Jack Holmes President – UPS Freight

2 Trucking’s Ups and Downs UPS entered the LTL arena in In 2005 and 2006, the top publicly-traded LTL companies made $3.3 billion in profit UPS endured the economic downturn of –While the publicly-traded LTL companies mentioned above lost $900 million UPS Freight is well positioned for the LTL industry of 2011

Strategy, Not Tactics 3 When the industry tightened in 2008… Many LTL and TL companies dropped long term strategies Instead, they focused on quick volume and revenue grabs that were unsustainable UPS remained focused on the long-term goals of their entry into the LTL and TL markets While other companies fixated on the immediate issues, UPS kept investing in technology, in equipment and in people UPS does not manage business by the quarter

4 Our Approach to LTL and TL Focus on improving core competencies Quicker delivery lanes Expanded coverage Better reliability Easier customs clearance

5 Technology Focus on improving core competencies Quicker delivery lanes Expanded coverage Better reliability Easier customs clearance Manage fuel prices Idling, speed control Develop more efficient routes

6 Visibility Focus on improving core competencies Quicker delivery lanes Expanded coverage Better reliability Easier customs clearance Manage fuel prices Idling, speed control Develop more efficient routes Tracking WorldShip, InternetShip and CampusShip Quantumview Manage Paperless Billing Products

7 Enterprise Focus on improving core competencies Quicker delivery lanes Expanded coverage Better reliability Easier customs clearance Manage fuel prices Idling, speed control Develop more efficient routes Tracking WorldShip, InternetShip and CampusShip Quantumview Manage Paperless Billing Products Bundling

8 UPS’s Goal: Change the LTL value equation.

9 UPS and Healthcare/Personal Care “Patients, not Packages.” Characteristics of a good transportation provider for your industry Reliability Visibility Temperature Sensitivity Logistics!

10 Compliance and Sustainability Fuel efficiencies Route development and “no left turns” Alternative fuel vehicles Sustainability options for customers Packaging California regulations

11 Logistics Very few industries benefit from superior logistics like the healthcare/personal care industry does Warehousing and distribution Fulfillment Visibility Time-in-transit Reliability

12 The Real American Economy What we produce, not what Wall Street predicts Manufacturing is up, so are fuel costs Trucks and drivers on the road Obstructions, detours and road blocks coming down the pike

13 Important issues in 2011 Hours of Service Proposal Current rules have helped create a 20% annual decline in truck-related deaths since 2004

14 Important issues in 2011 Hours of Service Proposal Current rules have helped create a 20% annual decline in truck-related deaths since 2004 New Proposal - Hours of Service Would reduce driver hours per day from 11 to 10 Would institute an “on-duty” window of 14 hours Would require a 48-hour restart window instead of the current 34- hour window

15 Important issues in 2011 Hours of Service Proposal Current rules have helped create a 20% annual decline in truck-related deaths since 2004 New Proposal - Hours of Service Would reduce driver hours per day from 11 to 10 Would institute an “on-duty” window of 14 hours Would require a 48-hour restart window instead of the current 34- hour window Impact of the new rules: Elimination of many next-day lanes $2.2 billion in additional cost to trucking companies More equipment, more drivers, operating on the U.S.’s outdated transportation infrastructure

16 Important issues in 2011 Fuel Costs Trucking will consume 35 billion gallons of diesel in 2011 Cost of $135.8 billion $35 billion more than was spent in 2010 Diesel is up almost $1 per gallon since last year

17 Important issues in 2011 CSA 2010 Comprehensive list of safety measures UPS fully favors raising the acceptable level of safety on our roads Important industry note: CSA will raise the cost of doing business for many companies, and those companies will push the costs onto their customers

18 Transportation in 2011 New regulations Capacity issues Driver shortages Higher fuel prices

Thank you.