United Parcel Service, Inc.

Company Overview

Business Model: United Parcel Service, Inc. is a global package delivery and logistics provider, offering a broad range of industry-leading products and services across over 200 countries and territories. Its core services include time-definite transportation and delivery via an integrated air and ground network, distribution, contract logistics, ocean freight, airfreight, customs brokerage, and insurance. In 2025, the Company delivered an average of 20.8 million packages per day, totaling 5.2 billion packages, and generated $88.7 billion in total revenue.

Market Position: The Company maintains a global smart logistics network, which it believes is the broadest in the industry, providing comprehensive package services through a single pickup and delivery network. It operates with a significant presence in all major economies and leverages cutting-edge technologies, including artificial intelligence and RFID-enabled Smart Package Smart Facility technology, to optimize network efficiency, asset utilization, and enhance end-to-end visibility. The Company emphasizes industry-leading service reliability, a broad service portfolio including specialized cold chain logistics, and strong customer relationships, supported by its brand equity and distinctive culture.

Recent Strategic Developments: In 2025, United Parcel Service, Inc. continued its "Customer First, People Led, Innovation Driven" strategy, focusing on higher-yielding volume in healthcare, business-to-business, small- and medium-sized businesses, and international markets. Key initiatives included:

• Increasing small- and medium-sized business penetration to over 30% of total U.S. volume.
• Acquisitions of Frigo-Trans and Biotech & Pharma Logistics and Andlauer Healthcare Group, further expanding healthcare cold chain capabilities. The global healthcare portfolio generated over $11 billion in revenue in 2025.
• Extension of RFID labeling solutions to 5,500 UPS Store locations and installation of RFID readers across U.S. package cars.
• Entry into an agreement with the United States Postal Service for final-mile delivery of a portion of Ground Saver and Mail Innovations volumes starting in 2026, aiming for cost efficiency.
• Implementation of weekend delivery within Europe.
• Planned opening of a new air hub in the Philippines by late 2026 and expansion in Hong Kong by 2028 to enhance Asia trade lane access and transit times.
• Initiation of Network Reconfiguration and Efficiency Reimagined initiatives, leading to facility consolidations and workforce reductions, delivering approximately $3.5 billion in cost savings in 2025.

Geographic Footprint: United Parcel Service, Inc. serves over 200 countries and territories, with significant operations in all major economies. Its global air operations hub is in Louisville, Kentucky, supported by international air hubs in Germany, China, Hong Kong, Canada, and Florida (for Latin America and the Caribbean). In 2025, 76.1% of total revenue was generated in the United States, and 23.9% internationally.

Financial Performance

Revenue Analysis

Profitability Metrics:

• Operating Margin: 8.9%
• Net Margin: 6.3%

Investment in Growth:

• Capital Expenditures: $3.7 billion
• Strategic Investments: Approximately $2.0 billion for acquisitions of Frigo-Trans and Biotech & Pharma Logistics and Andlauer Healthcare Group, Inc. in 2025.

Business Segment Analysis

U.S. Domestic Package

Financial Performance:

• Revenue: $59.5 billion (-1.4% YoY)
• Operating Profit: $3.9 billion (-9.6% YoY)
• Operating Margin: 6.6%
• Non-GAAP Adjusted Operating Margin: 7.7%
• Key Growth Drivers: Increased revenue per piece (+7.1%) due to favorable customer and product mix, and revenue quality actions. Growth from small- and medium-sized businesses, including through the Digital Access Program. Increased air cargo revenue from the full onboarding of volume under the United States Postal Service contract.
• Key Performance Drivers: Average daily package volume decreased by 8.6%, primarily due to planned volume declines from the largest customer (Amazon.com, Inc.) and revenue quality actions related to certain e-commerce customers. Business-to-consumer volume decreased 12.5%, and business-to-business volume decreased 2.8%. Operating expenses decreased 0.8%, driven by lower headcount and a reduction of approximately 27 million labor hours from Network Reconfiguration and Efficiency Reimagined initiatives, but partially offset by increased compensation and benefits from insourcing Ground Saver and higher air cargo expense.

Product Portfolio:

• Air portfolio: Time-definite, same-day, next-day, two-day, and three-day delivery alternatives, as well as air cargo services.
• Ground network: Day-definite ground service, delivering approximately 15 million ground packages per day.
• Ground Saver (formerly UPS SurePost): Residential ground service for non-urgent, lightweight residential shipments, with final-mile delivery for a portion of volume to be supported by the United States Postal Service starting in 2026.

Market Dynamics:

• Competitive positioning: Leader in time-definite, guaranteed small package delivery services in the U.S.
• Key customer types: Business-to-business, residential (business-to-consumer), small- and medium-sized businesses.
• Market trends: Strategic shift to higher-yielding volume, reduction in volume from largest customer (Amazon.com, Inc.), and challenging market conditions impacting overall volume.

International Package

Financial Performance:

• Revenue: $18.6 billion (+3.4% YoY)
• Operating Profit: $2.9 billion (-10.0% YoY)
• Operating Margin: 15.5%
• Non-GAAP Adjusted Operating Margin: 15.8%
• Key Growth Drivers: Average daily volume increased by 2.5%, with increases in both domestic (+1.4%) and export (+3.5%) products, primarily in Europe, Middle East and Africa. Agility to adjust to changing trade lanes and strength in small- and medium-sized business volumes between European countries. Brokerage services contributed to operating profit.
• Key Performance Drivers: Revenue per piece increased 1.1%, driven by favorable currency movements, partially offset by lower demand-related surcharges and shifts in lane and product mix. Operating expenses increased 6.3%, mainly due to increased volumes, merit compensation increases, implementation of weekend delivery within Europe, and increased integrated air and ground network costs. Global trade policy changes, including de minimis exclusions, resulted in shifting trade lane volumes and reduced segment margin.

Product Portfolio:

• International transportation services: Guaranteed day and time-definite services, supported by brokerage capabilities.
• UPS Worldwide Expedited: Reliable, deferred, day-definite service option for non-express international package shipments.
• UPS Standard: Cross-border ground package delivery within Europe, and between the U.S. and Canada, and U.S. and Mexico.
• Worldwide Economy: Contract-only, e-commerce solution for non-urgent, cross-border shipments.
• UPS Worldwide Express Freight: Premium international service for urgent, palletized shipments over 150 pounds.

Market Dynamics:

• Competitive positioning: Wide selection of international transportation services.
• Key customer types: Small- and medium-sized businesses, e-commerce.
• Market trends: Complex macroeconomic environment pressures, weakening small package U.S. export and import performance, and shifting trade lane volumes due to U.S. trade policy changes (e.g., China-to-U.S. lane).

Supply Chain Solutions (SCS)

Financial Performance:

• Revenue: $10.6 billion (-17.0% YoY)
• Operating Profit: $1.1 billion (+14.6% YoY)
• Operating Margin: 10.1%
• Non-GAAP Adjusted Operating Margin: 10.6%
• Key Growth Drivers: $303 million revenue growth in healthcare logistics businesses due to 2025 acquisitions of Frigo-Trans and Andlauer Healthcare Group, Inc., and organic growth. Volume growth in Roadie and UPS Capital within digital businesses.
• Key Performance Drivers: Total revenue decreased primarily due to the 2024 divestiture of Coyote ($1.6 billion revenue in 2024) and volume declines in Mail Innovations due to revenue quality initiatives. Demand softness in air and ocean markets and changing trade policies impacted Forwarding. Operating expenses decreased primarily due to the Coyote divestiture, a $330 million gain on sale-leaseback transactions, and lower purchased transportation costs in Mail Innovations.

Product Portfolio:

• Forwarding: Global air and ocean freight forwarding, customs brokerage, and related services.
• Logistics: Value-added fulfillment and transportation management services, including multi-client and dedicated facilities. Specialized healthcare logistics services, including complex cold-chain capabilities.
• Digital and Other SCS Businesses: Roadie (crowdsourced same-day delivery), Happy Returns (end-to-end return services), UPS Capital (integrated supply chain and high-value shipment insurance solutions).

Market Dynamics:

• Competitive positioning: Global service provider seeking integration across complex supply chains. Strategic focus on healthcare and life sciences logistics.
• Key customer types: Healthcare and life sciences customers, e-commerce.
• Market trends: Demand softness in air and ocean markets, effects of changing trade policies and tariff uncertainty, particularly on the China-to-U.S. trade lane.

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: $1.0 billion (8.6 million shares) in 2025. As of December 31, 2025, $1.3 billion remained available under the January 2023 authorization. No further share repurchases are anticipated in 2026.
• Dividend Payments: $5.4 billion in 2025. Quarterly cash dividend of $1.64 per share in 2025.
• Dividend Yield: Not explicitly stated, but dividends declared per share were $6.56 in 2025.
• Future Capital Return Commitments: A first quarter 2026 dividend of $1.64 per share was approved, payable March 5, 2026.

Balance Sheet Position:

• Cash and Equivalents: $5.9 billion
• Total Debt: $24.1 billion
• Net Cash Position: -$18.2 billion (Total Debt - Cash and Equivalents)
• Debt Maturity Profile: $500 million in 2026, $1.0 billion in 2027, $588 million in 2028, $1.3 billion in 2029, $1.5 billion in 2030, and $18.7 billion after 2030.

Cash Flow Generation:

• Operating Cash Flow: $8.5 billion
• Free Cash Flow: Not explicitly stated, but capital expenditures were $3.7 billion.
• Cash Conversion Metrics: In 2025, the Company entered into accounts receivable factoring programs, selling $734 million of receivables for net cash proceeds of $730 million.

Operational Excellence

Production & Service Model: The Company operates an integrated global air and ground network for time-definite delivery services. This network is designed for operational and capital efficiencies and a smaller environmental impact compared to single-service network designs. It offers same-day pickup seven days a week through various access points, including UPS Access Points, The UPS Stores, and UPS drop boxes. Returns services are offered in approximately 150 countries. The Company is focused on leveraging technology to optimize volume flow, moving from a scanning to a sensing network, including RFID technology in its Smart Package Smart Facilities initiative.

Supply Chain Architecture: Key Suppliers & Partners:

• Final-Mile Delivery: United States Postal Service - agreement to support final-mile delivery for a portion of Ground Saver and Mail Innovations volumes starting in 2026.
• Third-Party Carriers: Independent contractors and third-party carriers are utilized for transportation services.

Facility Network:

• Corporate Headquarters: Atlanta, Georgia (owned).
• Information Technology Headquarters: Parsippany, New Jersey (owned).
• Primary Information Technology Operations: Owned facility in New Jersey.
• Package Facilities: Approximately 1,000 owned or leased facilities in the U.S. (90 million sq ft); approximately 800 owned or leased facilities internationally (23 million sq ft).
• Air Hubs: Principal air hub (Worldport) in Louisville, Kentucky; major international air hubs in Germany, China, Hong Kong, Canada, and Florida (for Latin America and the Caribbean).
• Forwarding & Logistics Facilities: Approximately 600 facilities (50 million sq ft), including 22 million sq ft of healthcare-compliant warehousing. A logistics campus of approximately 4 million sq ft in Louisville, Kentucky.
• Network Reconfiguration: In 2025, 93 leased and owned buildings had daily operations closed, with 85 permanently closed. 24 buildings are identified for closure in the first half of 2026.

Operational Metrics:

• Global ground fleet: Approximately 125,000 package cars, vans, tractors, and motorcycles, including approximately 19,000 alternative fuel and advanced technology vehicles.
• Aircraft fleet: 295 UPS owned and/or operated aircraft, 221 charters & leases operated by others, with 18 Boeing 767-300s under option as of December 31, 2025. The MD-11 fleet was permanently grounded and retired in Q4 2025.
• Workforce reduction: Operational workforce reduced by approximately 48,000 positions, including 15,000 fewer seasonal positions, as part of Network Reconfiguration and Efficiency Reimagined initiatives.

Market Access & Customer Relationships

Go-to-Market Strategy: Distribution Channels:

• Direct Sales: Integrated air and ground network, UPS drivers directly accepting packages.
• Channel Partners: UPS Access Points, The UPS Stores, UPS drop boxes.
• Digital Platforms: Digital Access Program (DAP) embeds shipping solutions directly into e-commerce platforms, targeting small- and medium-sized businesses. Roadie (crowdsourced delivery) and Happy Returns (return services) leverage technology for on-demand services.

Customer Portfolio: Enterprise Customers:

• Customer Concentration: Amazon.com, Inc. and its affiliates represented approximately 10.6% of consolidated revenues in 2025, substantially all within the U.S. Domestic Package segment. The Company's strategy involves reducing volumes from this customer by more than 50% by June 2026 from 2024 levels.
• Strategic Partnerships: Agreement with the United States Postal Service for final-mile delivery.

Geographic Revenue Distribution:

• United States: 76.1% of total revenue
• International: 23.9% of total revenue

Competitive Intelligence

Market Structure & Dynamics

Industry Characteristics: The industry is rapidly evolving with demands for faster deliveries, increased shipment visibility, and new service developments. It faces competition from various local, regional, national, and international logistics providers, national postal services, motor carriers, express companies, freight forwarders, air couriers, large transportation companies, and e-commerce companies investing in their own logistics capabilities. New and emerging technologies, including crowdsourcing, also create additional competition.

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors:

• United States Postal Service: Competes in package delivery and is also a partner for final-mile delivery.
• Various motor carriers, express companies, freight forwarders, air couriers: Direct competition across different transportation and logistics services.
• Large transportation companies: Offer a wide variety of services.
• E-commerce companies and other retailers: Increasingly investing in their own technology and logistics capabilities.

Emerging Competitive Threats:

• Start-ups and smaller companies: Combine technologies with flexible labor solutions such as crowdsourcing.
• Disruptive technologies: New and emerging technologies could harm the Company's competitive position if not effectively incorporated.

Competitive Response Strategy: The Company's "Customer First, People Led, Innovation Driven" strategy focuses on growing in higher-yielding market segments (healthcare, B2B, SMBs, international), leveraging its integrated global network and cutting-edge technologies, and enhancing customer experience and service reliability. This includes deliberate shifts to increase focus on higher-yielding volume and network efficiency initiatives.

Risk Assessment Framework

Strategic & Market Risks

Market Dynamics:

• General Economic Conditions: Operations in over 200 countries are subject to national and international economic factors (industrial production, inflation, unemployment, consumer spending, retail activity, international trade policies). Geopolitical uncertainty and conflicts can also adversely impact.
• Industry Evolution & Competition: Rapidly evolving industry with demands for faster deliveries, increased visibility, and new services. Significant competition from various logistics providers, postal services, e-commerce companies, and start-ups. Failure to respond to competitive pressures or incorporate new technologies could materially adversely affect.
• Customer Relationships: Changes in relationships with significant customers, including planned volume reductions from the largest customer (Amazon.com, Inc.), or loss/reduction in business from other customers, could materially adversely affect.
• Geopolitical Exposure: Significant international operations expose the Company to changing economic, political, and social developments in various countries, including volatility in emerging markets.

Operational & Execution Risks

Supply Chain Vulnerabilities:

• Operational Security: Heightened security requirements from governments impose substantial costs. Compliance may not prevent attacks or security breaches.
• IT & Cybersecurity: Reliance on information technology networks and systems, susceptible to damage, disruptions, and cyber-attacks. Increased utilization of AI may intensify cybersecurity risks. Data breaches, loss of proprietary information, or operational disruptions could materially adversely affect.
• Human Capital: Failure to attract or retain qualified employees, increased labor costs, or strikes/work stoppages by unionized employees could materially adversely affect.
• Climate Change Effects: Increased severity or frequency of weather conditions or other natural/man-made disasters could disrupt business, damage property, injure employees, or increase operating costs.
• Acquisition Integration: Inability to effectively integrate acquired businesses and realize anticipated benefits from acquisitions, joint ventures, or strategic alliances could materially adversely affect.

Financial & Regulatory Risks

Market & Financial Risks:

• Fuel and Energy Prices: Significant impact from changing fuel and energy prices (gasoline, diesel, jet fuel) and interruptions in supplies. Inability to maintain or increase fuel surcharges could materially adversely impact operating results.
• Foreign Currency Exchange Rates: Exposure to changes in exchange rates for local currencies, particularly Euro, British Pound Sterling, Canadian Dollar, Chinese Renminbi, and Hong Kong Dollar.
• Interest Rates: Affected by changes in interest rates on short-term and floating-rate long-term debt, and impact on pension and postretirement benefit obligations.
• Capital Investments: Business requires significant capital investments. Inaccurate forecasting of future investment needs could lead to under/over-investment or capacity issues.
• Employee Benefits Costs: Significant expenses from employee health, retiree health, and pension benefits. Further cost increases could materially adversely affect.
• Insurance and Claims Expense: Combination of self-insurance and high-deductible programs. Increased number, severity, or cost of claims could materially adversely affect.
• Asset Impairments: Changes in markets and business plans may result in substantial impairments of asset carrying values, reducing net income.
• Tax Liabilities: Subject to income taxes in many jurisdictions. Significant judgment required, and changes in tax laws or audits could result in additional tax liabilities.

Regulatory & Compliance Risks:

• Complex Laws & Regulations: Subject to complex and stringent aviation, transportation, environmental, security, labor, employment, safety, privacy, disclosure, and data protection laws and policies. Compliance costs could increase, or non-compliance could result in fines or revocation of operating authority.
• Climate Change Regulations: Regulations and required disclosures of greenhouse gas emissions (e.g., ReFuelEU Aviation, CORSIA) could materially increase operating costs, including fuel costs and aircraft/vehicle replacement.
• Legal Proceedings: Exposure to various claims and litigation related to labor and employment, personal injury, property damage, business practices, environmental liability, and other matters. Material litigation or accidents could result in significant expenditures.

Innovation & Technology Leadership

Research & Development Focus: Core Technology Areas:

• Network Optimization: Leveraging technology to optimize volume flow, moving from a scanning to a sensing network.
• RFID Technology: Smart Package Smart Facility initiative, RFID labeling solution extended to UPS Store locations, and RFID readers installed across U.S. package cars.
• Artificial Intelligence (AI): Leveraging AI to optimize operations, improve customer experience, and support decision-making.
• Digital Tools: Development of digital tools and capabilities for shipment creation, tracking, data management, data-analysis automation, automated agents, personalization, and customized pricing.

Intellectual Property Portfolio:

• Patent Strategy: Not explicitly detailed, but the Company develops cutting-edge technologies.

Technology Partnerships:

• Not explicitly detailed beyond internal development and leveraging third-party systems.

Leadership & Governance

Executive Leadership Team

Leadership Continuity: The Board of Directors, directly and through the Compensation and Human Capital Committee, oversees human capital matters, including succession planning and employee training initiatives.

Board Composition: The Board of Directors has appointed a Risk Committee, consisting entirely of independent directors, responsible for overseeing management’s identification and evaluation of strategic enterprise risks, including those associated with privacy, technology, information security, AI, cybersecurity, cyber incident response, and business continuity.

Human Capital Strategy

Workforce Composition:

• Total Employees: Approximately 460,000 (excluding temporary seasonal employees).
• Geographic Distribution: 370,000 in the U.S., 90,000 internationally.
• Skill Mix: Approximately 75,000 management employees (nearly 35% part-time) and approximately 385,000 hourly employees (nearly 50% part-time).
• Union Representation: Nearly 80% of U.S. employees are represented by unions, primarily the International Brotherhood of Teamsters. Pilots are represented by the Independent Pilots Association, airline mechanics by Teamsters Local 2727, and auto/maintenance mechanics by the International Association of Machinists and Aerospace Workers.

Talent Management: Acquisition & Retention:

• Hiring Strategy: The Company reviews the competitiveness of its employee value proposition, including benefits, pay, training, talent development, and advancement opportunities.
• Retention Metrics: Not explicitly stated, but the Company's "People Led" strategy focuses on employee experience and recommendation likelihood.
• Employee Value Proposition: Strong culture and sense of partnership, competitive benefits and pay, training, talent development, and advancement opportunities.

Diversity & Development:

• Development Programs: Employee training initiatives, leadership development.
• Culture & Engagement: Strong, purpose-driven culture fostering trust, partnership, and empowerment. Encourages unique perspectives, backgrounds, talents, and skills. Affinity-based business resource groups, confidential employee surveys, and access to confidential counseling.

Environmental & Social Impact

Environmental Commitments: Climate Strategy:

• Emissions Targets: Goal to achieve carbon neutrality in global operations by 2050.
• Carbon Neutrality: Commitment to achieve carbon neutrality by 2050.
• Renewable Energy: Not explicitly detailed, but the Company's ability to meet goals depends on the development and availability of reliable, affordable, and low-emission energy solutions, including sustainable aviation fuel and alternative fuel/battery electric vehicles.

Supply Chain Sustainability:

• Not explicitly detailed.

Social Impact Initiatives:

• Community Investment: Not explicitly detailed.
• Product Impact: Not explicitly detailed.

Business Cyclicality & Seasonality

Demand Patterns:

• Seasonal Trends: Customer impact on revenue and profitability can vary based on e-commerce or other industry trends, including those related to the holiday season.
• Economic Sensitivity: Operations are subject to national and international economic factors, including industrial production, inflation, unemployment, consumer spending, and retail activity levels. Adverse developments or uncertainty in these areas can materially affect the Company.
• Industry Cycles: The industry continues to rapidly evolve, with demands for faster deliveries and increased visibility.

Planning & Forecasting:

• The Company adjusts elements of its operations and cost structure in response to strategic initiatives, and economic and regulatory conditions. Forecasting investment needs involves many factors subject to uncertainty.

Regulatory Environment & Compliance

Regulatory Framework: Industry-Specific Regulations:

• Air Operations: Regulated by the U.S. Department of Transportation (economic aspects, international routes/fares), Federal Aviation Administration (operational, technical, safety aspects), and Transportation Security Administration (security aspects of air cargo). Also subject to non-U.S. government aviation, health, customs, and immigration regulations.
• Ground Operations: Regulated by the U.S. Department of Transportation and Federal Motor Carrier Safety Administration (operations, safety, insurance, hazardous materials, driver hours of service). Also subject to state jurisdiction and similar foreign regulations. The United States Postal Service is overseen by the Postal Regulatory Commission.
• Customs: Subject to customs laws regarding import/export in operating countries, including filing documents for clients. U.S. activities regulated by the Bureau of Customs and Border Protection, TSA, U.S. Federal Maritime Commission, and DOT.
• Environmental: Subject to U.S. and international federal, state, and local environmental laws and regulations covering waste, water, air emissions, spills, and hazardous materials. Aircraft fleet complies with noise standards.
• Communications and Data Protection: Subject to Federal Communications Act of 1934 (radio/communication facilities) and Federal Communications Commission (satellite communications). Subject to evolving laws and regulations regarding privacy, cybersecurity, data protection, and data security (e.g., EU GDPR, California Privacy Rights Act, China's Personal Information Protection Law).
• Health and Safety: Subject to numerous federal, state, and local laws and regulations governing employee health and safety.

Trade & Export Controls:

• Impacted by laws, regulations, and policies affecting global trade, including tariff and trade policies, export requirements, embargoes, sanctions, taxes, and other restrictions. Trade discussions and agreements are unpredictable.

Legal Proceedings:

• Baker v. United Parcel Service, Inc. (DE) and United Parcel Service, Inc. (OH): Class action alleging violation of the Uniformed Services Employment and Reemployment Rights Act. Outcome and potential loss are not estimable.
• Malone et al. v. United Parcel Service Inc. (OH): Class action alleging entitlement to overtime under the Pennsylvania Minimum Wage Act. Outcome and potential loss are not estimable.
• Spain’s National Markets and Competition Commission (CNMC): Investigation into alleged nonaggression agreements. An immaterial fine was imposed, appealed to the Spanish Supreme Court. No material impact expected.
• MD-11 Cargo Aircraft Accident: An accident occurred in November 2025 at Louisville Muhammad Ali International Airport. No material financial impact is expected.

Tax Strategy & Considerations

Tax Profile:

• Effective Tax Rate: 22.2% in 2025, 22.3% in 2024.
• Geographic Tax Planning: International tax structure and transfer pricing are considered.
• Tax Reform Impact: The One Big Beautiful Bill Act (OBBBA) was signed into law in July 2025, with provisions effective in future years. The Company expects a favorable impact to its effective tax rate and cash flows from revisions to international tax regimes, repeal of mandatory capitalization of R&D expenditures, and extension of bonus depreciation.

Insurance & Risk Transfer

Risk Management Framework:

• Insurance Coverage: Combination of self-insurance and high-deductible insurance programs for risks including cargo loss, cyber-attacks, personal injury, property damage, aircraft and related liabilities, business interruption, and workers' compensation.
• Risk Transfer Mechanisms: Utilizes commodity, foreign currency exchange rate, and interest rate forward contracts, options, and swaps to manage market risks. Fuel surcharges are the primary means to reduce adverse fuel price changes. Foreign currency cash flow hedging program is maintained. Interest rate swaps are used to manage the fixed and floating interest rate mix of the total debt portfolio.