The impending US recession has definitely brought businesses at a decreasing speed of operations. In light of this problem, it seems that not only the financial institutions and manufacturers are the victims, even those in the delivery of services and goods are widely affected due to the interconnectivity of flow of merchandises. Even though logistics is considered to be the “efficient” strategy of flowing out the goods from their origin to target consumers (Crystal 1), the sudden economic events can manage to inflict changes in the course of effective merchandise transportation.
The logistics issue being felt by UPS and other service entities is a simple sign that domestic transactions truly affect companies involved in such services. Even though the organization is not concerned in the production of market commodities, the trend in the market will predict how the company will perform. There are at least three basic effects- First, if consumers have lesser purchasing power, there will be lesser items for UPS to deliver. Second, with a weakening domestic activity influencing higher operation prices, the company will not be able to sustain its remaining operation expenses. Lastly, high interest rates in the domestic market could compromise the values of UPS’ non-monetary assets such as delivery trucks, warehouses and telecom facilities.
It cannot be denied that the logistics industry is in the passive state of operation which only adapt to the business climate being undertaken in its home market. This only provides one definite conclusion; the economic and financial problems in a certain market predict how logistics companies will perform based solely on how much goods are to be transported by the manufacturers to the consumers. If this segment delivery of the market is weak, then eventually, the logistics sector will also have nothing to gain since each of its operations is dependent on selling and purchasing transactions.
Crystal, Gary. “What is Logistics?.” WiseGeek. 2003. 28 Apr 2008 <http://www.wisegeek.com/what-is-logistics.htm>.