Dive Brief:
- UPS plans to open seven dedicated healthcare logistics facilities in 2023 as the company bolsters its capabilities in the high-value customer segment, CEO Carol Tomé said on an April 25 earnings call.
- In the first quarter, the delivery giant opened around 1 million square feet of dedicated healthcare space, including a location in Germany. "This facility is also close to our European air hub in Cologne, enabling customers to leverage the speed and reach of our global network," Tomé said.
- For the year, UPS expects to generate more than $10 billion in healthcare revenue, Tomé said. That would be an increase from the $9.2 billion in revenue its healthcare portfolio made in 2022.
Dive Insight:
Healthcare logistics has been a bright spot for UPS amid an overall decline in delivery demand. It is also an attractive segment for carriers to invest in since it's generally more profitable on a per-shipment basis than business-to-consumer deliveries.
"Our goal is to become the number one complex healthcare logistics provider in the world," Tomé said.
One big step UPS took toward that goal was its acquisition of Bomi Group in November 2022. The deal for the healthcare logistics provider allows UPS to boost its cold chain capabilities in Europe and Latin America with the addition of temperature-controlled facilities in 14 countries and 3,000 employees.
"To date, revenue and cost synergy are running ahead of target," Tomé said of the Bomi Group acquisition.
UPS will add 2.3 million square feet of healthcare logistics space in its global network this year, CFO Brian Newman said on the call. At 2022’s end, the company had around 17 million square feet of "healthcare-compliant warehousing," according to its 10-K.
UPS is also continuing to expand its UPS Premier service, which uses sensor technology to give healthcare customers increased visibility and enable shipments to be recovered if delays or other issues occur. The service, announced in 2020, is now available in 45 countries, with four more to be added this year, Tomé said.
