As of February 5, 2021,3, 2023, there were 147,531,933133,935,649 outstanding shares of class A common stock and 719,506,596724,805,339 outstanding shares of class B common stock.

Portions of the registrant’s definitive proxy statement for its annual meeting of shareowners scheduled for May 13, 20214, 2023 are incorporated by reference into Part III of this report.

We are subject to numerous laws and regulations in the countries in which we operate. Continued compliance with increasingly stringent laws, regulations and policies in the U.S. and in the other countries in which we operate may result in materially increased costs, or we could be subject to substantial fines or possible revocation of our authority to conduct our operations.

The U.S. Department of Transportation (“DOT”("DOT"), the Federal Aviation Administration (“FAA”("FAA") and the U.S. Department of Homeland Security, through the Transportation Security Administration (“TSA”("TSA"), have primary regulatory authority over our air transportation services.

The DOT’s authority primarily relates to economic aspects of air transportation, such as operations,operating authority, insurance requirements, pricing, non-competitive practices, interlocking relations and cooperative agreements. The DOT also regulates international routes, fares, rates and practices and is authorized to investigate and take action against discriminatory treatment of U.S. air carriers abroad. International operating rights for U.S. airlines are usually subject to bilateral agreements between the U.S. and foreign governments or, in the absence of such agreements, by principles of reciprocity. We are also subject to current and potential aviation, health, customs and immigration regulations imposed by governments in other countries in which we operate, including registration and license requirements and security regulations. We have 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. The efficiency and flexibility of our international air transportation network is subject to DOT and foreign government regulations and operating restrictions.

The FAA’s authority primarily relates to operational, technical and safety aspects of air transportation, including certification, aircraft operating procedures, transportation of hazardous materials, record keeping standards and maintenance activities and personnel. In addition, we are subject to non-U.S. government regulation of aviation rights involving non-U.S. jurisdictions and non-U.S. customs regulation.

UPS's aircraft maintenance programs and procedures, including aircraft inspection and repair at periodic intervals, are approved for all aircraft under FAA regulations. The future cost of repairs pursuant to these programs may fluctuate according to aircraft condition, age and the enactment of additional FAA regulatory requirements.

The TSA regulates various security aspects of air cargo transportation. Our airport and off-airport locations, as well as our personnel, facilities and procedures involved in air cargo transportation must comply with TSA regulations.

Our airline, along with a number of other U.S. domestic airlines, participatesWe participate in the Civil Reserve Air Fleet (“CRAF”("CRAF") program. Our participation in the CRAFthis program allows the U.S. Department of Defense (“DOD”("DOD") to requisition specified UPS aircraft for military use during a national defense emergency. The DOD is required to compensate us for any use of aircraft under the CRAF program. In addition, participation in the CRAF program entitles us to bid for other U.S. Government opportunities including small package and air freight.airfreight.

Our ground transportation of packages in the U.S. is subject to regulation by the DOT and its agency, the Federal Motor Carrier Safety Administration (the “FMCSA”"FMCSA"). Ground transportation also falls under state jurisdiction with respect to the regulation of operations, safety and insurance. Our ground transportation of hazardous materials in the U.S. is subject to regulation by the DOT's Pipeline and Hazardous Materials Safety Administration. We also must comply with safety and fitness regulations promulgated by the FMCSA, including those relating to drug and alcohol testing and hours of service for drivers. Ground transportation of packages outside of the U.S. is subject to similar regulatory schemes in the countries in which we transport those packages.

The Postal Reorganization Act of 1970 created the U.S. Postal Service as an independent establishment of the executive branch of the federal government, and created the Postal Rate Commission, an independent agency, to recommend postal rates. The Postal Accountability and Enhancement Act of 2006 amended the 1970 Act to give the re-named Postal Regulatory Commission revised oversight authority over many aspects of the U.S. Postal Service, including postal rates, product offerings and service standards. We sometimes participate in proceedings before the Postal Regulatory Commission in an attempt to secure fair postal rates for competitive services.

Our ground operations are also subject to compliance with various cargo-security and transportation regulations issued by the U.S. Department of Homeland Security, including regulation by the TSA in the U.S., and similar regulations issued by foreign governments in other countries.

We are subject to the customs laws regarding the import and export of shipments in the countries in which we operate, including those related to the filing of documents on behalf of client importers and exporters. Our activities in the U.S., including customs brokerage and freight forwarding, are subject to regulation by the Bureau of Customs and Border Protection, the TSA, the U.S. Federal Maritime Commission and the DOT. Our international operations are subject to similar regulatory structures in their respective jurisdictions.

For additional information, see “Risk Factors – Business and Operating    Risks – Increased security requirements impose substantial costs on us and we could be the target of an attack or have a security breach, which could materially adversely affect us”.

We are subject to U.S. and international federal, state and local environmental laws and regulations across all of our operations. These laws and regulations cover a variety of matters such as disclosures, operations and processes, including, but not limited to: properly storing, handling and disposing of waste materials; appropriately managing waste water and storm water; monitoring and maintaining the integrity of underground storage tanks; complying with laws regarding clean air, including those governing emissions; protecting against and appropriately responding to spills and releases and communicating the presence of reportable quantities of hazardous materials to local responders. We maintain site- and activity-specific environmental compliance and pollution prevention programs to address our environmental responsibilities and remain compliant. In addition, we maintain numerous programs which seek to minimize waste and prevent pollution within our operations.

Pursuant to the Federal Aviation Act, the FAA, with the assistance of the Environmental Protection Agency is authorized to establish standards governing aircraft noise. Our aircraft fleet is in compliancecomplies with current noise standards of the federal aviation regulations. Our international operations are also subject to noise regulations in certain other countries in which we operate.

For additional information, see “Risk Factors – Regulatory and Legal Risks – Increasingly stringent regulations related to climate change could materially increase our operating costs”.

For additional information, see “Risk Factors – Business and Operating Risks – A significant data breach or information technology system disruption could materially adversely affect us”.

For additional information on governmental regulations and their potential impact on us generally, see “Risk Factors – Regulatory and Legal Risks”.

Our Corporate Governance Guidelines and the Charterscharters for our Audit, Committee, Compensation Committee, Executive Committee,and Human Capital, Risk, Committee and Nominating and Corporate Governance CommitteeCommittees are also available under the heading "ESG-"ESG" on the Governance Documents" onDocuments page of our investor relations website.

We provide the addresses to our internet siteswebsites solely for information. We do not intend for any addresses to be active links or to otherwise incorporate the contents of any website into this or any other report we file with the SEC.

Our business, financial condition and results of operations are and will remain subject to numerous risks and uncertainties. In connection with any investment decision, youYou should carefully consider the following risk factors, which may have materially affected or could materially affect us, including impacting our business, financial condition, results of operations, stock price, or credit rating as well as ouror reputation. You should read these risk factors in conjunction with “Management’s"Management’s Discussion and Analysis of Financial Condition and Results of Operations”Operations" in Item 7 and our Consolidated Financial"Financial Statements and related notesSupplementary Data" in Item 8. These risks are not the only onesrisks we face. We could also be affected by other unknown events, factors, uncertainties, or uncertainties that are unknown to us, orrisks that we do not currently consider to be material risks.material.

The consequences of the COVID-19 pandemic resulted in, and is expected to continue to result in,have had a substantial impact on business and consumer activity, including contributing to a curtailment of certain business activities (including thea decrease in demand for a broad variety of goods and services), weakened economic conditions,significant ongoing supply chain disruptions, significant economic uncertainty and volatility in theglobal financial markets, both in the United States and abroad. The pandemic hasmarkets. These consequences have significantly impacted, and is expected tomay continue to significantly impact us, and hashave had, and is expected tomay continue to have, a material adverse impact on the operations, financial performance and liquidity of many of our customers.

Because of ongoing uncertainty with respect to the ongoing severity, magnitude and durationconsequences of the COVID-19 pandemic, and its economic consequences are uncertain, rapidly changing and difficult to predict, the future impact on our operations, financial condition and liquidity also remains uncertain and difficult to predict. TheThis impact of the pandemic will continue to depend on evolving factors, many of which are not within our control, and to which we may not be able to effectively respond. These risks include, but are not limited to: a significant reduction in revenue due to renewed or extended curtailment of business from our customers;activities; a significant increase in our expenses or a reduction in our operating margins due to long-term changes in the mix of our products and services; effects from governmental, business and individuals’ actions that have been and continue to be taken in response to the pandemic (including restrictions on travel and transportation and workforce pressures); reductions in operating effectiveness due to employees working remotely;remotely or in hybrid models; unavailability of personnel; the delay or cancellation of capital projects and related delays in, or loss of, expected benefits therefrom; limited access to liquidity; increased volatility and pricing in the capital and commercial paper markets; further disruption of our global supply chains; an impairmentimpairments in the fair value of our assets; an increaseincreases in our pension funding obligations; and the effect of the pandemic on the credit-worthiness ofreductions in our customers. Further, the COVID-19 pandemic, and the volatile regional and global economic conditions stemming from it, could also precipitate or aggravate risk factors that we identify herein or affect our operations and financial performance in a manner that is not presently known to us or that we currently do not consider material. The occurrence or continuation of any of the foregoing could have a material adverse effect on us.customers’ credit-worthiness.

We conduct operations in over 220 countries and territories. Our operations are subject to cyclicality affecting national and international economies in general, as well as the local economic environments in which we operate. The factors that resultChanges in general economic changesconditions are beyond our control, and it may be difficult for us to adjust our business model to mitigate the impact of these factors. In particular,For example, we are affected by levels of industrial production, inflation, unemployment levels, consumer spending and retail activity and weactivity. We could be materially affected by adverse developments in these aspects of the economy, including without limitationeconomy. We have also been, and may in the impactfuture be, adversely impacted by changes in general economic conditions as a result of the ongoing COVID-19 pandemic. In addition, there remains substantial economicgeopolitical uncertainty and/or conflicts in or arising from the countries and/or regions where we operate, including the United Kingdom’s departure fromKingdom, the European Union. The U.K.Union, the Ukraine, the Russian Federation and the E.U. continue to negotiate their future relationship, which could take several years to finalize. The outcome of these negotiations could result in, among other things, transportation delays, increased costs, fewer goods being transported globally, additional volatility in currency exchange rates and further regulations relating to, among other things, trade, aviation and the transport of goods.Trans-Pacific region. Changes in general economic conditions, or our inability to accurately forecast these changes or mitigate the impact of these conditions on our business, could materially adversely affect us.

Our industry is rapidly evolving, including in response to demanddemands for faster deliveries and increased visibility into shipments. We expect to continue to face significant competition on a local, regional, national and international basis. Current competitorsCompetitors include the postal services of the U.S. and other nations,international postal services, various motor carriers, express companies, freight forwarders, air couriers, large transportation and e-commerce companies that are makinghave made and continue to make significant investments in their own logistics capabilities, and start upssome of whom are currently our customers. We also face competition from start-ups and other smaller companies that combine technologies with flexible labor solutions such as crowdsourcing to focus on local market needs, some of whom are currently our customers.needs. Competition may also come from other sources in the future including as new technologies are developed. Competitors have cost, operational and organizational structures that differ from ours and from time to time may offer services or pricing terms that we mayare not be willing or able to offer. Additionally, to sustain the level of servicesservice and value that we deliver to our customers, from time to time we have raised, and may in the future raise, prices and our customers may not be willing to accept these higher prices. If we are unable todo not timely and appropriately respond to competitive pressures, including replacing any lost volume or maintaining our profitability, we could be materially adversely affected.

Continued transportation industry consolidationmarket growth may further increase competition. As a result, of consolidation, competitors may increase their market share, improve their financial capacity and strengthen their competitive positions. Business combinations could also result in competitors providing a wider variety of services and products at competitive prices, which could materially adversely affect us.

We maintain a large workforce, andworkforce. We necessarily depend on the skills and continued service of our employees, including our experienced management team.employees. We also regularly seek to hire a large number of part-time and seasonal workers. We must be able to attract, engage, develop and retain a large and diverse global workforce while controlling related labor costs and maintainingmaintain an environment that supports our core values. Our ability to control labor costs is subject to numerous factors, including turnover, training costs, regulatory changes, market pressures, unemployment levels and healthcare and other benefit costs. If we are unable to hire, properly train andor retain qualified employees, we could experience higher employmentlabor costs, reduced sales,revenues, further increased workers' compensation and automobile liability claims, regulatory noncompliance, customer losses of customers and diminution of our brand value or company culture, which could materially adversely affect us. Our ability to control labor costs has in the past been, and is expected to continue to be, subject to numerous factors, including turnover, training costs, regulatory changes, market pressures, inflation, unemployment levels and healthcare and other benefit costs.

In addition, our strategic initiatives, including transformation, have led and may in the futureare expected to continue to lead to the creation of fewer, but more impactful, jobs as we strive to lower our cost to serve. Our inability to continue to retain experienced and motivated employees may also materially adversely affect us.

Many of our U.S. employees are employed under a national master agreement and various supplemental agreements with local unions affiliated with the International Brotherhood of Teamsters ("the Teamsters"(the "Teamsters"). These agreements run through July 31, 2023. Our airline pilots, airline mechanics, ground mechanics and certain other employees are employed under other collective bargaining agreements. In addition, some of our international employees are employed under collective bargaining or similar agreements. Strikes,Actual or threatened strikes, work stoppages or slowdowns by our employees could adversely affect our ability to meet our customers' needs. As a result, customersWe have begun negotiating the various supplemental agreements with the Teamsters and expect that negotiations with respect to the national master agreement will commence in April 2023. We are negotiating in good faith in an effort to reach an agreement that is in the best interests of our employees, the Teamsters and UPS; however, no assurances of our ability to do so, or the timing or terms thereof, can be provided. Customers may reduce their business or stop doing business with us if they believe that such actions or threatened actions may adversely affect our ability to provide services. We may permanently lose customers if we are unable to provide uninterrupted service, and this could materially adversely affect us. The terms of future collective bargaining agreements also may affect our competitive position and results of operations.

Our success dependsAs a result of concerns about global terrorism and homeland security, various governments have adopted and may continue to adopt stricter security requirements, resulting in partincreased operating costs. Regulatory and legislative requirements may change periodically in response to evolving threats. We cannot determine the effect that any new requirements will have on our ability to maintain the image of the UPS brandoperations, cost structure or operating results, and new rules or other future security requirements may increase our reputation for providing excellent service to our customers. Service quality issues, actual or perceived, even when false or unfounded, could tarnish the imageoperating costs and reduce operating efficiencies. Regardless of our brand and may cause customerscompliance with security requirements or the steps we take to use other companies. Also, adverse publicity surrounding labor relations, environmental concerns,secure our facilities or fleet, we could also be the target of an attack or security matters, political activities and similar matters, or attempts to connect our company to such issues, either in the U.S. or other countries inbreaches could occur, which we operate, could negativelymaterially adversely affect our overall reputation and use of our services by customers. Social media accelerates and amplifies the scope of negative publicity, and makes responding to negative claims more difficult. Damage to our reputation and loss of brand equity could reduce demand for our services and thus have a material adverse effect on us, and could require additional resources to rebuild our reputation and restore the value of our brand.us.

We rely heavily on information technology ("IT") networks and systems, including the internet and a number of internally-developed systems and applications, as well as certain technology systems from third-party vendors, to manage or support a wide variety of important business processes and activities throughoutoperate our operations.business. For example, we rely on information technologyIT to receive package level information in advance of the physical receipt of packages, to move and track items that movepackages through our delivery systems,operations, to efficiently plan deliveries, to execute billing processes, and to track and report financial and operational data. Our franchise locations and businesses we have acquiredsubsidiaries also are reliantrely on the use of information technologyIT systems to manage their business processes and activities.

Information technologyIT systems (ours, as well as those of our franchisees, acquired businesses, and third-party service providers) are susceptible to damage, disruptions orand shutdowns due to programming errors, defects or other vulnerabilities, power outages, hardware failures, computer viruses, cyber-attacks, ransomware attacks,or malware attacks, attacks by foreign governments and state-sponsored actors, theft, misconduct by employees or other insiders, telecommunications failures, misuse, human errors or other catastrophic events. Hackers, foreign governments, cyber-terroristsThese events, which have become more frequent and cyber-criminals, acting individually or in coordinated groups, may launch distributed denial of service attacks or other coordinated attacks that maysophisticated, could, from time to time, cause material service outages, gainallow inappropriate or block legitimate access to systems or information, or result in other material interruptions in our business. In addition, the foregoing breaches in securityoccurrence of any of these events could expose us, our customers, and franchisees, service providers or the individuals affected,others, to a risk of loss, disclosure or misuse of proprietary information and sensitive or confidential data, including personally identifiable information. The techniques used to obtain unauthorized access, disable or degrade service or sabotage systems change frequently, may be difficult to detect and often are not recognized until launched against a target. As a result, we may be unable to anticipate these techniques or to implement adequate measures to prevent any of the events described above.

We also depend on and interact with the information technologyIT networks and systems of third-parties for many aspects of our business operations, including our customers, franchisees and service providers such as cloud service providers and third-party delivery services. These third parties may have access to information we maintain about our company, operations, customers, employees and vendors, or operating systems that are critical to or can significantly impact our business operations. Like us, theseThese third parties are subject to risks imposed byresulting from data breaches, and information technologycyberattacks, IT systems disruptions, like those described above, and other events or actions described above that could damage, disrupt or close down their networks or systems. Security processes, protocols and standards that we have implementedimplement and contractual provisions requiring security measures that we may have sought to impose on such third-parties may not be sufficient or effective at preventing such events. TheseAny of these events could result in unauthorized access to, or disruptions or denials of access to, misuse or disclosure of, information or systems that are important to our business,us, including proprietary information, sensitive or confidential data, and other information about our operations, customers, employees and suppliers, including personal information.

AnyWe have invested and expect to continue to invest in IT security initiatives, IT risk management and disaster recovery plans. The costs and operational consequences of theseimplementing, maintaining and enhancing further data or system protection measures could increase significantly to overcome increasingly frequent, complex and sophisticated cyber threats and regulatory requirements. The occurrence of any of the events that impact our information technology networks or systems, or those of acquired businesses, franchisees, customers, service providers or other third-parties,described above could result in material disruptions in our operations,business, the loss of existing or potential customers, damage to our brand and reputation, additional regulatory scrutiny, and litigation and other potential liability for us. Among other consequences,material liability. In addition, our customers’ confidence in our ability to protect data and systems and to provide services consistent with their expectations could be impacted, further disrupting our operations. Similarly, an actual or alleged failure to comply with applicableincreasingly challenging U.S. orand foreign data protection regulations or other data protection standards may expose us to litigation, fines, sanctions or other penalties.

Severe weatherWeather conditions or other natural or manmademan-made disasters and the increased severity or frequency thereof (including as a result of climate change), including storms, floods, fires, earthquakes, rising temperatures, epidemics, pandemics, conflicts, civil or political unrest, or terrorist attacks, have in the past and may in the future disrupt our business and result in decreased revenues.business. Customers may reduce shipments, supply chains may be disrupted, demand may be negatively impacted or our costs to operate our business may increase, eitherany of which could have a material adverse effect on us. Any such event affecting one of our major facilities could result in a significant interruption in or disruption of our business. A potential result of climate change is more frequent or more severe weather events or natural disasters. To the extent such weather events or natural disasters do become more frequent or severe, disruptions to our business and costs to repair damaged facilities or maintain or resume operations could increase.

We have significant international operations. As a result, weWe are continually exposed to changing economic, political and social developments that are beyond our control. Emerging markets are typicallyoften more volatile than those in the developed world,other countries, and any broad-based downturn in these markets from any of those developments could reduce our revenues and materially adversely affect our business, financial condition and results of operations. We are subject to many laws governing our international operations, including those that prohibit improper payments to government officials and commercial customers, govern our environmental impact or labor matters, and restrict where we can do business, our shipments to certain countries and the information that we can provide to non-U.S. governments. Our failure to manage and anticipate these and other risks associated with our international operations could materially adversely affect us.

We have a combination of both self-insurance and high-deductible insurance programs for the risks arising out of the services we provideour business and the nature of our global operations, including claims exposure resulting from cargo loss, personal injury, property damage, aircraft and related liabilities, business interruption and workers' compensation. Self-insured workers' compensation, automobile and general liabilities are determined using actuarial estimates of the aggregate liability for claims incurred and an estimate of incurred but not reported claims, on an undiscounted basis. Our accruals for insurance reserves reflect certain actuarial assumptions and management judgments, which are subject to a high degree of variability. If the number or severity of claims for which we are retaining risk continues to increase, which has occurred in recent periods, our financial condition and results of operations could be materially adversely affected. If we lose our ability to, or decide not to, self-insure these risks, our insurance cost could materially increase and we may find it difficult to obtain adequate levels of insurance coverage.

We regularly assess the carrying values of our assets relative to their estimated fair values. The determination of fair value is dependent on a significant number of estimates and assumptions that could be impacted by a variety of factors, including changes in business strategy, we may acquire businessesrevenue, expenses, government regulations, including regulation related to climate change, costs of capital and form joint ventureseconomic or strategic alliances,market conditions. The use of different estimates or may disposeassumptions could also result in different estimates of operations. Whether we realize the anticipated benefits from these transactions will depend, in part, upon the successful integration between the businesses involved, the performancefair value. Our estimates of the underlying operations, capabilities or technologies and the management of the acquired operations. Accordingly, our financial results could be materially adversely affected by our failure to effectively integrate the acquired operations, unanticipated performance issues or transaction-related charges.

We are subject to income taxes in the U.S. and many foreign jurisdictions. Significant judgment is required in determining our worldwide provision for income taxes. In the course of our business, thereThere are many transactions and calculations where the ultimate tax determination is uncertain.

We are subject to complex and stringent aviation, transportation, environmental, security, labor, employment, safety, privacy, disclosure and data protection and other governmental laws, regulations and policies, both in the U.S. and in other countries in which we operate.internationally. In addition, we are impacted by laws, regulations and policies that affect global trade, including tariff and trade policies, export requirements, embargoes, sanctions, taxes, monetary policies and other restrictions and charges. Recently, tradeTrade discussions and arrangements between the U.S. and various of its trading partners have beenare fluid, and existing and future trade agreements are, and are expected to continue to be, subject to a number of uncertainties, including the imposition of new tariffs or adjustments and changes to the products covered by existing tariffs. The impact of new laws, regulations and policies or decisions or interpretations by authorities applying those laws and regulations, cannot be predicted. Compliance with any new laws, regulations or policies may increase our operating costs or require significant capital expenditures. Any failure to comply with applicable laws, regulations or policies in the U.S. or in any of the other countries in which we operate could result in substantial fines or possible revocation of our authority to conduct our operations, which could materially adversely affect us.

Regulation of greenhouse gas ("GHG") emissions exposes our transportation and logistics businessesus to potentially significant new taxes, fees and other costs. Compliance with such regulation, and any increased or additional regulation, or the associated costs is further complicated by the fact that various countries and regions are followingmay adopt different approaches to the regulation of climate change.change regulation.

For example, in 2009, the European Commission approved the extension to the airline industry of the E.U. Emissions Trading Scheme (“ETS”) for GHG emissions. Under this decision, all of our flights operating within the E.U. are covered by the ETS requirements, and we are required annually to purchase emission allowances in an amount exceeding the number of free allowances allocated to us under the ETS. Similarly, in 2016, the International Civil Aviation Organization (“ICAO”("ICAO") passed a resolution adoptingadopted the Carbon Offsetting and Reduction Scheme for International Aviation (“CORSIA”("CORSIA"), which is a global, market-based emissions offset program to encourage carbon-neutral growth beyond 2020.growth. A voluntary participation pilot phase is scheduled to beginbegan in 2021, in which countries may voluntarily participate, and full mandatory participation is scheduled to begin in 2027. ICAO continues to develop details regarding implementation, but compliance with CORSIA will increase our operating costs.

In the U.S., Congress in the past several years has considered but, to date, not passed various bills that would regulate GHG emissions, but these bills so far have not received sufficient Congressional support for enactment.emissions. Nevertheless, we believe some form of federal climate change legislation is possible in the future. Even in the absence of such legislation, the Environmental Protection Agency could determine to regulate GHG emissions, especially aircraft or diesel engine emissions, and this could impose substantial costs on us.

In addition, the impact that the recent re-entry into the Paris climate accord may have on future U.S. policy regarding GHG emissions, on CORSIA and on other GHG regulation isremains uncertain. The extent to which other countries implement that accord could also have ana material adverse direct or indirect effect on us.

Potential costsIncreased regulation relating to us of increased regulation regarding GHG emissions in the U.S. or abroad, especially aircraft or diesel engine emissions, include ancould, among other things, increase in the cost of the fuel and other energy we purchase and the capital costs associated with updating or replacing our aircraft or vehicles prematurely. We cannot predict the impact any future regulation wouldwill have on our cost structure or our operating results. It is possiblelikely that such regulation could significantly increase our operating costs and that we may not be willing or able to pass such costs along to our customers. Moreover, even without such regulation, increased awareness and any adverse publicity in the global marketplace about the GHGs emitted by companies in the airline and transportation industries could harm our reputation and reduce customer demand for our services, especially our air services.

The nature of our business exposes us to the potential for various claims and litigation related to labor and employment, personal injury, property damage, business practices, environmental liability and other matters. Any material litigation or a catastrophic accident or series of accidents could result in significant expenditures and have a material adverse effect on us.

We own our corporate headquarters in Atlanta, Georgia, our UPS Supply Chain Solutions headquarters, located in Alpharetta, Georgia and our information technology headquarters, located in Parsippany, New Jersey. Our primary information technology operations are consolidated in an owned facility in New Jersey and we own a backup facility in Georgia.

We own or lease over 1,000 package operating facilities in the U.S., with approximately 8185 million square feet of floor space. These facilities have vehicles and drivers stationed for the pickup and delivery of packages, and capacity to sort and transfer packages. Our larger facilities also service our vehicles and equipment, and employ specialized mechanical equipment for the sorting and handling of packages. We own or lease approximately 800 facilities that support our international package operations, with approximately 2321 million square feet of floor space.

Our aircraft are operated in a hub and spoke pattern in the U.S., with our principal air hub, Worldport, located in Louisville, Kentucky. Our major air hub in Europe is located in Germany, and in Asia we operate two major air hubs in China and one in Hong Kong.

We own or lease more than 500600 facilities, with approximately 4047 million square feet of floor space, which support our freight forwarding and logistics operations. This includes approximately 17 million square feet of healthcare-compliant warehousing. We own and operate a logistics campus consisting of approximately 4 million square feet in Louisville, Kentucky. In addition, we own or lease approximately 200 UPS Freight service centers with approximately 6 million square feet of floor space which are classified as held for sale in the consolidated balance sheet as of December 31, 2020. For additional information see note 4 to the audited, consolidated financial statements.

The following table shows information about our aircraft fleet as of December 31, 2020:2022:

We operate a global ground fleet of approximately 127,000125,000 package cars, vans, tractors and motorcycles, of which approximately 5,700 tractors used in our UPS Freight operations are classified as held for sale in the consolidated balance sheet as of December 31, 2020.

See note 6 to the audited, consolidated financial statements for a discussion of pension related matters and note 10 to the audited, consolidated financial statements for a discussion of judicial proceedings and other matters arising from the conduct of our business activities.

Not applicable.

A number of macroeconomic factors contributed to a challenging operating environment in 2022, including global inflation and rising interest rates, recessionary forecasts, wage and labor market pressures, geopolitical uncertainties and foreign currency exchange rates relative to the United States ("U.S.") Dollar. We continued to be affected by COVID-19 lockdowns in China that impacted both manufacturing and supply chains. In addition, consumers returned to more pre-pandemic shopping patterns. These factors resulted in disruptions to certain parts of our business, improve our financial performance, provide the best customer experience and benefit our shareowners. We focused on, among other things, enhancing the capabilities that we believe our customers value the most; speed and ease of access to our services. We completed enhancements to our U.S. ground network to improve time-in-transit and continued to deploy our digital access program into e-commerce platforms.

We have two reportable segments: U.S. Domestic Package and International Package, which are together referred to as our global small package business, business-to-business activity has declined, while we continue to experience a significant increase in the level of business-to-consumer shipping, which we partially attribute to the capability enhancements described above. While business-to-business activity began to recover in the latter part of 2020, we believe that the market shift towards e-commerce will persist, with a continuing high level of residential deliveries that may continue to increase demand, but also drive higher operating costs. The pandemic also resulted in a reduction in global air cargo capacity. This caused market rates in the industry to increase and we experienced increased demand for our services.

Highlights of our results for the years ended December 31, 20202022 and 2019,2021, which are discussed in more detail in the sections that follow, include:

In the U.S. Domestic Package segment, volume and revenue growth was highest in our residential ground products. The increase in residential delivery volume droveresulted from higher fuel revenue, driven by increases in headcount, delivery stopsboth price per day, average daily miles drivengallon and average daily union labor hours, allin fuel surcharge rates as part of our pricing initiatives, as well as improvements in revenue quality and customer mix. Expenses increased due to higher fuel prices and higher compensation and benefits costs, which increased expensewere partially offset by declines in purchased transportation costs and compressed operating marginshigher productivity as described below. Operating expenses also increased as a result of the investments we made to improveexecuted our ground network.strategy.

TheIn our International Package segment, experiencedrevenue increased slightly, driven by fuel revenue, revenue quality actions and favorable shifts in customer and product mix. These increases were mostly offset by lower volume, the impact of the strengthening U.S. Dollar and reductions in demand-related surcharges, primarily in the fourth quarter. Expense increases were primarily driven by higher fuel prices, partially offset by favorable currency impacts and volume declines.

In Supply Chain Solutions, the decrease in revenue was driven by volume and revenue growth, driven by strong outbound demand from Asiamarket rate declines in Forwarding, as well as the impact of divesting UPS Freight in 2021. These decreases were partially offset by growth from e-commerce within Europe. Residential delivery volume growth drove an increase in third-party pickupour healthcare operations and delivery expense.