at a time of globalization and cost-cutting of in-house supply-chain operations, said Kevin Sterling, senior transportation analyst at BB&T Capital Markets.

"If you're a small business, would you know how to ship from China to the U.S., or are you going to hire a team to manage your supply chain?" he said.

Pushing logistics is also a way for parcel delivery companies to "feed their infrastructure," or fill capacity in their intensive networks of planes and trucks, Mr. Sterling said. Mr. Davis agreed that is a UPS goal.

At FedEx Corp., UPS's Memphis, Tenn.,-based rival, spokesman Jess Bunn said that company's supply-chain services help drive business to the company's other units.

"As the economy has become increasingly global," FedEx is offering customers supply-chain services, such as filling orders, determining the best mode of transportation and "real-time information to manage inventory in motion," he said.

Mr. Davis said UPS's "We [Heart] Logistics" campaign reflects the company's evolution since going public in 1999, from primarily shipping parcels, to a full logistics provider.

Supply Chain and Freight, the UPS logistics unit started after the company went public, is the company's third-largest unit.

The division brought in 16% of total UPS revenue of $45.3 billion in 2009, up from 7% of total revenue in 2004. The unit is growing faster than UPS's largest unit by far, its domestic package-delivery business.

Profit margins in the logistics segment have "improved pretty dramatically," Mr. Davis said. The past decade was "a time of adding capabilities," he said.

Since going public, UPS has bought more than 40 logistics companies whose specialties range from distributing medicine to clearing international borders.

UPS plans more acquisitions of logistics companies in Asia and Central Europe, Mr. Davis said.

The company has touted its logistics offering in past regional campaigns, with themes such as "Your World Synchronized" and the "White Board" campaign but has never attempted to rebrand itself globally, he said.

In April, UPS became a logistics partner with AliExpress, a new online wholesale marketplace launched by China-based, which Mr. Davis called "the Chinese version of Amazon."UPS technologies, such as printing labels and a request for a pick up of merchandise, are embedded into the site. "Small and medium businesses can compete with big businesses when they couldn't before," Mr. Davis said.

By Jennifer Levitz

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