A Parcel Shipping Experiment

A Parcel Shipping Experiment Our Empirical Comparison of Rates, Service, Network Patterns, and Transit Times Among Parcel Carriers March 2, 2012 Trans...
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A Parcel Shipping Experiment Our Empirical Comparison of Rates, Service, Network Patterns, and Transit Times Among Parcel Carriers March 2, 2012 Transportation & Logistics Research David Ross, CFA J. Bruce Chan

[email protected] [email protected]

(443) 224-1316 (443) 224-1386

In an effort to gain some first-hand insight into the small package business, we conducted an experiment that involved sending approximately 100 pieces of equal size and weight to various destinations in the U.S. and abroad. This allowed us to compare, on an empirical basis, the varying price and service levels among the main parcel players—namely, UPS (UPS; $76.89; Buy), FedEx (FDX; $91.12; Buy), the USPS, and a regional parcel carrier. Throughout the exercise, we kept records of costs, service exceptions, network patterns, and transit times, all of which are detailed in this report. It is important to note that our experiment was conducted using retail-rated shipments only, and that large shippers typically benefit from substantial rate discounts, which alter the relative attractiveness of carriers. Still, we believe our results provide some beneficial insight on price levels across comparable products. Service, of course, is unaffected by discounts. While our experiment involved only about 100 of the millions of packages that flow through the various parcel networks each day, it gave us a valuable perspective from which to consider some of the larger trends that we have been observing in the industry. •

• •

• •

Modal share shift (air to ground) should continue over time, as the carriers’ ground networks are operating as fast and efficient as ever, and there remains a wider gap in price than service (see Exhibits 1-3 on pp. 5-6). For this reason, we also expect ground rates to rise significantly faster than air rates, especially in regional lanes, over the next several years. For carriers, the continued air-to-ground share shift will require more effective management—and likely a reduction in the size—of the (domestic) air fleet to avoid significant margin pressure. Interestingly, Exhibits 4-7 (on pp. 6-7) show highest variance in actual-versus-estimated delivery dates were with the U.S. Postal Service (USPS), although it tended to be beneficial for customers, as most packages arrived well ahead of published transit times (which were slower times than published by the competition). While this result indicates that USPS (on-time) service is not as bad as perception, it may mean that USPS is losing out on money that it could be charging for transit times that are faster/better than advertised. FedEx Ground is significantly cheaper than UPS Ground (for retail customers), while FedEx Express and UPS Air product rates are comparable (on a same-service basis). We reiterate our Buy ratings on FDX ($111 target price, or 13.5x our CY13 EPS estimate of $8.24) and UPS ($83 target price, or 15x our CY13 EPS estimate of $5.50) based on the companies’ strong positioning in the U.S. and International small package markets, positive pricing momentum, and growing B2C and C2C shipment trends, especially as the UPS Store and FedEx Office often offer the retail customer a better experience than the local post office. Our estimates and ratings assume neither company acquires TNT Express.

Stifel Nicolaus does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. All relevant disclosures and certifications appear on pages 14-16 of this report.

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Other key takeaways: •









UPS Store and FedEx Office both offer a much better customer experience than the USPS. While results will obviously vary by location, we found the UPS Store and FedEx Office locations to be more customer-service oriented than their USPS counterparts. FedEx and UPS have different coverage maps, so what may be a 2-day shipment with one carrier could be a 3day shipment with the other. Shippers should look at these maps (Exhibits 8-10 on pp. 7-8) before choosing a carrier, as it may save them time and money. FedEx Office locations are generally larger and have more traffic than UPS Stores, as they offer more than just shipping and packaging; however, there are many more UPS Store locations, making it more convenient for many. Tracking and tracing for USPS is available but for a modest surcharge. While other carriers include this service “free of charge,” it is likely already built-in to pricing. As a result, USPS may be the only carrier to allow customers to opt-out of the tracking and tracing charge. Regional carriers like Eastern Connection (serving the Mid-Atlantic) are a good option for larger shippers moving packages within a regional footprint. They offer good regional transit times, often at lower prices than FedEx or UPS. However, like UPS SurePost and FedEx SmartPost, service is not available to the one-off retail shipper.

Notes: Summary of each shipment shown in Exhibits 11-12 on pp. 9-10. Experiment conducted based on 2011 published rates. In the next section, we will highlight our general experiences with each carrier and its retail sales channel, including what we learned while in the store—directly and indirectly. But first, a brief comparison as it relates to LTL pricing: when we took our packages in (they each weighed the same and fit in the same size box for shipping by each service), on the scale, each weighed in at 5.4 lbs. For pricing, though, FedEx and UPS round up to the nearest pound, resulting in a theoretical 11% increase over what we should have paid were it priced more strictly by the weight. In fact, even a 5.01 lb. shipment would be priced as a 6.0 lb shipment in their networks. In the less-thantruckload (LTL) world, where carriers run similar but less automated networks for heavier, non-conveyorizable freight, carriers are lucky to charge even on a 500 lb. basis for an actual 540 lb. shipment, let alone 600 lbs.

The UPS Store •

• •

All services always guaranteed (at no additional cost). Next Day Air is guaranteed by 10:30am for higher density areas (cities) and by Noon for rural areas. Ground service is guaranteed on a day-definite basis by coverage map (see Exhibit 9 on p. 8). There are no UPS boxes at the store in which to ship anything. We had to pay for each box used to package our goods, even for overnight shipments. We found it interesting that Ground service to Alaska (from Baltimore, MD) is a 4-day guarantee (it must be sent by air); whereas Hawaii is a 5-day guarantee.

A Parcel Shipping Experiment March 2, 2012

• •

• •





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UPS offers a 3-Day Select product that is a hybrid between air and ground. 3-Day Select basically allows faster delivery to the normal 4-6 day ground destinations. UPS Store also handles U.S. mail, so customers can drop off standard mail or ship USPS Priority Mail. The workers offer all services, but for those who want tracking, UPS is the only option. Interestingly, depending on origin/destination pair, UPS may also be cheaper than the USPS (typically for heavier-weight shipments). Customers can also buy stamps or rent a mailbox (after all, the UPS Store used to be Mail Boxes Etc). UPS Store employees handled all of the data input for us – there were no labels for us to fill out and no handwriting to worry about. The UPS Store employees make sure the customer information is correct and complete, which should translate into fewer lost or returned packages. The process is even easier for returning customers, as the “from” information is already on file and that field is automatically populated on the shipping label. The store sells the UPS #88 car toy along with paper, boxes, pens, gift wrapping, packing materials and other related items. The store does not buy it supplies from or through UPS, and UPS charges the store for any UPS boxes/envelopes that the store chooses to stock. As for setting-up an account to get a discount, that service is not available at the UPS Store. Customers need to talk to a UPS salesperson in order to establish an account, which in turn requires a minimum amount of volume, and likely, a monthly minimum charge for the account. No UPS SurePost option available at the UPS Store - that is reserved for larger shippers who use other UPS portfolio products. Hours of operation: Monday-Friday, 8:30am - 6:30pm and 10:00am – 4:00pm on Saturday. Parcel pick up happens once per day between 6:00pm - 6:30pm. If the store has an unusually large number of pieces for pickup, they will alert the distribution center, who will then send an additional driver if necessary. If a customer misses the scheduled pickup and needs a package sent out that night, he can drop it off at a local sort facility until 7:00pm.

FedEx Office (formerly Kinkos) • •

• •



FedEx Office has a surcharge for using Ground boxes but not for Express boxes, and we were told we needed to use Ground boxes for our Ground shipments. Express boxes and envelopes are “free.” Technically, a customer can ship using any variety of box, including using a “Ground” box for an Express shipment, or vice-versa. However, store employees are trained to discourage this practice, presumably to prevent confusion in the sort, but likely also to keep customers from converting from higher-yielding Express to lower-yielding Ground. No SmartPost option for shippers at FedEx Office – this remains a product (almost exclusively) for highvolume B2C shippers. Service defaults to its “Standard” product which, on average is a service level below the default service provided by UPS (i.e. the UPS Store defaulted us to the more expensive next-day shipping option when we just asked for next-day—we are not sure if this was by store manager design or company design, but it explains the difference in pricing). Ground pickup was earlier than Express, and the Express driver could not take our Ground packages, so we

A Parcel Shipping Experiment March 2, 2012

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had to drive to the nearest Ground facility to ensure that all packages went out the same day. It required much debating and calling the manager’s manager before we were able to get the address of the local facility, contact the local supervisor, and have him grant us access/permission to drop the packages off ourselves. We noted that there was very tight security at the Ground facility. Double labeling—after we filled everything out, the FedEx worker entered it into the system, printed a label and put it on the box. The process seemed redundant to us. The UPS Store was much more efficient. Everything would have been much easier with an account number (we have a FedEx account here at Stifel but chose not to use it for the purposes of this experiment). As in the UPS store, we were unable to sign-up for an account as an individual—had to contact a FedEx salesperson. Hours of operation (open more days and longer each day than UPS Stores): Monday-Friday, 7am – 11pm and 9am – 9pm on Saturday and Sunday.

Regional carrier (Eastern Connection) • •

To add a regional parcel carrier to the mix, we used Eastern Connection, since we are based in Baltimore. Regional carriers typically do not have retail outlets and serve larger regional customers only. However, since we knew the company, they made an exception for us so we could compare service and rates (even though they have no real retail rates).

USPS (the local post office) • • • • • •



USPS rates are often more attractive for lighter-weight packages but usually not as attractive for heavier packages. Customer service was not as helpful with processing the shipments, but they at least stayed open late so that we could get everything filled out and shipped. The Priority Mail box is free, but there is a charge for bubble envelopes. Hours of operation: Monday— Friday, 9am-2pm, 3pm-5pm The biggest surprise was the amount of time the shipping and labeling process took. There are multiple forms to fill out for each shipment, especially if one wants delivery confirmation or if shipping is international. One USPS shipment was sent back to us. When it was returned, the box was in poor condition (and after only having gone a few blocks!). We paid $113 to send it to London via Global Express Guaranteed® (GXG) on a Tuesday. By Thursday morning, a beat up box was delivered to our office, with a notice that there had been an issue at customs in NYC (basically, the wrong postal code was transcribed, and there was no procedure to check the GXG bill for what, upon inspection, was clearly an error). We reshipped the package and included the data in our overall results. The only guaranteed services are next-day express mail and GXG for international (which uses FedEx).

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Exhibit 1: In regional markets, it costs 3x as much for next-day service in air vs. ground

Average Total Shipping Price to NY, NY ($ U.S.)

$45

Packaging $3.99

3 Day Delivery

1 Day Delivery

$40

4 Day Delivery

$35 $30 Packaging $3.99

$25 $20

Shipping $36.61

$15

Packaging $3.99

Shipping $30.30

Packaging $2.99

Packaging $2.09

Shipping $20.05

$10

Shipping $9.57

$5

Shipping $8.43

Shipping $11.10

Shipping $8.72

$0 UPS Next Day Air

FDX Std. Ovnt

Eastern Connect. Priority

UPS Ground FDX Ground USPS Priority USPS Parcel Post

Source: Stifel Nicolaus . Note: UPS Next Day Air is a higher service option than FedEx Standard Overnight, but is what was given to us when we asked for next-day. The comparable product, UPS Express Saver, has a similar core price (excluding packaging) to FedEx.

Exhibit 2: In medium-haul markets, sacrificing just one day of transit time can mean big savings

Average Total Shipping Price to Chicago ($ U.S.)

$80

Packaging $3.99

1 Day Delivery

4 Day Delivery

2 Day Delivery

$70 $60 $50 $40

Shipping $72.11

$30

Shipping $66.30 Shipping $43.85

$20

Packaging $3.99 Shipping $22.94

$10

Shipping $11.65

Packaging $2.99

Packaging $2.09

Shipping $10.30

Shipping $10.74

FedEx Ground

USPS Parcel Post

$0 UPS Next Day Air

FedEx Std. Ovnt

USPS Express

FedEx 2-Day UPS Ground

Source: Stifel Nicolaus . Note: UPS Next Day Air is a higher service option than FedEx Standard Overnight, but is what was given to us when we asked for next-day. FedEx’s comparable product, FedEx Priority Overnight, has a similar core price to UPS Next Day Air.

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Exhibit 3: Not even showing the very expensive overnight prices, ground is still a big discount to deferred air in cross-country shipments

$60

Average Total Shipping Price to California ($ U.S.)

3-6 Day Delivery

2 Day Delivery

2-3 Day Delivery

Packaging $3.99 $50

$40

$30

Shipping $54.85

Shipping $48.63

Shipping $48.65

Packaging $3.99

$20

$10

Shipping $14.65

Packaging $2.99

Packaging $2.09

Shipping $13.01

Shipping $13.83

Shipping $11.65

$0 USPS Express

UPS 2nd Day

FedEx 2-Day

UPS Ground

FedEx Ground USPS Parcel Post

USPS Priority

Source: Stifel Nicolaus

Exhibit 4: UPS showed better ground on-time performance than air; packages arrived late on a few air shipments to the West

Exhibit 5: FedEx air service was excellent but saw a ground shipment to CA arrive late

UPS On-Time Delivery Rate

FDX On-Time Delivery Rate

3%

3%

3%

10%

84% 1 Da y Early

On Time

Source: Stifel Nicolaus

1 Day Late

97%

5 Days Late

On Time

1 Day Late

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Exhibit 6: USPS packages often “early” USPS On-Time Delivery Rate 5%

Stifel, Nicolaus & Company, Inc.

Exhibit 7: Service helps regionals compete Eastern Connection On-Time Delivery Rate

4% 9%

23%

4%

55% 5 Days Early

4 Days Early

3 Days Early

1 Day Early

On Time

1 Day Late

100% On Time

Source: Stifel Nicolaus

Exhibit 8: FedEx Ground coverage/service map from Baltimore, MD to other points in the U.S.

Source: FedEx website, reflects outbound shipments from Baltimore, Maryland

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Exhibit 9: UPS Ground service map shows different transit times than FedEx for MD shippers

Source: UPS website, reflects outbound shipments from Baltimore, Maryland

Exhibit 10: Eastern Connection service map shows coverage across the East Coast, with facilities in 19 cities

Source: Eastern Connection website

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Exhibit 11: Eastern Connection and FedEx shipment detail Shipment Method Carrier

Mode

Delivery

Destination

Price

Billed

State

Country

Guarantee

MA RI NY MD NY NY NY

USA USA USA USA USA USA USA

On Time On Time On Time On Time On Time On Time On Time

5.40 lbs 5.40 lbs 5.40 lbs 5.40 lbs 5.40 lbs 5.40 lbs 5.40 lbs

6.00 lbs 6.00 lbs 6.00 lbs 6.00 lbs 6.00 lbs 6.00 lbs 6.00 lbs

$43.65 $43.65 $29.85 $24.04 $24.04 $24.04 $24.04

On Time On Time On Time On Time On Time On Time On Time On Time On Time On Time On Time On Time On Time On Time On Time On Time On Time On Time On Time On Time 2 days late On Time On Time On Time On Time On Time On Time On Time On Time On Time On Time On Time On Time

5.20 lbs 5.20 lbs 5.15 lbs 5.20 lbs 5.20 lbs 5.20 lbs 5.20 lbs 5.20 lbs 5.25 lbs 5.20 lbs 5.15 lbs 5.15 lbs 5.25 lbs 5.20 lbs 5.15 lbs 5.20 lbs 5.20 lbs 5.15 lbs 5.15 lbs 5.20 lbs 5.50 lbs 5.50 lbs 5.50 lbs 5.50 lbs 5.50 lbs 5.50 lbs 5.50 lbs 5.40 lbs 5.50 lbs 5.50 lbs 5.50 lbs 5.50 lbs 5.60 lbs

6.00 lbs 6.00 lbs 6.00 lbs 6.00 lbs 6.00 lbs 6.00 lbs 6.00 lbs 6.00 lbs 6.00 lbs 6.00 lbs 6.00 lbs 6.00 lbs 6.00 lbs 6.00 lbs 6.00 lbs 6.00 lbs 6.00 lbs 6.00 lbs 6.00 lbs 6.00 lbs 6.00 lbs 6.00 lbs 6.00 lbs 6.00 lbs 6.00 lbs 6.00 lbs 6.00 lbs 6.00 lbs 6.00 lbs 6.00 lbs 6.00 lbs 6.00 lbs 6.00 lbs

$168.94 $151.46 $102.24 $162.32 $83.38 $83.38 $71.47 $71.47 $71.47 $66.30 $66.30 $30.30 $30.30 $30.30 $30.30 $48.65 $48.65 $46.81 $22.94 $22.94 $16.00 $16.00 $16.00 $15.05 $13.29 $13.29 $11.42 $11.42 $11.42 $11.42 $11.42 $11.42 $10.30

1) 2) 3) 4) 5) 6) 7)

►EC ►EC ►EC ►EC ►EC ►EC ►EC

Priority Priority Priority Priority Priority Priority Priority

Boston Smithfield Mount Kisco Baltimore New York New York New York

8) 9) 10) 11) 12) 13) 14) 15) 16) 17) 18) 19) 20) 21) 22) 23) 24) 25) 26) 27) 28) 29) 30) 31) 32) 33) 34) 35) 36) 37) 38) 39) 40)

FedEx FedEx FedEx FedEx FedEx FedEx FedEx FedEx FedEx FedEx FedEx FedEx FedEx FedEx FedEx FedEx FedEx FedEx FedEx FedEx FedEx FedEx FedEx FedEx FedEx FedEx FedEx FedEx FedEx FedEx FedEx FedEx FedEx

International Priority International Priority International Priority International Economy Standard Overnight Standard Overnight Standard Overnight Standard Overnight Standard Overnight Standard Overnight Standard Overnight Standard Overnight Standard Overnight Standard Overnight Standard Overnight 2-Day 2-Day 2-Day 2-Day 2-Day Ground Ground Ground Ground Ground Ground Ground Ground Ground Ground Ground Ground Ground

Sydney NSW Australia Central Hong Kong China Toronto ON Canada Sydney NSW Australia Salt Lake City UT USA Seattle WA USA Milwaukee WI USA Minneapolis MN USA St. Petersburg FL USA Atlanta GA USA Chicago IL USA New York NY USA New York NY USA New York NY USA New York NY USA Pasadena CA USA San Francisco CA USA Denver CO USA Boston MA USA Chicago IL USA Los Angeles CA USA La Jolla CA USA San Francisco CA USA Denver CO USA Boston MA USA Chicago IL USA Baltimore MD USA New York NY USA New York NY USA New York NY USA New York NY USA New York NY USA Chicago IL USA

Source: Stifel Nicolaus

Weight Actual

City

Total

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Exhibit 12: UPS and USPS shipment detail Shipment Method Carrier

41) 42) 43) 44) 45) 46) 47) 48) 49) 50) 51) 52) 53) 54) 55) 56) 57) 58) 59) 60) 61) 62) 63) 64) 65) 66) 67) 68) 69) 70) 71)

UPS UPS UPS UPS UPS UPS UPS UPS UPS UPS UPS UPS UPS UPS UPS UPS UPS UPS UPS UPS UPS UPS UPS UPS UPS UPS UPS UPS UPS UPS UPS

72) 73) 74) 75) 76) 77) 78) 79) 80) 81) 82) 83) 84) 85) 86) 87) 88) 89) 90) 91) 92)

USPS USPS USPS USPS USPS USPS USPS USPS USPS USPS USPS USPS USPS USPS USPS USPS USPS USPS USPS USPS USPS

Mode

Destination

Delivery

Weight Actual

Price

Billed

City

State

Country

Guarantee

Worldwide Expedited Worldwide Express Next Day Air Next Day Air Next Day Air Next Day Air Next Day Air Next Day Air Next Day Air Next Day Air Next Day Air Next Day Air Next Day Air 2nd Day Air 2nd Day Air 2nd Day Air Ground Commercial Ground Commercial Ground Commercial Ground Commercial Ground Commercial Ground Commercial Ground Commercial Ground Commercial Ground Commercial Ground Commercial Ground Commercial Ground Commercial Ground Commercial Ground Commercial Ground Commercial

Sydney Toronto Seattle Santa Fe Milwaukee Minneapolis Tampa Atlanta Chicago New York New York New York New York Los Angeles San Francisco Denver Los Angeles San Diego San Francisco Denver Boston Chicago Boston Chicago Chicago Baltimore New York New York New York New York New York

NSW ON WA NM WI MN FL GA IL NY NY NY NY CA CA CO CA CA CA CO MA IL MA IL IL MD NY NY NY NY NY

Australia USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA

1 day early On Time 1 day late 1 day late On Time On Time On Time On Time On Time On Time On Time On Time On Time On Time 5 days late On Time On Time On Time On Time On Time On Time On Time On Time On Time 1 day late On Time On Time On Time On Time On Time On Time

5.40 lbs 5.40 lbs 5.40 lbs 5.40 lbs 5.40 lbs 5.40 lbs 5.40 lbs 5.40 lbs 5.40 lbs 5.40 lbs 5.40 lbs 5.40 lbs 5.40 lbs 5.45 lbs 5.40 lbs 5.45 lbs 5.40 lbs 5.75 lbs 5.40 lbs 5.40 lbs 5.40 lbs 5.40 lbs 5.40 lbs 5.40 lbs 5.40 lbs 5.90 lbs 5.40 lbs 5.40 lbs 5.40 lbs 5.40 lbs 5.40 lbs

7.00 lbs 7.00 lbs 6.00 lbs 6.00 lbs 6.00 lbs 6.00 lbs 6.00 lbs 6.00 lbs 6.00 lbs 6.00 lbs 6.00 lbs 6.00 lbs 6.00 lbs 6.00 lbs 6.00 lbs 6.00 lbs 6.00 lbs 6.00 lbs 6.00 lbs 6.00 lbs 6.00 lbs 6.00 lbs 6.00 lbs 6.00 lbs 6.00 lbs 6.00 lbs 6.00 lbs 6.00 lbs 6.00 lbs 6.00 lbs 6.00 lbs

$179.32 $113.25 $96.48 $92.70 $83.08 $83.08 $83.08 $76.10 $76.10 $40.60 $40.60 $40.60 $40.60 $52.62 $52.62 $50.79 $18.64 $18.64 $18.64 $17.59 $15.64 $15.64 $15.64 $15.64 $15.64 $13.56 $13.56 $13.56 $13.56 $13.56 $13.56

GXG International GXG International Express Mail Express Mail Priority Priority Priority Priority Priority Priority Priority Priority Priority Priority Priority Priority Priority Parcel Post Parcel Post Parcel Post Parcel Post

Melbourne London San Mateo Chicago Baltimore Atlanta Boston Denver Los Angeles Milwaukee Minneapolis New York New York New York Portland San Francisco New York Los Angeles Chicago New York New York

VIC

Australia UK USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA

On Time On Time 1 day early On Time 1 day early 1 day early 1 day early 1 day early On Time On Time 1 day early 1 day early 1 day early 1 day early 1 day early 1 day early On Time 5 days early 4 days early 3 days early 4 days early

5.23 lbs 5.28 lbs 5.25 lbs 5.26 lbs 5.27 lbs 5.26 lbs 4.89 lbs 5.29 lbs 5.28 lbs 5.23 lbs 5.26 lbs 5.28 lbs 5.27 lbs 5.27 lbs 5.26 lbs 5.26 lbs 5.20 lbs 5.17 lbs 5.19 lbs 5.22 lbs 5.23 lbs

6.00 lbs 6.00 lbs

$121.00 $113.75 $54.85 $43.85 $11.65 $11.65 $11.65 $11.65 $11.65 $11.65 $11.65 $11.65 $11.65 $11.65 $11.65 $11.65 $9.45 $15.92 $12.83 $10.81 $10.81

Source: Stifel Nicolaus

CA IL MD GA MA CO CA WI MN NY NY NY OR CA NY CA IL NY NY

Total

54.20

51.5

2,790.4

75,282.7

Max

2,074.6

TEV

(a)

3,382.2

104.6

6,068.0

1,525.8

12,358.0

2,530.6

4,553.4

794.3

298.6

4,275.0

1,167.0

1,678.4

104.6

8,642.5

83,365.7

17,525.3

30,122.7

2,074.6

20.2x

18.3x

17.0x

17.0x

15.5x

18.2x

15.5x

15.8x

18.3x

2011E

(b)

16.3x

15.8x

14.0x

14.2x

13.0x

15.8x

13.4x

13.0x

14.6x

2012E

(b)

13.4x

14.0x

10.9x

11.5x

10.2x

14.0x

10.8x

11.1x

10.2x

2013E

(b)

3.4x

10.6x

2.2x

4.2x

1.8x

10.6x

2.1x

1.8x

2.3x

value

Equity value as a multiple of Book

0.4x

1.7x

1.6x

0.9x

0.9x

0.4x

1.6x

1.0x

0.7x

4.5x

7.5x

8.8x

4.5x

5.5x

4.0x

8.8x

4.0x

4.6x

Source: Com pany data , First Call, and Stifel Nicolaus estim ates

5.1x

10.0x

9.6x

5.5x

6.4x

4.7x

9.6x

4.7x

6.0x

4.7x

8.1x

9.2x

5.1x

6.0x

4.4x

9.2x

4.4x

5.6x

(c)

Enterprise value as a multiple of 2012E TTM TTM

Revenue EBITDA EBITDA EBITDAR

TTM

(a) Total Enterprise Value = Market Capitalization of Equity + Total Debt - Cash + Market Value of Minority Interest (b) Stifel Nicolaus estimates for those rated and First Call m ean estimates for unrated securities (c) Enterprise value adjusted to include the capitalization of off balance sheet operating leases with lease expense (or rent expense) being added back to EBITDA for the valuation multiple calculation (d) 2010E P/E divided by First Call mean or Stifel Nicolaus estimated long-term growth rate Excludes non-recurring items Calculations may vary due to rounding

7,417.8

15,995.0

Stifel Nicolaus Transportation Average

438.0

equiv.

Cash &

1,679.0 1,896.0 28,982.6

794.3

Debt

Total

Comparative Valuation Matrix

75,282.7 12,358.0 4,275.0 83,365.7

27,247.8

979.1

Mean

76.89

29,199.6

1,718.3

cap.

Market

Median

Buy

United Parcel Service (UPS)

320.5

56.1

S/O

Diluted

1,718.3

Buy

Ryder System (R)

91.12

30.62

3/1/2012

Closing Price

Min

Buy Buy

FedEx Corp. (FDX)

Rating

Con-way (CNW)

Asset-Based Logistics

Company name (Ticker)

(figures in $US millions, except per share amounts)

12.7x

14.5x

11.2x

11.7x

10.0x

12.1x

14.5x

10.4x

10.0x

EBIT

TTM

11.8%

ROE

TTM

TTM

8.1%

ROIC

13.1%

5.9%

5.2%

12.6%

4.6%

6.1%

2.5%

9.8%

70.9%

12.5%

26.7%

10.9%

9.9%

25.7%

9.0%

12.4%

5.9%

12.6% 70.9% 25.7%

2.5%

6.1% 10.9% 10.0%

3.1%

ROA

TTM

1.3

1.6

1.3

1.3

1.1

1.6

1.3

1.1

1.2

(d)

PEG ratio

Div.

2012E

0.6%

3.0%

1.7%

1.7%

0.6%

3.0%

2.1%

0.6%

1.3%

2.7%

4.0%

2.3%

-4.0%

-24.4%

4.0%

-24.4%

2.6%

1.9%

Yield FCF Yld

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Exhibit 13: Stifel Nicolaus Asset-Based Logistics Comps

Stifel, Nicolaus & Company, Inc.

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Stifel, Nicolaus & Company, Inc.

Exhibit 14: FDX Model FedEx Corporation Income Statement 1QA

FY 2011 2QA 3QA

4QA

2011A

1QA

FY 2012 2QA 3QE

4QE

2012E

1QE

FY 2013 2QE 3QE

4QE

2013E

2014E

1,491 12.0% 432 5.9% 1,923 10.6% 661 10.0% 2,584 10.4% 1,974 23.8% 148 10.4% 4,706 15.7%

1,489 8.5% 416 5.3% 1,905 7.8% 666 6.4% 2,571 7.4% 2,009 14.0% 165 9.3% 4,745 10.2%

1,514 7.1% 425 6.3% 1,939 6.9% 743 7.4% 2,682 7.1% 1,974 12.9% 158 11.3% 4,814 9.5%

1,634 10.0% 463 5.9% 2,097 9.0% 735 9.7% 2,832 9.2% 2,271 14.6% 182 20.5% 5,285 11.8%

6,128 9.4% 1,736 5.9% 7,864 8.6% 2,805 8.3% 10,669 8.5% 8,228 16.1% 653 13.0% 19,550 11.7%

1,640 10.0% 451 4.4% 2,091 8.7% 731 10.6% 2,822 9.2% 2,198 11.3% 207 39.9% 5,227 11.1%

1,623 9.0% 421 1.2% 2,044 7.3% 731 9.8% 2,775 7.9% 2,171 8.1% 217 31.5% 5,163 8.8%

1,717 5.1% 467 0.9% 2,184 4.1% 763 3.8% 2,947 4.1% 2,444 7.6% 219 20.2% 5,609 6.1%

6,678 9.0% 1,775 2.2% 8,453 7.5% 3,055 8.9% 11,508 7.9% 9,020 9.6% 849 30.1% 21,377 9.3%

1,688 3.0% 464 3.0% 2,153 3.0% 753 3.0% 2,906 3.0% 2,401 9.2% 194 -6.5% 5,501 5.2%

1,671 3.0% 434 3.0% 2,105 3.0% 753 3.0% 2,857 3.0% 2,371 9.2% 235 8.1% 5,463 5.8%

1,768 3.0% 481 3.0% 2,249 3.0% 786 3.0% 3,035 3.0% 2,669 9.2% 237 8.2% 5,941 5.9%

6,849 2.6% 1,821 2.6% 8,670 2.6% 3,133 2.6% 11,803 2.6% 9,812 8.8% 885 4.2% 22,500 5.3%

7,055 3.0% 1,876 3.0% 8,930 3.0% 3,227 3.0% 12,157 3.0% 10,715 9.2% 957 8.1% 23,829 5.9%

1,980 -8.5% 1,303 18.0% 251 -32.0% 3,534 -2.9% 525 12.9% 21,555 -3.6% 7,439 5.6% 4,321 -2.1% 1,770 -10.5% (351) 34,734 -2.1%

523 16.5% 406 56.2% 70 14.8% 999 29.7% 207 140.7% 5,912 20.1% 1,961 13.4% 1,258 28.1% 415 -8.0% (89) 9,457 18.1%

530 8.2% 435 35.5% 69 9.5% 1,034 18.3% 213 60.2% 5,992 12.8% 2,077 13.1% 1,221 14.3% 434 -6.7% (92) 9,632 12.1%

565 7.6% 412 25.2% 68 11.5% 1,045 14.2% 190 46.2% 6,049 11.2% 2,184 14.3% 1,123 8.0% 397 -2.2% (90) 9,663 11.1%

570 10.5% 469 19.3% 76 15.2% 1,115 14.4% 228 29.5% 6,628 12.8% 2,263 15.3% 1,309 6.3% 438 -2.2% (86) 10,552 11.9%

2,188 10.5% 1,722 32.2% 283 12.7% 4,193 18.6% 838 59.6% 24,581 14.0% 8,485 14.1% 4,911 13.7% 1,684 -4.9% (357) 39,304 13.2%

591 13.0% 449 10.6% 77 10.0% 1,117 11.8% 248 19.8% 6,592 11.5% 2,278 16.2% 1,328 5.6% 411 -1.0% (88) 10,521 11.3%

628 18.5% 470 8.0% 74 7.2% 1,172 13.3% 248 16.4% 6,583 9.9% 2,339 12.6% 1,325 8.5% 427 -1.6% (87) 10,587 9.9%

9,778 10,728 11,963 12,571 13,615 14,202 13,767 14,027 2,155 2,407 2,935 3,251 3,977 4,634 4,534 4,728 1,803 1,918 2,314 2,311 2,343 2,441 2,429 2,359 1,351 1,375 1,462 1,550 1,742 1,946 1,975 1,958 1,349 1,481 2,303 3,256 3,429 4,409 3,811 3,106 1,398 1,523 1,680 1,777 1,952 2,068 1,898 1,715 0 0 48 0 0 0 0 0 0 0 0 0 0 882 1,204 18 0 435 0 0 0 0 0 0 3,182 3,403 4,187 4,485 4,785 5,296 5,132 4,825 21,016 23,270 26,892 29,201 31,843 35,878 34,750 32,736

3,803 1,327 601 479 887 517 0 0 0 1,215 8,829

3,779 1,390 628 502 938 473 0 67 0 1,386 9,163

3,828 1,446 621 493 1,049 480 0 21 0 1,332 9,270

3,866 15,276 1,511 5,674 612 2,462 499 1,973 1,277 4,151 509 1,979 0 0 1 89 0 0 1,389 5,322 9,664 36,926

4,004 1,518 620 509 1,244 551 0 0 0 1,338 9,784

357 287 (16) 0 0 628

264 296 (91) 0 0 469

178 325 (110) 0 0 393

OPERATING RATIO FedEx Express FedEx Express - adjusted FedEx Ground FedEx Ground - adjusted FedEx Freight FedEx Freight - adjusted FedEx Services* FedEx Services - adjusted Total Operating Ratio Total Operating Ratio - adjusted

95.2% 96.4% 92.7% 91.4% 91.0% 92.2% 96.4% 94.8% 94.0% 95.2% 94.0% 92.5% 91.4% 91.0% 92.2% 96.4% 94.8% 94.0% 86.2% 86.6% 87.1% 86.7% 86.5% 89.1% 88.5% 86.2% 85.4% 86.2% 86.6% 87.1% 86.7% 86.5% 89.1% 88.5% 86.2% 85.4% 92.1% 90.9% 89.0% 86.7% 89.9% 93.3% 101.0% 103.5% 101.3% 92.1% 90.9% 89.0% 86.7% 89.9% 93.3% 98.7% 103.1% 101.3% NA 92.5% 95.2% 97.3% 97.8% NM NM 100.0% 100.0% NA 92.5% 95.2% 97.3% 97.8% 100.0% 100.0% 100.0% 100.0% 93.5% 94.2% 91.6% 90.4% 90.4% 94.5% 97.9% 94.2% 93.4% 93.5% 92.4% 91.4% 90.4% 90.4% 92.2% 94.5% 94.2% 93.4%

95.6% 94.5% 85.7% 85.7% 107.5% 102.0% 100.0% 100.0% 95.1% 94.4%

EBITDA % margin

2,820 12.5%

(figures in $ millions, except per share amounts) Fiscal Year End May 31 2003A 2004A 2005A REVENUE FedEx Express Package Revenue: U.S. Overnight Box 5,432 5,558 5,969 % change y/y 1.8% 2.3% 7.4% U.S. Overnight Envelope 1,715 1,699 1,798 % change y/y -2.3% -0.9% 5.8% Total U.S. Overnight 7,147 7,257 7,767 % change y/y 0.8% 1.5% 7.0% U.S. Deferred 2,510 2,593 2,799 % change y/y 5.3% 3.3% 7.9% Total U.S. Packages 9,657 9,850 10,566 % change y/y 1.9% 2.0% 7.3% International Priority 3,941 4,609 5,464 % change y/y 13.4% 17.0% 18.5% International Domestic NR NR NR % change y/y Total Package Revenue 13,598 14,459 16,030 % change y/y 5.0% 6.3% 10.9% Freight Revenue: U.S. 1,564 1,609 1,854 % change y/y 22.8% 2.9% 15.2% International Priority 426 522 671 % change y/y 19.1% 22.4% 28.4% International Airfreight 400 394 381 % change y/y 4.2% -1.5% -3.3% Total Freight Revenue 2,390 2,525 2,906 % change y/y 18.6% 5.6% 15.1% Other FedEx Express Revenue 479 513 550 % change y/y 1.7% 7.1% 7.2% Total FedEx Express Revenue 16,467 17,497 19,485 % change y/y 6.7% 6.3% 11.4% Total FedEx Ground Revenue 3,581 3,910 4,680 % change y/y 22.7% 9.2% 19.7% Total FedEx Freight Revenue 2,443 2,689 3,217 % change y/y 8.4% 10.1% 19.6% Total FedEx Services Revenue* 0 521 2,066 % change y/y NM Other (4) 93 (85) Total Consolidated Revenue 22,487 24,710 29,363 % change y/y 9.1% 9.9% 18.8% OPERATING EXPENSES Salaries and employee benefits Purchased transportation Rentals and landing fees Depreciation and amortization Fuel Maintenance and repairs Airline stabilization compensation Impairment (and other) charges Business realignment costs Other Total Operating Expenses OPERATING PROFIT FedEx Express FedEx Ground FedEx Freight FedEx Services* Other Total Operating Profit

783 494 193 0 1 1,471

Interest expense, net Other income (expense) Profit before tax % margin Income taxes

(1) - (18)

3,933 13.4%

2,218 19.6% 840 25.3% 434 13.9% 3,492 20.2% 566 2.9% 21,446 10.1% 5,306 13.4% 3,645 13.3% 2,088 1.1% (191) 32,294 10.0%

1,842 705 485 57 4 3,093

4,643 14.4%

2,412 8.7% 1,045 24.4% 394 -9.2% 3,851 10.3% 381 -32.7% 22,681 5.8% 6,043 13.9% 4,586 25.8% 2,040 -2.3% (136) 35,214 9.0%

2,050 813 463 45 0 3,371

5,113 14.5%

6,578 6,074 5,602 1.4% -7.7% -7.8% 2,012 1,855 1,640 1.1% -7.8% -11.6% 8,590 7,929 7,242 1.4% -7.7% -8.7% 2,995 2,789 2,589 3.9% -6.9% -7.2% 11,585 10,718 9,831 2.0% -7.5% -8.3% 7,666 6,978 7,087 14.0% -9.0% 1.6% 663 565 578 79.7% -14.8% 2.3% 19,914 18,261 17,496 7.9% -8.3% -4.2% 2,398 -0.6% 1,243 18.9% 406 3.0% 4,047 5.1% 460 20.7% 24,421 7.7% 6,751 11.7% 4,934 7.6% 2,138 4.8% (291) 37,953 7.8%

1,901 736 329 (891) 0 2,075

4,021 10.6%

2,165 -9.7% 1,104 -11.2% 369 -9.1% 3,638 -10.1% 465 1.1% 22,364 -8.4% 7,047 4.4% 4,415 -10.5% 1,977 -7.5% (306) 35,497 -6.5%

794 807 (44) (810) 0 747

2,722 7.7%

1,127 1,024 (153) 0 0 1,998

3,956 11.4%

1,107 11.7%

971 10.1%

429 417 42 0 0 888

1,228 1,325 (175) 0 0 2,378

288 407 42 0 0 737

1,698 12.2% 436 2.6% 2,134 10.1% 829 11.6% 2,964 10.5% 2,207 11.8% 207 30.8% 5,377 11.7%

650 605 15.0% 6.2% 452 492 9.8% 4.9% 73 72 7.5% -5.0% 1,175 1,170 12.5% 4.9% 230 230 21.1% 0.9% 6,783 7,009 12.1% 5.8% 2,466 2,480 12.9% 9.6% 1,157 1,313 3.1% 0.3% 400 440 0.8% 0.5% (90) (90) 10,716 11,152 10.9% 5.7%

1,721 1.4% 442 1.4% 2,163 1.4% 841 1.4% 3,004 1.4% 2,372 7.5% 220 6.4% 5,596 4.1%

2,474 623 662 672 636 13.1% 5.5% 5.3% 3.4% 5.1% 1,863 487 508 481 532 8.2% 8.4% 8.1% 6.4% 8.1% 296 78 75 73 73 4.7% 1.8% 1.7% -0.1% 1.5% 4,634 1,188 1,245 1,226 1,242 10.5% 6.4% 6.2% 4.3% 6.1% 956 220 250 250 280 14.1% -11.3% 0.8% 8.7% 21.7% 26,967 6,909 6,957 7,072 7,462 9.7% 4.8% 5.7% 4.3% 6.5% 9,563 2,472 2,538 2,631 2,696 12.7% 8.5% 8.5% 6.7% 8.7% 5,123 1,320 1,308 1,200 1,406 4.3% -0.6% -1.3% 3.7% 7.1% 1,678 440 510 460 470 -0.4% 7.1% 19.4% 15.0% 6.8% (355) (90) (90) (90) (90) 42,976 11,051 11,223 11,273 11,945 9.3% 5.0% 6.0% 5.2% 7.1%

2,593 2,724 4.8% 5.1% 2,008 2,172 7.8% 8.2% 300 304 1.2% 1.5% 4,901 5,200 5.8% 6.1% 1,000 1,075 4.6% 7.5% 28,401 30,104 5.3% 6.0% 10,337 11,098 8.1% 7.4% 5,235 5,663 2.2% 8.2% 1,880 1,960 12.0% 4.3% (360) (360) 45,493 48,465 5.9% 6.5%

3,982 4,145 4,198 16,328 4,265 4,285 4,354 4,501 17,404 18,356 1,576 1,656 1,666 6,415 1,692 1,707 1,747 1,792 6,938 7,392 623 691 698 2,632 684 698 707 723 2,811 2,960 518 681 688 2,396 722 729 742 764 2,957 3,151 1,200 1,251 1,255 4,950 1,203 1,196 1,229 1,265 4,893 5,118 511 544 547 2,153 558 560 573 588 2,279 2,402 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1,397 1,154 1,169 5,058 1,169 1,189 1,203 1,235 4,797 5,060 9,807 10,120 10,221 39,932 10,292 10,363 10,554 10,869 42,078 44,439

342 398 40 0 0 780

246 429 12 0 0 686

515 447 59 0 0 1,021

1,391 1,681 153 0 0 3,224

382 408 59 0 0 849

453 419 79 0 0 950

320 447 42 0 0 809

601 485 80 0 0 1,166

1,755 1,759 260 0 0 3,775

2,129 1,889 368 0 0 4,386

97.1% 93.5% 95.0% 95.6% 94.8% 96.4% 92.7% 94.8% 94.5% 93.5% 95.5% 92.0% 93.8% 92.9% 97.1% 93.5% 94.7% 95.6% 94.8% 96.4% 92.7% 94.8% 94.5% 93.5% 95.5% 92.0% 93.8% 92.9% 85.1% 81.6% 84.4% 82.1% 83.0% 82.6% 82.0% 82.4% 83.5% 83.5% 83.0% 82.0% 83.0% 83.0% 85.1% 81.6% 84.4% 82.1% 83.0% 82.6% 82.0% 82.4% 83.5% 83.5% 83.0% 82.0% 83.0% 83.0% 109.8% 96.8% 103.6% 96.8% 97.0% 99.0% 95.5% 97.0% 95.5% 94.0% 96.5% 94.3% 95.0% 93.5% 107.9% 96.7% 101.8% 96.8% 97.0% 99.0% 95.5% 97.0% 95.5% 94.0% 96.5% 94.3% 95.0% 93.5% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 95.9% 91.6% 93.9% 93.0% 92.6% 94.4% 91.7% 92.9% 93.1% 92.3% 93.6% 91.0% 92.5% 91.7% 95.7% 91.6% 93.9% 93.0% 92.6% 94.4% 91.7% 92.9% 93.1% 92.3% 93.6% 91.0% 92.5% 91.7% 886 9.2%

1,387 13.1%

4,351 11.1%

1,246 11.8%

1,298 12.3%

1,367 12.8%

1,709 15.3%

5,620 13.1%

1,571 14.2%

1,679 15.0%

1,551 13.8%

1,930 16.2%

6,731 14.8%

7,537 15.6%

(118) (15)

(116) (5)

(139) (19)

(104) (11)

(53) (8)

(54) (5)

(59) (11)

(71) (33)

(18) (7)

(23) (9)

(24) (9)

(12) (11)

(77) (36)

(11) (2)

(7) 4

(13) 0

(13) 0

(44) 2

(14) 0

(12) 0

(10) 0

(8) 0

(44) 0

(12) 0

1,319 5.3% 481

2,313 7.9% 876

2,978 9.2% 1,125

3,310 9.4% 1,235

2,016 5.3% 891

677 1.9% 579

1,894 5.5% 710

603 6.4% 223

437 4.5% 154

360 3.7% 129

865 8.2% 307

2,265 5.8% 813

724 6.9% 260

777 7.3% 280

674 6.3% 246

1,008 9.0% 368

3,183 7.4% 1,154

836 7.6% 305

938 8.4% 342

799 7.1% 292

1,158 9.7% 423

3,730 8.2% 1,362

4,374 9.0% 1,597

830

838

1,437

1,853

2,075

1,125

98

1,184

380

283

231

558

1,452

464

497

428

640

2,029

531

596

507

735

2,369

2,778

(5) 825 0 825 3.7%

232 1,070 0 1,070 4.3%

30 1,467 0 1,467 5.0%

(47) 1,806 0 1,806 5.6%

(59) 2,016 0 2,016 5.7%

696 1,821 0 1,821 4.8%

1,076 1,174 0 1,174 3.3%

0 1,184 0 1,184 3.4%

0 380 0 380 4.0%

86 369 0 369 3.8%

28 259 0 259 2.7%

0 558 0 558 5.3%

113 1,565 0 1,565 4.0%

0 464 0 464 4.4%

0 497 0 497 4.7%

0 428 0 428 4.0%

0 640 0 640 5.7%

0 2,029 0 2,029 4.7%

0 531 0 531 4.8%

0 596 0 596 5.3%

0 507 0 507 4.5%

0 735 0 735 6.2%

0 2,369 0 2,369 5.2%

0 2,778 0 2,778 5.7%

311

312

312

314

315

316

317

318

317

318

316

316

316

316

316

316

316

316

316

316

$3.76 $1.20 0.1% 107.6%

$1.16 6.0%

$0.81 7.4%

$1.75 32.3%

$4.94 31.2%

$1.46 21.1%

$1.57 35.1%

$1.35 66.2%

$2.03 15.5%

$6.41 29.9%

$1.68 15.2%

$1.89 19.8%

$1.61 18.6%

$2.33 14.9%

$7.50 17.0%

$8.80 17.3%

Average shares outstanding - diluted FY EPS - diluted (continuing operations) % change y/y

2,815 11.4%

1,414 604 354 100 (1) 2,471

6,422 6,485 7.6% 1.0% 1,974 1,990 9.8% 0.8% 8,396 8,475 8.1% 0.9% 2,853 2,883 1.9% 1.1% 11,249 11,358 6.5% 1.0% 6,139 6,722 12.4% 9.5% NR 369 NA 17,388 18,449 8.5% 6.1%

1,338 6.0% 508

Net income (loss) from continuing operations Extraordinary items (net of tax) Net income Preferred stock dividends Net income for common shareholders % margin

629 522 244 39 6 1,440

2006A 2007A 2008A 2009A 2010A

303

304

307

310

$2.73 15.6%

$3.52 29.2%

$4.78 35.8%

$5.98 25.1%

$6.68 $5.83 $3.76 11.7% -12.7% -35.5%

Certain prior year amounts have been reclassified to conform to the current year presentation. Differences may result due to rounding. * FedEx Services revenue, operating income and operating ratio included only FedEx Kinko's until F1Q08. As of F1Q08, FedEx Services, including FedEx Kinko's, is a different segment. (1) FY99 excludes net income contributions of $4.9mm by discontinued operations (2) F4Q01 includes $124 million charge ($102 million at FedEx Express and $22 million at Supply Chain Services) associated with curtailing certain aircraft modification and development programs and reorganizing SCS operations (3) F1Q02 FASB 142 impairment adjustment of $15.5 million after taxes (or $0.05 per diluted share) to reduce the carrying value of goodwill at a subsidiary of on of FedEx's non-reportable operating segments to its implied fair value (4) F2Q02 excludes $17 million pretax benefit from favorable resolution of a state sales tax matter in the Express division (5) F1Q03 includes an $8 million pretax gain from an insurance settlement (6) F1Q04 includes a $26 million aftertax benefit, or $0.08 per diluted share related to a favorable IRS ruling as well as $132 million pretax costs ($82 million aftertax), or $0.27 per diluted share, associated with the realignment of FedEx Express through early retirement and severance programs (7) F2Q04 includes $283 million pretax costs ($175 million aftertax), or $0.57 per diluted share, associated with the realignment of FedEx Express through early retirement and severance programs (8) F3Q04 includes $14 million pretax costs ($9 million aftertax), or $0.03 per diluted share, associated with the realignment of FedEx business units through early retirement and severance programs (9) F4Q04 includes $6 million pretax costs ($4 million aftertax), or $0.01 per diluted share, associated with the realignment of FedEx business units, as well as nonrecurring tax benefits totaling $0.04 per diluted share (10) F2Q05 includes a $48 million pretax charge (or $0.10 per diluted share), representing repayment of $29 million to the DOT and the write-off of a $19 million receivable and excludes a $0.04 per diluted share tax benefit from the reversal of valuation allowances on foreign tax credits from prior years (11) F1Q06 excludes $79 million pretax, or $0.15 per diluted share, non-cash one-time charge to adjust the accounting for certain facility leases, $75 million at FedEx Express and $4 million at Corporate (12) F2Q07 excludes $125 million pretax, or $0.25 per diluted share, one-time charge to reflect signing bonuses and other upfront comp of approx. $143mm partially offset by approx. $18mm reduction in variable incentive comp related to the new pilot labor contract (13) F3Q07 includes $0.08 per diluted share, one-time tax benefit attributable mainly to the conclusion of various state and federal audits and appeals and also includes an estimated $0.06 per diluted share negative impact related to severe winter storms in the quarter (14) F4Q07 excludes an estimated $30 million pretax, or $0.06 per diluted share, gain from a settlement with Airbus related to the A380 order cancellation (15) F4Q08 operating profit excludes $891 million pretax ($696 million after-tax), or $2.22 per diluted share, impairment charge at FedEx Services primarily related to change in use of Kinko's trade name and associated goodwill (16) F4Q09 excludes impairment and other charges of approximately $1.2bn ($1.1 billion, net of tax, or $3.46 per diluted share), including an $810mm goodwill impairment charge related to the Kinko's acquisition, $90mm goodwill impairment chargel related to the Watkins Motor Lines acquisition, $10mm of charges related to severance in the FedEx Freight segment, $260mm of aircraft-related charges and other charges primarily associated with aircraft-related lease and contract termination costs, and employee severance in FedEx Express segment (17) F2Q11 excludes one-time charges related to FedEx Freight network integration of $86mm, or $0.17 per diluted share, as well as a $66mm reserve taken for ATA settlement with a net effect of $0.10 per diluted share. (18) F3Q11 excludes one-time charges related to FedEx Freight network integration of $0.08 per diluted share, or $28mm ($43mm net of effective tax rate of 35.8%)

Source: Company data and Stifel Nicolaus estimates

A Parcel Shipping Experiment March 2, 2012

- 13 -

Stifel, Nicolaus & Company, Inc.

Exhibit 15: UPS Model United Parcel Service Income Statement 1999A 2000A 2001A 2002A 2003A 2004A 2005A 2006A 2007A 2008A 2009A

1QA

2010 2QA 3QA

4QA

5,240 5,664 5,479 5,393 5,621 6,084 6,381 6,778 6,738 6,559 11.7% 8.1% -3.3% -1.6% 4.2% 8.2% 4.9% 6.2% -0.6% -2.7% 2,694 2,910 2,928 2,902 3,015 3,193 3,258 3,424 3,359 3,325 9.3% 8.0% 0.6% -0.9% 3.9% 5.9% 2.0% 5.1% -1.9% -1.0% 14,379 15,428 15,984 15,985 16,726 17,683 18,971 20,254 20,888 21,394 6.5% 7.3% 3.6% 0.0% 4.6% 5.7% 7.3% 6.8% 3.1% 2.4% 22,313 24,002 24,391 24,280 25,362 26,960 28,610 30,456 30,985 31,278 8.1% 7.6% 1.6% -0.5% 4.5% 6.3% 6.1% 6.5% 1.7% 0.9%

5,456 -16.8% 2,859 -14.0% 19,843 -7.2% 28,158 -10.0%

1,382 0.1% 694 0.1% 5,026 3.1% 7,102 2.2%

1,463 11.3% 698 7.1% 5,108 5.9% 7,269 7.1%

1,466 8.8% 696 4.8% 5,129 5.6% 7,291 6.2%

1,950 2,177 2,344 2,111 22.8% 11.6% 7.7% -9.9% 6,554 7,488 8,294 7,176 11.9% 14.3% 10.8% -13.5% 585 616 655 412 9.8% 5.3% 6.3% -37.1% 9,089 10,281 11,293 9,699 13.9% 13.1% 9.8% -14.1%

584 25.9% 1,932 14.6% 123 36.7% 2,639 17.8%

561 17.4% 2,085 24.3% 125 37.4% 2,771 23.4%

569 6.2% 1,975 11.6% 132 13.8% 2,676 10.5%

(figures in $ millions, except per share amounts)

1QA

2011 2QA 3QA

4QA

1,524 5,835 7.9% 6.9% 887 2,975 4.4% 4.1% 5,669 20,932 7.2% 5.5% 8,080 29,742 7.0% 5.6%

1,495 8.2% 753 8.5% 5,295 5.4% 7,543 6.2%

1,562 6.8% 764 9.5% 5,411 5.9% 7,737 6.4%

1,588 8.3% 760 9.2% 5,419 5.7% 7,767 6.5%

1,584 6,229 3.9% 6.8% 1,022 3,299 15.2% 10.9% 6,064 22,189 7.0% 6.0% 8,670 31,717 7.3% 6.6%

651 2,365 2.8% 12.0% 2,242 8,234 9.7% 14.7% 154 534 33.9% 29.6% 3,047 11,133 9.2% 14.8%

629 7.7% 2,131 10.3% 140 13.8% 2,900 9.9%

672 19.8% 2,316 11.1% 151 20.8% 3,139 13.3%

2010A

1QE

2012 2QE 3QE

4QE

1,547 3.5% 779 3.5% 5,589 5.5% 7,915 4.9%

1,617 3.5% 791 3.5% 5,710 5.5% 8,118 4.9%

1,618 1.9% 775 1.9% 5,630 3.9% 8,023 3.3%

1,613 6,396 6,622 1.9% 2.7% 3.5% 1,040 3,385 3,522 1.8% 2.6% 4.0% 6,326 23,255 24,482 4.3% 4.8% 5.3% 8,980 33,036 34,626 3.6% 4.2% 4.8%

660 667 2,628 636 685 676 16.0% 2.5% 11.1% 1.1% 2.0% 2.4% 2,251 2,358 9,056 2,237 2,456 2,396 14.0% 5.2% 10.0% 5.0% 6.1% 6.5% 146 128 565 126 136 131 10.6% -16.9% 5.8% -10.0% -10.0% -10.0% 3,057 3,153 12,249 2,999 3,277 3,203 14.2% 3.5% 10.0% 3.4% 4.4% 4.8%

683 2,679 2,843 2.3% 1.9% 6.1% 2,509 9,599 10,384 6.4% 6.0% 8.2% 134 528 554 5.0% -6.6% 5.0% 3,326 12,806 13,782 5.5% 4.5% 7.6%

2011A

2012E

2013E

REVENUE U.S. Domestic Package: Next Day Air % change y/y Deferred % change y/y Ground % change y/y Total U.S. Domestic Package % change y/y International Package: Domestic % change y/y Export % change y/y Cargo % change y/y Total International Package % change y/y Supply Chain and Freight Forwarding and Logistics % change y/y Freight % change y/y Other % change y/y Total Supply Chain and Freight % change y/y Total consolidated revenue % change y/y

238 582 171 303 388 434 120.4% 144.5% -70.6% 77.2% 28.1% 11.9% 841 1,418 1,650 2,272 2,514 2,813 50.2% 68.6% 16.4% 37.7% 10.7% 11.9% 26,872 29,498 30,321 31,272 33,485 36,582 9.3% 9.8% 2.8% 3.1% 7.1% 9.2%

OPERATING EXPENSES Compensation and benefits Repairs and maintenance Depreciation and amortization Purchased transportation Fuel Other occupancy Other expenses Total operating expenses Total operating ratio

15,285 16,546 17,311 18,046 19,251 20,760 22,517 24,421 25,577 26,063 25,640 6,539 6,515 6,411 6,859 26,324 6,608 6,683 6,694 7,730 27,715 6,885 7,045 6,960 7,454 28,344 29,827 945 843 927 873 955 1,005 1,097 1,150 1,157 1,194 1,075 274 281 282 294 1,131 315 317 324 330 1,286 301 322 306 305 1,233 1,298 1,139 1,173 1,396 1,464 1,549 1,543 1,644 1,748 1,745 1,814 1,747 451 449 448 444 1,792 441 443 447 451 1,782 463 477 470 508 1,918 2,018 1,499 1,679 1,652 1,665 1,828 2,059 4,050 5,467 5,902 6,550 5,379 1,501 1,613 1,656 1,870 6,640 1,648 1,762 1,796 2,026 7,232 1,736 1,848 1,822 2,032 7,437 7,828 681 954 1,000 952 1,050 1,416 2,085 2,655 2,974 4,134 2,365 678 717 724 853 2,972 908 1,057 1,015 1,066 4,046 926 954 940 1,041 3,861 4,063 373 527 647 653 730 752 872 938 958 1,027 985 262 216 222 239 939 261 225 229 228 943 278 262 259 279 1,078 1,134 3,045 3,264 3,426 3,614 3,653 3,885 4,173 4,446 4,412 4,747 4,305 981 1,011 833 1,048 3,873 975 1,006 1,042 1,138 4,161 984 1,013 999 1,079 4,075 4,289 22,967 24,986 26,359 27,267 29,016 31,420 36,438 40,825 42,725 45,529 41,496 10,686 10,802 10,576 11,607 43,671 11,156 11,493 11,547 12,969 47,165 11,571 11,921 11,756 12,699 47,947 50,457 85.5% 84.7% 86.9% 87.2% 86.7% 85.9% 85.6% 85.9% 86.0% 88.4% 91.6% 91.1% 88.5% 86.7% 86.5% 88.1% 88.7% 87.1% 87.7% 91.6% 88.8% 88.0% 86.1% 85.7% 85.9% 86.4% 85.8%

By segment: OPERATING EXPENSES U.S. Domestic Package International Package Supply Chain and Freight Total operating expenses

18,807 20,073 20,422 20,530 21,705 23,104 24,117 25,446 26,204 27,371 25,839 6,442 6,521 6,380 7,037 26,380 6,694 6,756 6,752 7,381 27,583 6,930 6,929 6,816 7,664 28,339 29,527 3,488 3,801 4,141 4,393 4,877 5,641 6,483 7,379 8,381 9,686 8,332 2,212 2,250 2,257 2,510 9,229 2,454 2,642 2,648 2,656 10,400 2,548 2,732 2,673 2,760 10,713 11,387 672 1,112 1,796 2,344 2,458 2,675 5,838 8,000 8,094 8,472 7,144 1,896 2,031 2,048 2,118 8,093 2,008 2,128 2,147 2,152 8,435 2,094 2,261 2,267 2,274 8,895 9,543 22,967 24,986 26,359 27,267 29,040 31,420 36,438 40,825 42,679 45,529 41,315 10,550 10,802 10,685 11,665 43,702 11,156 11,526 11,547 12,189 46,418 11,571 11,921 11,756 12,699 47,947 50,457

OPERATING PROFIT U.S. Domestic Package International Package Supply Chain and Freight Total operating profit

924 -3.0% 2,479 13.9% 315 22.6% 3,718 9.8%

904 -2.2% 2,818 13.7% 356 13.0% 4,078 9.7%

907 0.3% 2,966 5.3% 407 14.3% 4,280 5.0%

943 4.0% 3,316 11.8% 461 13.3% 4,720 10.3%

1,134 20.3% 4,049 22.1% 426 -7.6% 5,609 18.8%

1,346 18.7% 4,991 23.3% 472 10.8% 6,809 21.4%

603 33.4% -

836 38.6% -

1,479 76.9% -

1,969 33.1% -

2,126 8.0% -

2,379 11.9% -

3,506 230 169 3,905

3,929 277 306 4,512

3,969 139 (146) 3,962

3,750 327 (72) 4,005

3,657 732 56 4,445

3,856 1,168 138 5,162

1,588 18.0% 5,856 17.3% 533 12.9% 7,977 17.2%

4,737 5,681 5,911 6,293 99.1% 19.9% 4.0% 6.5% 797 1,952 2,108 2,191 NM NM 8.0% 3.9% 460 369 407 431 6.0% -19.8% 10.3% 5.9% 5,994 8,002 8,426 8,915 113.1% 33.5% 5.3% 5.8% 42,581 47,547 49,692 51,486 16.4% 11.7% 4.5% 3.6%

4,493 1,494 156 6,143

5,010 1,710 2 6,722

4,781 1,900 332 7,013

3,907 1,607 443 5,957

5,080 1,391 1,498 1,536 1,597 6,022 1,429 1,539 1,552 1,583 6,103 1,458 1,616 1,630 1,662 6,365 6,875 -19.3% 16.2% 26.6% 22.9% 10.1% 18.5% 2.7% 2.7% 1.0% -0.9% 1.3% 2.0% 5.0% 5.0% 5.0% 4.3% 8.0% 1,943 492 555 581 580 2,208 604 660 667 632 2,563 658 719 727 689 2,794 3,017 -11.3% 8.4% 9.5% 14.1% 22.6% 13.6% 22.8% 18.9% 14.8% 9.0% 16.1% 9.0% 9.0% 9.0% 9.0% 9.0% 8.0% 417 104 111 108 117 440 106 116 123 128 473 111 122 129 134 497 512 -3.2% 6.1% 6.7% 3.8% 5.4% 5.5% 1.9% 4.5% 13.9% 9.4% 7.5% 5.0% 5.0% 5.0% 5.0% 5.0% 3.0% 7,440 1,987 2,164 2,225 2,294 8,670 2,139 2,315 2,342 2,343 9,139 2,227 2,457 2,486 2,485 9,656 10,403 -16.5% 13.6% 20.6% 19.4% 12.8% 16.5% 7.6% 7.0% 5.3% 2.1% 5.4% 4.1% 6.1% 6.1% 6.1% 5.7% 7.7% 45,297 11,728 12,204 12,192 13,421 49,545 12,582 13,191 13,166 14,166 53,105 13,142 13,853 13,712 14,791 55,498 58,811 -12.0% 7.2% 12.7% 9.3% 8.4% 9.4% 7.3% 8.1% 8.0% 5.6% 7.2% 4.4% 5.0% 4.1% 4.4% 4.5% 6.0%

2,319 1,367 296 3,982

660 427 91 1,178

748 521 133 1,402

911 419 177 1,507

1,043 537 176 1,756

3,362 1,904 577 5,843

849 446 131 1,426

981 497 187 1,665

1,015 409 195 1,619

1,289 497 191 1,977

4,134 1,849 704 6,687

985 451 134 1,570

1,189 546 197 1,932

1,207 530 219 1,956

1,316 565 211 2,092

4,698 2,093 760 7,551

5,099 2,394 860 8,354

OPERATING RATIO U.S. Domestic Package International Package Supply Chain and Freight Total operating ratio

84.3% 83.6% 83.7% 84.6% 85.6% 85.7% 84.3% 83.6% 84.6% 87.5% 91.8% 90.7% 89.7% 87.5% 87.1% 88.7% 88.7% 87.3% 86.9% 85.1% 87.0% 87.6% 85.4% 85.0% 85.4% 85.8% 85.3% 93.8% 93.2% 96.8% 93.1% 86.9% 82.8% 81.3% 81.2% 81.5% 85.8% 85.9% 83.8% 81.2% 84.3% 82.4% 82.9% 84.6% 84.2% 86.6% 84.2% 84.9% 85.0% 83.4% 83.5% 83.0% 83.7% 82.6% 79.9% 78.4% 108.8% 103.2% 97.8% 95.1% 97.4% 100.0% 96.1% 95.0% 96.0% 95.4% 93.9% 92.0% 92.3% 93.3% 93.9% 91.9% 91.7% 91.8% 92.3% 94.0% 92.0% 91.2% 91.5% 92.1% 91.7% 85.5% 84.7% 86.9% 87.2% 86.7% 85.9% 85.6% 85.9% 86.0% 88.4% 91.6% 91.1% 88.5% 86.7% 86.5% 88.1% 88.7% 87.1% 87.7% 91.6% 88.8% 88.0% 86.1% 85.7% 85.9% 86.4% 85.8%

EBITDA % margin

5,044 18.8%

5,685 19.3%

5,358 17.7%

5,469 17.5%

5,994 17.9%

6,705 18.3%

7,787 18.3%

8,470 17.8%

8,758 17.6%

7,771 15.1%

5,729 12.6%

1,629 13.9%

1,851 15.2%

1,955 16.0%

2,200 16.4%

7,635 15.4%

1,867 14.8%

2,108 16.0%

2,066 15.7%

2,428 17.1%

8,469 15.9%

2,033 15.5%

2,408 17.4%

2,427 17.7%

2,600 17.6%

9,468 17.1%

197

527

159

63

76

82

104

86

99

75

10

(4)

(18)

15

10

3

11

9

16

8

44

14

14

14

14

56

57

Interest expense Other income (expense)

(228) (1,786)

(205) 0

(184) 0

(173) 0

(121) 0

(149) 0

(172) 0

(211) 0

(246) 0

(442) 0

(368) 0

(85) 0

(84) 0

(91) 0

(94) 0

(354) 0

(85) 0

(83) 0

(84) 0

(96) 0

(348) 0

(101) 0

(101) 0

(99) 0

(96) 0

(398) 0

(367) 0

Profit before tax % margin Income taxes Tax rate

2,088 7.8% 1,205 57.7%

4,834 16.4% 1,900 39.3%

3,937 13.0% 1,512 38.4%

3,895 12.5% 1,473 37.8%

4,400 13.1% 1,629 37.0%

5,095 13.9% 1,794 35.2%

6,075 14.3% 2,205 36.3%

6,597 13.9% 2,392 36.3%

6,866 13.8% 2,497 36.4%

5,590 10.9% 2,012 36.0%

3,624 8.0% 1,308 36.1%

1,089 9.3% 381 35.0%

1,300 10.7% 455 35.0%

1,431 11.7% 501 35.0%

1,672 12.5% 585 35.0%

5,492 11.1% 1,922 35.0%

1,352 10.7% 467 34.5%

1,591 12.1% 548 34.4%

1,551 11.8% 509 32.8%

1,889 13.3% 666 35.3%

6,383 12.0% 2,190 34.3%

1,483 11.3% 519 35.0%

1,844 13.3% 646 35.0%

1,871 13.6% 655 35.0%

2,010 13.6% 704 35.0%

7,209 13.0% 2,523 35.0%

8,044 13.7% 2,815 35.0%

Investment income

(16)

(17)

Net income (loss) from continuing operations (1) - (18)

Extraordinary items (net of tax) Net income Preferred stock dividends Net income for common shareholders % margin

10,372 17.6%

883

2,934

2,425

2,422

2,771

3,301

3,870

4,205

4,369

3,578

2,316

708

845

930

1,087

3,570

885

1,043

1,042

1,223

4,193

964

1,199

1,216

1,307

4,686

5,229

1,442 2,325 0 2,325 8.7%

(139) 2,795 0 2,795 9.5%

(26) 832 2,399 3,254 0 0 2,399 3,254 7.9% 10.4%

127 2,898 0 2,898 8.7%

32 3,333 0 3,333 9.1%

0 3,870 0 3,870 9.1%

(3) 4,202 0 4,202 8.8%

(3,987) 382 0 382 0.8%

(575) 3,003 0 3,003 5.8%

(164) 2,152 0 2,152 4.8%

(175) 533 0 533 4.5%

0 845 0 845 6.9%

61 991 0 991 8.1%

32 1,119 0 1,119 8.3%

(82) 3,488 0 3,488 7.0%

0 885 0 885 7.0%

20 1,063 0 1,063 8.1%

0 1,042 0 1,042 7.9%

0 1,223 0 1,223 8.6%

20 4,213 0 4,213 7.9%

0 964 0 964 7.3%

0 1,199 0 1,199 8.7%

0 1,216 0 1,216 8.9%

0 1,307 0 1,307 8.8%

0 4,686 0 4,686 8.4%

0 5,229 0 5,229 8.9%

1,175

1,144

1,138

1,137

1,116

1,089

1,063

1,022

1,004

1,004

1,003

1,004

1,004

1,004

1,002

998

987

977

991

971

965

960

956

963

951

$2.14 $2.44 1.8% 14.0% $2.87 $2.55 35.4% -11.3%

$2.90 19.2% $2.93 15.1%

$3.47 19.4% $3.47 18.3%

$3.86 $4.11 $3.50 $2.31 11.3% 6.5% -14.9% -34.1% $3.86 $0.36 $2.93 $2.14 11.4% -90.7% NM -26.8%

$0.71 36.8% $0.53 32.8%

$0.84 71.6% $0.84 90.1%

$0.93 69.4% $0.99 80.5%

$1.08 43.6% $1.11 47.8%

$3.56 54.2% $3.47 62.1%

$0.88 25.2% $0.88 66.4%

$1.05 24.1% $1.07 26.4%

$1.06 14.0% $1.06 7.0%

$1.25 15.6% $1.25 12.3%

$4.23 19.0% $4.25 22.3%

$0.99 12.4% $0.99 12.4%

$1.24 18.9% $1.24 16.7%

$1.27 20.0% $1.27 20.0%

$1.37 9.2% $1.37 9.2%

$4.87 15.0% $4.87 14.5%

$5.50 12.9% $5.50 12.9%

Average shares outstanding - diluted

1,141

EPS - diluted (continuing operations) % change y/y EPS - diluted % change y/y

$2.04 29.7% $0.77 -50.7%

$2.38 $2.10 16.7% -11.8% $2.50 $2.12 NM -15.1%

1,134

Certain prior year amounts have been reclassified to conform to the current year presentation Effective January 1, 2005, UPS changed its reporting segments and restated income statement and operating statistic financials with no impact on cash flow or earnings back to 2001. Financials prior to 2001 are not on the same basis by segment and product. (1) 1999 Net Income excludes the tax assessment charge incurred in the second quarter of $1.786 billion pretax. The tax assessment reduced 1999 net income by $1.442 billion. (2) 2000 Net Income excludes $139 million related primarily to investment gains. Specifically, a $49 million gain from sale of UPS Truck Leasing subsidiary, $241 million gain on investment held by UPS' Strategic Enterprise Fund in two companies that were acquired by other companies, and a $59 million charge for retroactive costs associated with creating new full-time jobs from existing part-time Teamster jobs. (3) 2001 Net Income excludes $26 million related to FAS 133 cumulative adjustment. (4) 2002 Net Income excludes $1.114 billion pre-tax in extraordinary items, net ($832 million after-tax). Specifically, a $1.023 billion credit to expense related to the difference between an original tax assessment expense charge recorded in 1999 and the estimated settlement amount now approved, a $106 million restructuring charge in connection with reorganization of non-package operations, and a credit to operating expenses for the elimination of $197 million in vacation liability due to change in accounting methodology. (5) 1Q03 Net Income excludes $55 million reduction in income taxes ($0.05 per diluted share benefit) due to the resolution of a number of outstanding tax issues. Those gains were partially offset by a writedown for $58 million ($0.03 per share) of UPS's marketable securities, reflecting market conditions. (6) 2Q03 Net Income excludes $24 million charge resulting from the sale of the company's Mail Technologies unit, as well as a $38 million one-time tax benefit (7) 3Q03 Net Income excludes $24 million pretax gain on sale of UPS Aviation Technologies in the Non-Package segment as well as $22 million income tax reduction benefit based on a federal court ruling regarding the expensing of aircraft maintenance costs. (8) 4Q03 Net Income excludes $28 million pre-tax ($18 million after-tax) gain for the redemption of long-term debt. In addition, the company lowered its effective tax rate to reflect improvements in state taxes, thus reducing the provision for income taxes. This $39 million benefit has been excluded from net (9) 3Q04 Net Income excludes $99 million credit to tax expense due to the resolution of various tax matters (10) 4Q04 Net Income excludes $110 million impairment charge ($70 million after-tax) on Boeing 727, 747, and McDonnell Douglas DC-8 aircraft, and related engines and parts, of which $91 million was related to the U.S. domestic package segment and $19 million to the International package segment. 4Q04 also excludes a $63 million charge ($40 million after-tax) to pension expense resulting from the consolidation of data collection systems in the U.S. domestic package segment. In addition, 4Q04 net income excludes net credits to income tax expense of $43 million related to various items, including the resolution of certain tax matters, the removal of a portion of the valuation allowances on certain deferred tax assets on NOL carryforwards and an adjustment for identified tax contingency items. (11) 3Q06 Net Income excludes $87 million pretax charge for a tentative legal settlement involving a wage-and-hour case in California as well as a $52 million income tax benefit related to favorable developments with certain international tax issues. (12) 1Q07 excludes $221 million in pretax impairment charges on Boeing 727 and 747 aircraft, and related engines and parts ($159 million - U.S. Domestic Package and $62 million - International Package), due to the acceleration of the planned retirement of these aircraft. In addition, 1Q07 excludes a $68 million pretax charge ($53 million - U.S. Domestic Package, $7 million - International Package, and $8 million - Supply Chain & Freight) related to the special voluntary separation opportunity offered to about 640 employees to reflect the cash payout and acceleration of stock compensation and certain retiree healthcare benefits under the program. After-tax charges excluded in 1Q07 net income totaled $184 million. (13) 3Q07 excludes $46 million pretax charge ($31 million aftertax) related to the restructuring and disposal of certain operations in France within the Supply Chain segment. (14) 4Q07 excludes the $6.1 billion pre-tax ($3.8 billion after-tax) withdrawal payment to the Central States pension fun in the Domestic Package segment and on the compensation and benefits line (15) 4Q08 excludes a $548 million goodwill impairment charge for UPS Freight and a $27 million intangible impairment charge for a customer list in UK domestic package business (16) 1Q09 excludes a $181 million ($116 million after-tax) charge for on the company's DC-8 airframes, engines and parts due to an acceleration of the planned retirement of those aircraft (17) 2Q09 excludes a $77 million charge for the remeasurement of certain obligations denominated in foreign currencies, in which hedge accounting was not able to be applied. 2Q09 investment income includes $17mm write-down related to certain preferred shares and auction rate securities (marked down to (18) 1Q10 excludes a $98 million restructuring charge related to the reorganization of Domestic Package's management structure - voluntary retirement benefits, severance, and unvested stock compensation, as well as a $38 million loss on the sale of a specialized transportation business in Germany ($99mm after-tax, in total), plus a $76mm charge to income tax expense, resulting from a change in the tax filing status of a German subsidiary (19) 3Q10 U.S. Domestic Package operating profit and consolidated income before income taxes exclude a $109 million gain on the sale of real estate; net income and earnings per share amounts exclude the after-tax effect of that real estate sale, which totaled $61 million. (20) 4Q10 Supply Chain & Freight operating profit excludes a $71mm gain on the sale of UPS Logistics Technologies, partially offset by the exclusion of a $13mm fair value adjustment loss related to the guarantee associated with the sale of a specialized transportation business in Germany that occurred in 1Q10, for a net exclusion of $58mm; net income and earnings per share amounts exclude the after tax-effect of the sale and fair value adjustment, which totaled $32mm, or $0.03 per diluted share (21) 2Q11 operating profit and consolidated income before taxes excludes the impact of certain real estate transactions, including a $15 million loss for the U.S. Domestic Package segment and a $48 million gain in the Supply Chain & Freight segment, for a combined impact of $33mm ($20mm after-taxes) (22) 4Q11 operating profit and consolidated income before income taxes excluded the impact of the pension mark-to-market loss related to pension expense recognized outside of a 10% corridor of $827 million, allocated between U.S. Domestic Package segment ($479 million), International Package segment ($171 million), and Supply Chain & Freight segment ($177 million); net of taxes, exlusion totals $527mm Source: Company data and Stifel Nicolaus estimates

A Parcel Shipping Experiment March 2, 2012

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Stifel, Nicolaus & Company, Inc.

Important Disclosures and Certifications I, David Ross, certify that the views expressed in this research report accurately reflect my personal views about the subject securities or issuers; and I, David Ross, certify that no part of my compensation was, is, or will be directly or indirectly related to the specific recommendation or views contained in this research report. For our European Conflicts Management Policy go to the research page at www.stifel.com.

Source: Blue Matrix, Stifel Nicolaus For a price chart with our ratings and target price changes for FDX go to http://sf.bluematrix.com/bluematrix/ Disclosure?ticker=FDX

Source: Blue Matrix, Stifel Nicolaus For a price chart with our ratings and target price changes for UPS go to http://sf.bluematrix.com/bluematrix/ Disclosure?ticker=UPS

A Parcel Shipping Experiment March 2, 2012

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Stifel, Nicolaus & Company, Inc.

Stifel, Nicolaus & Company, Inc. expects to receive or intends to seek compensation for investment banking services from FedEx Corporation and United Parcel Service, Inc. in the next 3 months. Stifel, Nicolaus & Company, Inc. makes a market in the securities of FedEx Corporation and United Parcel Service, Inc.. Stifel, Nicolaus & Company, Inc.'s research analysts receive compensation that is based upon (among other factors) Stifel Nicolaus' overall investment banking revenues. Our investment rating system is three tiered, defined as follows: BUY -For U.S. securities we expect the stock to outperform the S&P 500 by more than 10% over the next 12 months. For Canadian securities we expect the stock to outperform the S&P/TSX Composite Index by more than 10% over the next 12 months. For other non-U.S. securities we expect the stock to outperform the MSCI World Index by more than 10% over the next 12 months. For yield-sensitive securities, we expect a total return in excess of 12% over the next 12 months for U.S. securities as compared to the S&P 500, for Canadian securities as compared to the S&P/TSX Composite Index, and for other non-U.S. securities as compared to the MSCI World Index. HOLD -For U.S. securities we expect the stock to perform within 10% (plus or minus) of the S&P 500 over the next 12 months. For Canadian securities we expect the stock to perform within 10% (plus or minus) of the S&P/TSX Composite Index. For other non-U.S. securities we expect the stock to perform within 10% (plus or minus) of the MSCI World Index. A Hold rating is also used for yield-sensitive securities where we are comfortable with the safety of the dividend, but believe that upside in the share price is limited. SELL -For U.S. securities we expect the stock to underperform the S&P 500 by more than 10% over the next 12 months and believe the stock could decline in value. For Canadian securities we expect the stock to underperform the S&P/TSX Composite Index by more than 10% over the next 12 months and believe the stock could decline in value. For other non-U.S. securities we expect the stock to underperform the MSCI World Index by more than 10% over the next 12 months and believe the stock could decline in value. Of the securities we rate, 51% are rated Buy, 47% are rated Hold, and 2% are rated Sell. Within the last 12 months, Stifel, Nicolaus & Company, Inc. or an affiliate has provided investment banking services for 17%, 10% and 0% of the companies whose shares are rated Buy, Hold and Sell, respectively.

A Parcel Shipping Experiment March 2, 2012

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Additional Disclosures FedEx Corporation is on the Stifel Analyst Select List. This Select List includes companies that Stifel Nicolaus analysts believe have the potential for the greatest total return in each of their respective areas of coverage over approximately the next 12 months. In some cases, analysts who cover more than one sub-sector may have more than one name on the list. United Parcel Service, Inc. is on the Stifel Nicolaus Income Opportunity Ideas List. This Income Opportunity Ideas List represents our Stifel Nicolaus analysts’ best yield ideas, however is not intended to represent a model portfolio. Each stock is on the Buy List, and offers what Stifel Nicolaus analysts believe are companies with solid fundamentals, a favorable valuation, and a current dividend higher than that of the S&P 500 Index. Please visit the Research Page at www.stifel.com for the current research disclosures applicable to the companies mentioned in this publication that are within Stifel Nicolaus' coverage universe. For a discussion of risks to target price please see our stand-alone company reports and notes for all Buy-rated stocks. The information contained herein has been prepared from sources believed to be reliable but is not guaranteed by us and is not a complete summary or statement of all available data, nor is it considered an offer to buy or sell any securities referred to herein. Opinions expressed are subject to change without notice and do not take into account the particular investment objectives, financial situation or needs of individual investors. Employees of Stifel, Nicolaus & Company, Inc. or its affiliates may, at times, release written or oral commentary, technical analysis or trading strategies that differ from the opinions expressed within. Past performance should not and cannot be viewed as an indicator of future performance. Stifel, Nicolaus & Company, Inc. is a multi-disciplined financial services firm that regularly seeks investment banking assignments and compensation from issuers for services including, but not limited to, acting as an underwriter in an offering or financial advisor in a merger or acquisition, or serving as a placement agent in private transactions. Moreover, Stifel Nicolaus and its affiliates and their respective shareholders, directors, officers and/or employees, may from time to time have long or short positions in such securities or in options or other derivative instruments based thereon. These materials have been approved by Stifel Nicolaus Europe Limited, authorized and regulated by the Financial Services Authority (UK), in connection with its distribution to professional clients and eligible counterparties in the European Economic Area. (Stifel Nicolaus Europe Limited home office: London +44 20 7557 6030.) No investments or services mentioned are available in the European Economic Area to retail clients or to anyone in Canada other than a Designated Institution. This investment research report is classified as objective for the purposes of the FSA rules. Please contact a Stifel Nicolaus entity in your jurisdiction if you require additional information. The use of information or data in this research report provided by or derived from Standard & Poor’s Financial Services, LLC is © 2012, Standard & Poor’s Financial Services, LLC (“S&P”). Reproduction of Compustat data and/or information in any form is prohibited except with the prior written permission of S&P. Because of the possibility of human or mechanical error by S&P’s sources, S&P or others, S&P does not guarantee the accuracy, adequacy, completeness or availability of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. S&P GIVES NO EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE. In no event shall S&P be liable for any indirect, special or consequential damages in connection with subscriber’s or others’ use of Compustat data and/or information. For recipient’s internal use only. Additional Information Is Available Upon Request

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