It is reasonably possible that such legislation or regulation could impose material costs on us. Until the timing, scope and extent of any future regulation becomes known, we cannot predict its effect on our cost structure or our operating results. These costs include an increase in the cost of the fuel and other energy we purchase and capital costs associated with updating or replacing our aircraft or vehicles prematurely. Even in the absence of such legislation, the Environmental Protection Agency, spurred by judicial interpretation of the Clean Air Act, may regulate GHG emissions, especially aircraft or diesel engine emissions, and this could impose substantial costs on us. While these bills have not yet received sufficient Congressional support for enactment, some form of federal climate change legislation is possible in the future. Congress has considered various bills that would regulate GHG emissions. For example, in the past several years, the U.S. or in any of the countries in which we operate could result in substantial fines or possible revocation of our authority to conduct our operations, which could adversely affect our financial performance.Ĭoncern over climate change, including the impact of global warming, has led to significant federal, state and international legislative and regulatory efforts to limit greenhouse gas (“GHG”) emissions. Any failure to comply with applicable laws or regulations in the U.S. Compliance with new laws and regulations may increase our operating costs or require significant capital expenditures. The impact of new laws, regulations and policies cannot be predicted. Changes in laws, regulations and policies and the related interpretations may alter the landscape in which we do business and may affect our costs of doing business. In addition, our business is impacted by laws, regulations and policies that affect global trade, including tariff and trade policies, export requirements, taxes, monetary policies and other restrictions and charges. and in the other countries in which we operate. We are subject to complex and stringent aviation, transportation, environmental, security, labor, employment and other governmental laws, regulations and policies, both in the U.S. If these factors drove some of our large customers to cancel all or a portion of their business relationships with us, it could materially impact the growth in our business and the ability to meet our current and long-term financial forecasts. These customers could choose to divert all or a portion of their business with us to one of our competitors, demand pricing concessions for our services, require us to provide enhanced services that increase our costs, or develop their own shipping and distribution capabilities. These customers can drive the growth in revenue for particular services based on factors such as: new customer product launches trends in the e-commerce industry, such as the seasonality associated with the fourth quarter holiday season business mergers and acquisitions and the overall fast growth of a customer's underlying business. We do not believe the loss of any single customer would materially impair our overall financial condition or results of operations however, collectively, some of our large customers might account for a relatively significant portion of the growth in revenue in a particular quarter or year. No single customer accounts for 10% or more of our consolidated revenue. The efficiency and flexibility of our international air transportation network is dependent on DOT and foreign government regulations and operating restrictions. UPS Airlines has international route operating rights granted by the DOT and we may apply for additional authorities when those operating rights are available and are required for the efficient operation of our international network. We are also subject to current and potential aviation regulations imposed by foreign governments in the countries in which we operate, including registration and license requirements and security regulations. and foreign governments or, in the absence of such agreements, by principles of reciprocity. airlines are usually subject to bilateral agreement between the U.S. The DOT also regulates, subject to the authority of the President of the United States, international routes, fares, rates and practices, and is authorized to investigate and take action against discriminatory treatment of U.S. The DOT’s authority primarily relates to economic aspects of air transportation, such as insurance requirements, discriminatory pricing, non-competitive practices, interlocking relations and cooperative agreements.
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