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Document and Entity Information - shares	3 Months Ended	6 Months Ended
Document and Entity Information - shares	Jun. 30, 2019	Jun. 30, 2019	Jul. 16, 2019
Document Type		10-Q
Document Quarterly Report		true
Document Period End Date		Jun. 30, 2019
Document Transition Report		false
Entity File Number		001-15451
Entity Registrant Name		UNITED PARCEL SERVICE INC
Entity Incorporation, State or Country Code		DE
Entity Tax Identification Number		58-2480149
Entity Address, Street Address		55 Glenlake Parkway NE
Entity Address, City		Atlanta,
Entity Address, State		GA
Entity Address, Postal Zip Code		30328
City Area Code		404
Local Phone Number		828-6000
Title of 12(b) Security		Class B common stock, par value $0.01 per share
Trading Symbol		UPS
Security Exchange Name		NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current		Yes
Entity Small Business		false
Entity Emerging Growth Company		false
Entity Shell Company		false
Entity Central Index Key		0001090727
Current Fiscal Year End Date		--12-31
Entity Filer Category		Large Accelerated Filer
Document Fiscal Year Focus		2019
Document Fiscal Period Focus		Q2
Amendment Flag		false
Floating-Rate Senior Notes due 2020
Title of 12(b) Security		Floating-Rate Senior Notes due 2020
Trading Symbol		UPS20A
Security Exchange Name		NYSE
1.625% Senior Notes due 2025
Title of 12(b) Security		1.625% Senior Notes due 2025
Trading Symbol		UPS25
Security Exchange Name		NYSE
1% Senior Notes due 2028
Title of 12(b) Security		1% Senior Notes due 2028
Trading Symbol		UPS28
Security Exchange Name		NYSE
0.375% Senior Notes due 2023
Title of 12(b) Security		0.375% Senior Notes due 2023
Trading Symbol		UPS23A
Security Exchange Name		NYSE
1.500% Senior Notes due 2032
Title of 12(b) Security		1.500% Senior Notes due 2032
Trading Symbol		UPS32
Security Exchange Name		NYSE
Class A common stock
Entity Common Stock, Shares Outstanding			160,370,017
Class B common stock
Entity Common Stock, Shares Outstanding			698,334,960

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions	Jun. 30, 2019	Dec. 31, 2018
Current Assets:
Cash and cash equivalents	$ 4,072	$ 4,225
Marketable securities	725	810
Accounts receivable, net	8,071	8,958
Current income taxes receivable	601	940
Other current assets	1,374	1,277
Total Current Assets	14,843	16,210
Property, Plant and Equipment, Net	28,095	26,576
Operating Lease Right-Of-Use Assets	2,477	0
Goodwill	3,811	3,811
Intangible Assets, Net	2,121	2,075
Investments and Restricted Cash	168	170
Deferred Income Tax Assets	143	141
Other Non-Current Assets	1,129	1,033
Total Assets	52,787	50,016
Current Liabilities:
Current maturities of long-term debt, commercial paper and finance leases	2,952	2,805
Current maturities of operating leases	487	0
Accounts payable	4,291	5,188
Accrued wages and withholdings	2,743	3,047
Self-insurance reserves	790	810
Accrued group welfare and retirement plan contributions	735	715
Other current liabilities	1,635	1,522
Total Current Liabilities	13,633	14,087
Long-Term Debt and Finance Leases	20,427	19,931
Non-Current Operating Leases	2,026	0
Pension and Postretirement Benefit Obligations	7,524	8,347
Deferred Income Tax Liabilities	1,947	1,619
Self-Insurance Reserves	1,493	1,571
Other Non-Current Liabilities	1,314	1,424
Shareowners' Equity:
Additional paid-in capital	102	0
Retained earnings	9,109	8,006
Accumulated other comprehensive loss	(4,815)	(4,994)
Deferred compensation obligations	25	32
Less: Treasury stock (0.4 shares in 2019 and 0.6 shares in 2018)	(25)	(32)
Total Equity for Controlling Interests	4,405	3,021
Noncontrolling interests	18	16
Total Shareowners’ Equity	4,423	3,037
Total Liabilities and Shareowners’ Equity	52,787	50,016
Common Class A [Member]
Shareowners' Equity:
Common stock	2	2
Common Class B [Member]
Shareowners' Equity:
Common stock	$ 7	$ 7

CONSOLIDATED BALANCE SHEETS (Parenthetical) - shares shares in Millions	Jun. 30, 2019	Dec. 31, 2018
Treasury stock, shares	0	1
Class A common stock
Common stock, shares issued	161
Class B common stock
Common stock, shares issued	698

STATEMENTS OF CONSOLIDATED INCOME - USD ($) $ in Millions	3 Months Ended		6 Months Ended
STATEMENTS OF CONSOLIDATED INCOME - USD ($) $ in Millions	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Revenue	$ 18,048	$ 17,456	$ 35,208	$ 34,569
Operating Expenses:
Compensation and benefits	9,299	9,024	18,616	18,069
Depreciation and amortization	575	542	1,143	1,138
Fuel	857	852	1,627	1,602
Other occupancy	322	321	693	682
Other expenses	1,379	1,312	2,719	2,574
Total Operating Expenses	15,905	15,683	31,671	31,276
Operating Profit	2,143	1,773	3,537	3,293
Other Income and (Expense):
Investment income and other	220	302	435	596
Interest expense	(159)	(149)	(328)	(302)
Total Other Income and (Expense)	61	153	107	294
Income Before Income Taxes	2,204	1,926	3,644	3,587
Income Tax Expense	519	441	848	757
Net Income	$ 1,685	$ 1,485	$ 2,796	$ 2,830
Basic Earnings Per Share	$ 1.95	$ 1.71	$ 3.23	$ 3.27
Diluted Earnings Per Share	$ 1.94	$ 1.71	$ 3.22	$ 3.25
Repairs and maintenance
Operating Expenses:
Cost of goods sold	$ 473	$ 423	$ 907	$ 857
Purchased transportation
Operating Expenses:
Cost of goods sold	$ 3,000	$ 3,209	$ 5,966	$ 6,354

STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Statement of Comprehensive Income [Abstract]
Net Income	$ 1,685	$ 1,485	$ 2,796	$ 2,830
Change in foreign currency translation adjustment, net of tax	(33)	(78)	20	(84)
Change in unrealized gain (loss) on marketable securities, net of tax	5	0	9	(3)
Change in unrealized gain (loss) on cash flow hedges, net of tax	(12)	332	64	266
Change in unrecognized pension and postretirement benefit costs, net of tax	43	38	86	77
Comprehensive Income	$ 1,688	$ 1,777	$ 2,975	$ 3,086

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References + Details

STATEMENTS OF CONSOLIDATED CASH FLOWS - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Cash Flows From Operating Activities:
Net Income	$ 2,796	$ 2,830
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization	1,143	1,138
Pension and postretirement benefit expense	376	308
Pension and postretirement benefit contributions	(1,108)	(92)
Self-insurance reserves	(98)	(66)
Deferred tax (benefit) expense	275	142
Stock compensation expense	513	378
Other (gains) losses	108	180
Changes in assets and liabilities, net of effects of business acquisitions:
Accounts receivable	817	1,270
Other assets	398	1,345
Accounts payable	(782)	(260)
Accrued wages and withholdings	(256)	(9)
Other liabilities	57	22
Other liabilities	(32)	14
Net cash from operating activities	4,207	7,200
Cash Flows From Investing Activities:
Capital expenditures	(2,861)	(2,849)
Proceeds from disposals of property, plant and equipment	6	35
Purchases of marketable securities	(383)	(446)
Sales and maturities of marketable securities	480	453
Net (increase) decrease in finance receivables	8	(4)
Cash paid for business acquisitions, net of cash and cash equivalents acquired	(1)	(2)
Other investing activities	(96)	(7)
Net cash used in investing activities	(2,847)	(2,820)
Cash Flows From Financing Activities:
Net change in short-term debt	(51)	68
Proceeds from long-term borrowings	2,653	513
Repayments of long-term borrowings	(1,988)	(2,014)
Purchases of common stock	(503)	(521)
Issuances of common stock	129	125
Dividends	(1,599)	(1,507)
Other financing activities	(175)	(271)
Net cash used in financing activities	(1,534)	(3,607)
Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash	23	(51)
Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash	(151)	722
Cash, Cash Equivalents and Restricted Cash:
Beginning of period	4,367	3,769
End of period	$ 4,216	$ 4,491

BASIS OF PRESENTATION	6 Months Ended
BASIS OF PRESENTATION	Jun. 30, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]
BASIS OF PRESENTATION	BASIS OF PRESENTATION AND ACCOUNTING POLICIES Principles of Consolidation In our opinion, the accompanying interim, unaudited, consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP") for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. These interim, unaudited, consolidated financial statements contain all adjustments (consisting of normal recurring accruals) necessary to present fairly our financial position as of June 30, 2019, our results of operations for the three and six months ended June 30, 2019 and 2018, and our cash flows for the six months ended June 30, 2019 and 2018. The results reported in these interim, unaudited, consolidated financial statements should not be regarded as necessarily indicative of results that may be expected for any other period or the entire year. The interim, unaudited, consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2018. Fair Value of Financial Instruments The carrying amounts of our cash and cash equivalents, accounts receivable, finance receivables and accounts payable approximate fair value as of June 30, 2019 and December 31, 2018. The fair values of our investment securities are disclosed in note 5, our recognized multiemployer pension withdrawal liabilities in note 7, our short and long-term debt in note 9 and our derivative instruments in note 15. We utilized Level 1 inputs in the fair value hierarchy of valuation techniques to determine the fair value of our cash and cash equivalents, and Level 2 inputs to determine the fair value of our accounts receivable, finance receivables and accounts payable. Use of Estimates The preparation of the accompanying interim, unaudited, consolidated financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingencies at the date of the interim, unaudited, consolidated financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Estimates have been prepared on the basis of the most current and best information and actual results could differ materially from those estimates. For interim, unaudited, consolidated financial statement purposes, we provide for accruals under our various employee benefit plans for each three month period based on one quarter of the estimated annual expense.

RECENT ACCOUNTING PRONOUNCEMENTS	6 Months Ended
RECENT ACCOUNTING PRONOUNCEMENTS	Jun. 30, 2019
Accounting Changes and Error Corrections [Abstract]
RECENT ACCOUNTING PRONOUNCEMENTS	RECENT ACCOUNTING PRONOUNCEMENTS Adoption of New Accounting Standards In February 2016, the Financial Accounting Standards Board ("FASB") issued accounting standards update ("ASU") 2016-02, Leases (Topic 842), which requires lessees to recognize a right-of-use asset and lease liability on their balance sheet for all leases with terms beyond twelve months. The new standard also requires enhanced disclosures that provide more transparency and information to financial statement users about lease portfolios. Effective January 1, 2019, we adopted the requirements of this ASU using the modified retrospective approach. The adoption on January 1, 2019 resulted in the recognition of right-of-use assets for operating leases of approximately $2.65 billion and operating lease liabilities of approximately $2.70 billion. The consolidated financial statements for the period ended June 30, 2019 are presented under the new standard, while comparative periods presented have not been adjusted and continue to be reported in accordance with the previous standard. We elected the transition package of practical expedients permitted within the standard. In accordance with the package of practical expedients, we did not reassess initial direct costs, lease classification, or whether our contracts contain or are leases. We also made an accounting policy election to not recognize right-of-use assets and liabilities for leases with an original lease term of twelve months or less, unless the leases include options to renew or purchase the underlying asset that are reasonably certain to be exercised. See note 10 for additional disclosures required by this ASU. In March 2017, the FASB issued an ASU requiring the premium on callable debt securities to be amortized to the earliest call date. The amortization period for callable debt securities purchased at a discount is not impacted by the update. We adopted this standard on January 1, 2019. It did not have a material impact on our consolidated financial position, results of operations or cash flows. In August 2017, the FASB issued an ASU to enhance recognition of the economic results of hedging activities in the financial statements. In addition, this update makes certain targeted improvements to simplify the application of hedge accounting guidance and increase transparency regarding the scope and results of hedging activities. We adopted this standard on January 1, 2019. It did not have a material impact on our consolidated financial position, results of operations or cash flows but did require additional disclosures. See note 15 for required disclosures pertaining to this ASU. For accounting standards adopted in the period ended June 30, 2018, refer to note 1 to our audited consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2018. Other accounting pronouncements adopted during the periods covered by the consolidated financial statements did not have a material impact on our consolidated financial position, results of operations or cash flows. Accounting Standards Issued But Not Yet Effective In June 2016, the FASB issued an ASU introducing an expected credit loss methodology for the measurement of financial assets not accounted for at fair value. The methodology replaces the probable, incurred loss model for those assets. The standard will be effective for us in the first quarter of 2020. We are evaluating the full impact of its adoption on our consolidated financial statements and internal control over financial reporting environment, but do not expect this ASU to have a material impact on our consolidated financial position, results of operations or cash flows. In January 2017, the FASB issued an ASU to simplify the accounting for goodwill impairment. The update removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. Under this ASU, goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. The standard will be effective for us in the first quarter of 2020. We continue to evaluate this update to determine the full impact of its adoption but do not expect this ASU to have a material impact on our consolidated financial position, results of operations or cash flows. Other accounting pronouncements issued, but not effective until after June 30, 2019, are not expected to have a material impact on our consolidated financial position, results of operations or cash flows.

Revenue Recognition

6 Months Ended

Jun. 30, 2019

Revenue from Contract with Customer [Abstract]

Revenue Recognition

REVENUE RECOGNITION

Revenue Recognition

Substantially all of our revenues are from contracts associated with the pick-up, transportation and delivery of packages and freight (“transportation services”), whether carried out by or arranged by UPS, both domestically and internationally, which generally occurs over a short period of time. Additionally, we provide value-added logistics services to customers through our global network of company-owned and leased distribution centers and field stocking locations, both domestically and internationally.

Disaggregation of Revenue



	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Revenue:
Next Day Air	$	2,173	$	1,830	$	4,014	$	3,614
Deferred	1,157		1,080		2,246		2,149
Ground	7,820		7,444		15,370		14,818
U.S. Domestic Package	11,150		10,354		21,630		20,581

Domestic	690		700		1,380		1,416
Export	2,668		2,747		5,299		5,419
Cargo & Other	147		155		285		300
International Package	3,505		3,602		6,964		7,135

Forwarding	1,496		1,659		2,912		3,264
Logistics	833		784		1,665		1,566
Freight	861		853		1,634		1,630
Other	203		204		403		393
Supply Chain & Freight	3,393		3,500		6,614		6,853

Consolidated revenue	$	18,048	$	17,456	$	35,208	$	34,569

We account for a contract when both parties have approved the contract and are committed to perform their obligations, the rights of the parties and payment terms are identified, the contract has commercial substance and collectability of consideration is probable.

Performance Obligations

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the basis of revenue recognition in accordance with U.S. GAAP. To determine the proper revenue recognition method for contracts, we evaluate whether two or more contracts should be combined and accounted for as one single contract and whether the combined or single contract should be accounted for as more than one performance obligation. This evaluation requires judgment, and the decision to combine a group of contracts or separate the combined or single contract into multiple performance obligations could change the amount of revenue and profit recorded in a given period. Within most of our contracts, the customer contracts with us to provide distinct services, such as transportation services. The vast majority of our contracts with customers for transportation services include only one performance obligation; the transportation services themselves. However, if a contract is separated into more than one performance obligation, we allocate the total transaction price to each performance obligation in an amount based on the estimated relative standalone selling prices of the promised goods or services underlying each performance obligation. We frequently sell standard transportation services with observable standalone sales prices. In these instances, the observable standalone sales are used to determine the standalone selling price.

In certain business units, such as Logistics, we sell customized, customer-specific solutions in which we provide a significant service of integrating a complex set of tasks and components into a single capability (even if that single capability results in the delivery of multiple units). Hence, the entire contract is accounted for as one performance obligation. In these cases we typically use the expected cost plus a margin approach to estimate the standalone selling price of each performance obligation.

Satisfaction of Performance Obligations

We generally recognize revenue over time as we perform the services in the contract because of the continuous transfer of control to the customer. Our customers receive the benefit of our services as the goods are transported from one location to another. Further, if we were unable to complete delivery to the final location, another entity would not need to reperform the transportation service already performed.

As control transfers over time, revenue is recognized based on the extent of progress towards completion of the performance obligation. The selection of the method to measure progress towards completion requires judgment and is based on the nature of the products or services to be provided. We use the cost-to-cost measure of progress for our package delivery contracts because it best depicts the transfer of control to the customer, which occurs as we incur costs on our contracts. Under the cost-to-cost measure of progress, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. Revenues, including ancillary or accessorial fees and reductions for estimated customer incentives, are recorded proportionally as costs are incurred. Costs to fulfill include labor and other direct costs and an allocation of indirect costs. For our freight and freight forwarding contracts, an output method of progress based on time-in-transit is utilized as the timing of costs incurred does not best depict the transfer of control to the customer. In our Logistics business we have a right to consideration from customers in an amount that corresponds directly with the value to the customers of our performance completed to date, and as such we recognize revenue in the amount to which we have a right to invoice the customer.

Variable Consideration

It is common for our contracts to contain customer incentives, guaranteed service refunds or other provisions that can either increase or decrease the transaction price. These variable amounts are generally dependent upon achievement of certain incentive tiers or performance metrics. We estimate variable consideration at the most likely amount to which we expect to be entitled. We include estimated amounts of revenue, which may be reduced by incentives or other contract provisions, in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Our estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based on an assessment of anticipated customer spending and all information (historical, current and forecasted) that is reasonably available to us.

Contract Modifications

Contracts are often modified to account for changes in the rates we charge our customers or to add additional distinct services. We consider contract modifications to exist when the modification either creates new, or changes the existing, enforceable rights and obligations. Contract modifications that add additional distinct goods or services are treated as separate contracts. Contract modifications that do not add distinct goods or services typically change the price of existing services. These contract modifications are accounted for prospectively as the remaining performance obligations are distinct.

Payment Terms

Under the typical payment terms of our customer contracts, the customer pays at periodic intervals (i.e., every 14 days, 30 days, 45 days, etc.) for shipments included on invoices received. Invoices are generated each week on the week-ending day, which is Saturday for the majority of our U.S. Domestic Package business, but could be another day depending on the business unit or the specific agreement with the customer. It is not customary business practice to extend payment terms past 90 days, and as such, we do not have a practice of including a significant financing component within our revenue contracts with customers.

Principal vs. Agent Considerations

In our transportation businesses, we utilize independent contractors and third-party carriers in the performance of some transportation services. U.S. GAAP requires us to evaluate, using a control model, whether our businesses themselves promise to transfer services to the customer (as the principal) or to arrange for services to be provided by another party (as the agent). Based on our evaluation of the control model, we determined that all of our major businesses act as the principal rather than the agent within their revenue arrangements. Revenue and the associated purchased transportation costs are both reported on a gross basis within our statements of consolidated income.

Accounts Receivable, Net

Accounts receivable, net, include amounts billed and currently due from customers. The amounts due are stated at their net estimated realizable value. Losses on accounts receivable are recognized when they are incurred, which requires us to make our best estimate of the probable losses inherent in our customer receivables at each balance sheet date. These estimates require consideration of historical loss experience, adjusted for current conditions, trends in customer payment frequency, and judgments about the probable effects of relevant observable data, including present economic conditions and the financial health of specific customers and market sectors. Our risk management process includes standards and policies for reviewing major account exposures and concentrations of risk. Our total provision for doubtful accounts charged to expense before recoveries during the quarters ended June 30, 2019 and 2018 was $68 and $29 million, respectively, and $105 and $41 million during the six months ended June 30, 2019 and 2018, respectively.

Contract Assets and Liabilities

Contract assets include billed and unbilled amounts resulting from in-transit packages, as we have an unconditional right to payment only once all performance obligations have been completed (i.e., packages have been delivered), and our right to payment is not solely based on the passage of time. Amounts may not exceed their net realizable value. Contract assets are generally classified as current and the full balance is converted each quarter based on the short-term nature of the transactions.

Contract liabilities consist of advance payments and billings in excess of revenue as well as deferred revenue. Advance payments and billings in excess of revenue represent payments received from our customers that will be earned over the contract term. Deferred revenue represents the amount of consideration due from customers related to in-transit shipments that has not yet been recognized as revenue based on our selected measure of progress. We classify advance payments and billings in excess of revenue as either current or long-term, depending on the period over which the advance payment will be earned. We classify deferred revenue as current based on the timing of when we expect to recognize revenue, which typically occurs within a short window after period-end. The full balance of deferred revenue is converted each quarter based on the short-term nature of the transactions. Our contract assets and liabilities are reported in a net position on a contract-by-contract basis at the end of each reporting period. In order to determine revenue recognized in the period from contract liabilities, we first allocate revenue to the individual contract liability balance outstanding at the beginning of the period until the revenue exceeds that deferred revenue balance.

Contract assets related to in-transit packages were $174 and $234 million at June 30, 2019 and December 31, 2018, respectively, net of deferred revenue related to in-transit packages of $226 and $236 million at June 30, 2019 and December 31, 2018, respectively. Contract assets are included within "Other current assets" in the consolidated balance sheets. Short-term contract liabilities related to advanced payments from customers were $8 and $5 million at June 30, 2019 and December 31, 2018, respectively. Short-term contract liabilities are included within "Other current liabilities" in the consolidated balance sheets. Long-term contract liabilities related to advanced payments from customers were $26 million at June 30, 2019 and December 31, 2018, respectively. Long-term contract liabilities are included within "Other Non-Current Liabilities" in the consolidated balance sheets.

STOCK-BASED COMPENSATION

6 Months Ended

Jun. 30, 2019

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

STOCK-BASED COMPENSATION

We issue employee share-based awards under various incentive compensation plans, which permit the grant of non-qualified and incentive stock options, stock appreciation rights, restricted stock and stock units, and restricted performance shares and performance units to eligible employees (restricted stock and stock units, restricted performance shares and performance units are herein referred to as "Restricted Units"). Upon vesting, Restricted Units result in the issuance of the equivalent number of UPS class A common shares after required tax withholdings. Dividends accrued on Restricted Units are reinvested in additional Restricted Units at each dividend payable date, and are subject to the same vesting and forfeiture conditions as the underlying Restricted Units upon which they are earned.

The primary compensation programs offered under the UPS Incentive Compensation Plan include the UPS Management Incentive Award program, the UPS Long-Term Incentive Performance Award program and the UPS Stock Option program. We also maintain an employee stock purchase plan which allows eligible employees to purchase shares of UPS class A common stock at a discount. Additionally, our matching contributions to the primary employee defined contribution savings plan are made in shares of UPS class A common stock.

Management Incentive Award Program ("MIP")

We award Restricted Units under MIP to certain eligible management employees. For Restricted Units granted under MIP prior to 2019, vesting generally occurs over a five-year period with approximately 20% of the award vesting on January 15th of each of the years following the grant date (except in the case of death or disability, in which case immediate vesting occurs). The entire grant is expensed on a straight-line basis (less estimated forfeitures) ratably over the requisite service period (except in the case of death, disability or retirement, in which case immediate expensing occurs). These historical awards will continue to vest through 2023.

Beginning with the MIP grant in the first quarter of 2019, Restricted Units vest one year following the grant date (except in the case of death or disability, in which case immediate vesting occurs). The entire grant is expensed on a straight-line basis (less estimated forfeitures) ratably over the requisite service period (except in the case of death, disability or retirement, in which case immediate expensing occurs).

Based on the date that the eligible management population and performance targets were approved for the 2018 MIP award (granted in the first quarter of 2019), we determined the award measurement dates to be February 6, 2019 (for U.S.-based employees other than management committee employees), February 14, 2019 (for management committee employees) and March 25, 2019 (for international-based employees); therefore, the Restricted Units awarded were valued for stock compensation expense purposes using the closing New York Stock Exchange price of $108.82, $111.80 and $106.90 on those dates, respectively.

Long-Term Incentive Performance Award Program ("LTIP")

We award Restricted Units under LTIP to certain eligible management employees. These Restricted Units generally vest at the end of a three-year period (except in the case of death, disability or retirement, in which case immediate vesting occurs on a prorated basis). The number of Restricted Units earned will be based on the percentage achievement of the performance targets established on the grant date. The performance targets are equally-weighted among consolidated operating return on invested capital ("ROIC"), growth in currency-constant consolidated revenue and total shareowner return ("RTSR") relative to a peer group of companies.

For the two-thirds of the award related to ROIC and growth in currency-constant consolidated revenue, we recognize the grant date fair value of these Restricted Units (less estimated forfeitures) as compensation expense ratably over the vesting period, based on the number of awards expected to be earned. The remaining one-third of the award related to RTSR is valued using a Monte Carlo model. We recognize the grant date fair value of this portion of the award (less estimated forfeitures) as compensation expense ratably over the vesting period.

Based on the date that the eligible management population and performance targets were approved for the 2019 LTIP award, we determined the award measurement date to be March 22, 2019; therefore, the target Restricted Units awarded for the ROIC and growth in currency-constant consolidated revenue portions of the award were valued for stock compensation expense using the closing New York Stock Exchange price of $107.35 on that date.

The weighted-average assumptions used and the calculated weighted-average fair values of the RTSR portion of the LTIP awards granted in 2019 and 2018 are as follows:



	2019			2018
Risk-free interest rate	2.24		%	2.61		%
Expected volatility	19.61		%	16.51		%
Weighted-average fair value of units granted	$	123.40		$	137.57
Share payout	114.95		%	123.46		%

There is no expected dividend yield as units earn dividend equivalents.

Non-Qualified Stock Options

We grant non-qualified stock option awards to a limited group of eligible senior management employees under the UPS Stock Option program. Stock option awards generally vest over a five-year period with approximately 20% of the award vesting at each anniversary of the grant date (except in the case of death or disability, in which case immediate vesting occurs). The options granted expire 10 years after the date of the grant. In the first quarter of 2019, we granted 0.3 million stock options at a grant price of $111.80, which is based on the closing New York Stock Exchange price on February 14, 2019. In the first quarter of 2018, we granted 0.3 million and 0.01 million stock options at a grant price of $106.43 and $104.45, respectively, which is based on the closing New York Stock Exchange price on March 1, 2018 and March 22, 2018, respectively.

The fair value of each option grant is estimated using the Black-Scholes option pricing model. The weighted-average assumptions used and the calculated weighted-average fair values of options granted in 2019 and 2018 are as follows:



	2019			2018
Expected dividend yield	2.93		%	2.93		%
Risk-free interest rate	2.60		%	2.84		%
Expected life (in years)	7.5			7.5
Expected volatility	17.79		%	16.72		%
Weighted-average fair value of options granted	$	16.39		$	15.23

Compensation expense for share-based awards recognized in "Compensation and benefits" on the statements of consolidated income for the three months ended June 30, 2019 and 2018 was $205 and $139 million pre-tax, respectively. Compensation expense for share-based awards recognized in "Compensation and benefits" on the statements of consolidated income for the six months ended June 30, 2019 and 2018 was $513 and $378 million pre-tax, respectively.

INVESTMENTS AND RESTRICTED CASH

6 Months Ended

Jun. 30, 2019

Marketable Securities [Abstract]

INVESTMENTS AND RESTRICTED CASH

CASH AND INVESTMENTS

The following is a summary of marketable securities classified as trading and available-for-sale as of June 30, 2019 and December 31, 2018 (in millions):



	Cost		Unrealized Gains		Unrealized Losses			Estimated Fair Value
June 30, 2019:
Current trading marketable securities:
Corporate debt securities	$	114	$	—	$	—		$	114
Equity securities	2		—		—			2
Total trading marketable securities	116		—		—			116

Current available-for-sale securities:
U.S. government and agency debt securities	295		4		(1		)	298
Mortgage and asset-backed debt securities	69		1		—			70
Corporate debt securities	220		2		—			222
Non-U.S. government debt securities	19		—		—			19
Total available-for-sale marketable securities	603		7		(1		)	609

Total current marketable securities	$	719	$	7	$	(1	)	$	725

	Cost		Unrealized Gains		Unrealized Losses			Estimated Fair Value
December 31, 2018:
Current trading marketable securities:
Corporate debt securities	$	137	$	—	$	—		$	137
Equity securities	2		—		—			2
Total trading marketable securities	139		—		—			139

Current available-for-sale securities:
U.S. government and agency debt securities	297		1		(1		)	297
Mortgage and asset-backed debt securities	82		—		(1		)	81
Corporate debt securities	275		—		(2		)	273
Non-U.S. government debt securities	20		—		—			20
Total available-for-sale marketable securities	674		1		(4		)	671

Total current marketable securities	$	813	$	1	$	(4	)	$	810

Investment Other-Than-Temporary Impairments

We have concluded that no material other-than-temporary impairment losses existed as of June 30, 2019. In making this determination, we considered the financial condition and prospects of the issuer, the magnitude of the losses compared with the investments’ cost, the probability that we will be unable to collect all amounts due according to the contractual terms of the security, the credit rating of the security and our ability and intent to hold these investments until the anticipated recovery in market value occurs.

Maturity Information

The amortized cost and estimated fair value of marketable securities at June 30, 2019, by contractual maturity, are shown below (in millions). Actual maturities may differ from contractual maturities because the issuers of the securities may have the right to prepay obligations with or without prepayment penalties.



	Cost		Estimated Fair Value
Due in one year or less	$	147	$	147
Due after one year through three years	472		474
Due after three years through five years	21		22
Due after five years	77		80
	717		723
Equity securities	2		2
	$	719	$	725

Non-Current Investments and Restricted Cash

Non-current investments and restricted cash are primarily associated with our self-insurance programs. We entered into an escrow agreement with an insurance carrier to guarantee our self-insurance obligations. This agreement requires us to provide collateral to the insurance carrier, which is invested in various marketable securities and cash equivalents. Collateral provided is reflected in "Cash, Cash Equivalents and Restricted Cash" in the statements of consolidated cash flows. At June 30, 2019 and December 31, 2018, we had $144 and $142 million, respectively, in self-insurance investments and restricted cash.

We held a $20 and $19 million investment in a variable life insurance policy to fund benefits for the UPS Excess Coordinating Benefit Plan at June 30, 2019 and December 31, 2018, respectively. The quarterly change in investment fair value is recognized in "Investment income and other" in the statements of consolidated income. Additionally, we held escrowed cash related to the acquisition and disposition of certain assets of $3 and $9 million as of June 30, 2019 and December 31, 2018, respectively.

The amounts described above are classified as “Investments and Restricted Cash” in the consolidated balance sheets.

A reconciliation of cash and cash equivalents and restricted cash from the consolidated balance sheets to the statements of consolidated cash flows is shown below (in millions):



	June 30, 2019		December 31, 2018		June 30, 2018
Cash and cash equivalents	$	4,072	$	4,225	$	4,214
Restricted cash	144		142		277
Total cash, cash equivalents and restricted cash	$	4,216	$	4,367	$	4,491

Fair Value Measurements

Marketable securities valued utilizing Level 1 inputs include active exchange-traded equity securities and equity index funds, and most U.S. government debt securities, as these securities all have quoted prices in active markets. Marketable securities valued utilizing Level 2 inputs include asset-backed securities, corporate bonds and municipal bonds. These securities are valued using market corroborated pricing, matrix pricing or other models that utilize observable inputs such as yield curves.

We maintain holdings in certain investment partnerships that are measured at fair value utilizing Level 3 inputs (classified as “Other non-current investments” in the tables below, and as “Other Non-Current Assets” in the consolidated balance sheets). These partnership holdings do not have quoted prices, nor can they be valued using inputs based on observable market data. These investments are valued internally using a discounted cash flow model with two significant inputs: (1) the after-tax cash flow projections for each partnership, and (2) a risk-adjusted discount rate consistent with the duration of the expected cash flows for each partnership. The weighted-average discount rates used to value these investments were 7.45% and 8.16% as of June 30, 2019 and December 31, 2018, respectively. These inputs, and the resulting fair values, are updated on a quarterly basis. The level 3 instruments measured on a recurring basis totaled $1 and $2 million as of June 30, 2019 and December 31, 2018, respectively.

The following table presents information about our investments measured at fair value on a recurring basis as of June 30, 2019 and December 31, 2018, and indicates the fair value hierarchy of the valuation techniques utilized to determine such fair value (in millions):



	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance
June 30, 2019:
Marketable Securities:
U.S. government and agency debt securities	$	298	$	—	$	—	$	298
Mortgage and asset-backed debt securities	—		70		—		70
Corporate debt securities	—		336		—		336
Equity securities	—		2		—		2
Non-U.S. government debt securities	—		19		—		19
Total marketable securities	298		427		—		725
Other non-current investments	20		—		1		21
Total	$	318	$	427	$	1	$	746



December 31, 2018:
Marketable Securities:
U.S. government and agency debt securities	$	297	$	—	$	—	$	297
Mortgage and asset-backed debt securities	—		81		—		81
Corporate debt securities	—		410		—		410
Equity securities	—		2		—		2
Non-U.S. government debt securities	—		20		—		20
Total marketable securities	297		513		—		810
Other non-current investments	19		—		2		21
Total	$	316	$	513	$	2	$	831

There were no transfers of investments between Level 1 and Level 2 during the six months ended June 30, 2019 or 2018.

PROPERTY, PLANT AND EQUIPMENT

6 Months Ended

Jun. 30, 2019

Property, Plant and Equipment [Abstract]

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment as of June 30, 2019 and December 31, 2018 consists of the following (in millions):



	2019			2018
Vehicles	$	9,975		$	9,820
Aircraft	17,908			17,499
Land	2,073			2,000
Buildings	4,890			4,808
Building and leasehold improvements	4,531			4,323
Plant equipment	12,165			11,833
Technology equipment	2,160			2,093
Construction-in-progress	2,847			2,112
	56,549			54,488
Less: Accumulated depreciation and amortization	(28,454		)	(27,912		)
	$	28,095		$	26,576

As part of our ongoing investment in transformation, in 2018 we made prospective revisions to our estimates of useful lives for building improvements, vehicles and plant equipment which in general had the effect of lengthening the useful lives of these categories. In the second quarter of 2019, we made capital investments in property, plant and equipment, net of disposals and fully-depreciated assets, that resulted in an increase in depreciation expense of $95 million and a decrease in net income of $73 million or $0.08 per share on a basic and diluted basis. The increase in depreciation expense was offset by the effect of lengthening the useful lives of various asset categories, in the latter half of 2018, which resulted in a decrease in depreciation expense of $54 million and an increase in net income of $41 million or $0.05 per share on a basic and diluted basis. Combining both impacts resulted in a net increase of $41 million in depreciation expense, and a net decrease in net income of $32 million or $0.03 per share on both a basic and diluted basis.

For the six months ended June 30, 2019, the impact of our ongoing capital investments in property, plant and equipment, net of disposals and fully-depreciated assets, resulted in an increase in depreciation expense of $185 million and a decrease in net income of $142 million or $0.16 per share on a basic and diluted basis. The increase in depreciation expense was offset by the effect of lengthening the useful lives of various asset categories, in the latter half of 2018, which resulted in a decrease in depreciation expense of $181 million and an increase in net income of $139 million or $0.16 per share on a basic and diluted basis. Combining both impacts resulted in a net increase of $4 million in depreciation expense, and a decrease in net income of $3 million or $0.00 per share on both a basic and diluted basis.

We continually monitor our aircraft fleet utilization in light of current and projected volume levels, aircraft fuel prices and other factors. Additionally, we monitor all other property, plant and equipment categories for any indicators that the carrying value of the assets may not be recoverable. No impairment charges on property, plant and equipment were recorded during the six months ended June 30, 2019 or 2018.

EMPLOYEE BENEFIT PLANS

6 Months Ended

Jun. 30, 2019

Retirement Benefits [Abstract]

EMPLOYEE BENEFIT PLANS

Company-Sponsored Benefit Plans

Information about net periodic benefit cost for our company-sponsored pension and postretirement benefit plans is as follows for the three and six months ended June 30, 2019 and 2018 (in millions):



	U.S. Pension Benefits						U.S. Postretirement Medical Benefits						International Pension Benefits
	2019			2018			2019			2018			2019			2018
Three Months Ended June 30:
Service cost	$	360		$	415		$	6		$	7		$	14		$	16
Interest cost	517			450			27			26			11			11
Expected return on assets	(783		)	(800		)	(2		)	(2		)	(19		)	(19		)
Amortization of prior service cost	55			48			1			2			1			—
Net periodic benefit cost	$	149		$	113		$	32		$	33		$	7		$	8

	U.S. Pension Benefits						U.S. Postretirement Medical Benefits						International Pension Benefits
	2019			2018			2019			2018			2019			2018
Six Months Ended June 30:
Service cost	$	719		$	831		$	12		$	14		$	28		$	32
Interest cost	1,034			899			54			52			23			23
Expected return on assets	(1,565		)	(1,601		)	(4		)	(4		)	(38		)	(39		)
Amortization of prior service cost	109			97			3			4			1			—
Net periodic benefit cost	$	297		$	226		$	65		$	66		$	14		$	16

During the first six months of 2019, we contributed $874 and $234 million to our company-sponsored pension and U.S. postretirement medical benefit plans, respectively. We currently expect to contribute approximately $1.2 billion and $10 million over the remainder of the year to the pension and U.S. postretirement medical benefit plans, respectively. Subject to market conditions, we continually evaluate opportunities for additional discretionary pension contributions.

The components of net periodic benefit cost other than current service cost are presented within “Investment income and other” in the statements of consolidated income.

Multiemployer Benefit Plans

We contribute to a number of multiemployer defined benefit and health and welfare plans under the terms of collective bargaining agreements that cover our union-represented employees. Our current collective bargaining agreements set forth the annual contribution increases allotted to the plans that we participate in, and we are in compliance with these contribution rates. These limitations on annual contribution rates will remain in effect throughout the terms of the existing collective bargaining agreements.

As of June 30, 2019 and December 31, 2018 we had $849 and $852 million, respectively, recorded in "Other Non-Current Liabilities" as well as $7 million as of June 30, 2019 and December 31, 2018, recorded in "Other current liabilities" on our consolidated balance sheets associated with our previous withdrawal from a multiemployer pension plan. This liability is payable in equal monthly installments over a remaining term of approximately 43 years. Based on the borrowing rates currently available to us for long-term financing of a similar maturity, the fair value of this withdrawal liability as of June 30, 2019 and December 31, 2018 was $889 and $832 million, respectively. We utilized Level 2 inputs in the fair value hierarchy of valuation techniques to determine the fair value of this liability.

UPS was a contributing employer to the Central States Pension Fund (“CSPF”) until 2007 when we withdrew from the CSPF and fully funded our allocable share of unfunded vested benefits by paying a $6.1 billion withdrawal liability. Under a collective bargaining agreement with the International Brotherhood of Teamsters (“IBT”), UPS agreed to provide coordinating benefits in the UPS/IBT Full Time Employee Pension Plan (“UPS/IBT Plan”) for UPS participants whose last employer was UPS and who had not retired as of January 1, 2008 (“the UPS Transfer Group”) in the event that benefits are lawfully reduced by the CSPF in the future consistent with the terms of our withdrawal agreement with the CSPF. Under our withdrawal agreement with the CSPF, benefits to the UPS Transfer Group cannot be reduced without our consent and can only be reduced in accordance with applicable law.

In December 2014, Congress passed the Multiemployer Pension Reform Act (“MPRA”). This change in law for the first time permitted multiemployer pension plans to reduce benefit payments to retirees, subject to specific guidelines in the statute and government approval. In September 2015, the CSPF submitted a proposed pension benefit reduction plan to the U.S. Department of the Treasury (“Treasury”). In May 2016, Treasury rejected the proposed plan submitted by the CSPF. In the first quarter of 2018, Congress established a Joint Select Committee to develop a recommendation to improve the solvency of multiemployer plans and the Pension Benefit Guaranty Corporation (“PBGC”) before a November 30, 2018 deadline. While the Committee’s efforts failed to meet its deadline, the Committee made significant progress towards finding solutions that will address the long term solvency of multiemployer pension plans. UPS will continue to work with all stakeholders, including legislators and regulators, to implement an acceptable solution.

The CSPF has said that it believes a legislative solution to its funded status is necessary or that it will become insolvent in 2025, and we expect that the CSPF will continue to explore options to avoid insolvency. Numerous factors could affect the CSPF’s funded status and UPS’s potential obligation to pay coordinating benefits under the UPS/IBT Plan. Any obligation to pay coordinating benefits will be subject to a number of significant uncertainties, including whether the CSPF submits a revised MPRA filing and the terms thereof, or whether it otherwise seeks federal government assistance, as well as the terms of any applicable legislation, the extent to which benefits are paid by the PBGC and our ability to successfully defend legal positions we may take in the future under the MPRA, including the suspension ordering provisions, our withdrawal agreement and other applicable law.

We account for the potential obligation to pay coordinating benefits to the UPS Transfer Group under Accounting Standards Codification Topic 715- Compensation- Retirement Benefits (“ASC 715”), which requires us to provide a best estimate of various actuarial assumptions, including the eventual outcome of this matter, in measuring our pension benefit obligation at the December 31st measurement date. While we currently believe the most likely outcome to this matter and the broader systemic problems facing multiemployer pension plans is intervention by the federal government, ASC 715 does not permit anticipation of changes in law in making a best estimate of pension liabilities.

As such, our best estimate of the next most likely outcome at the December 31, 2018 measurement date was that the CSPF would submit and implement another benefit reduction plan under the MPRA during 2019. We believe any MPRA filing would be designed to forestall insolvency by reducing benefits to participants other than the UPS Transfer Group to the maximum extent permitted, and then reducing benefits to the UPS Transfer Group by a lesser amount.

We evaluated this outcome using a deterministic cash flow projection, reflecting updated estimated CSPF cash flows and investment earnings, the lack of legislative action and the absence of a MPRA filing by the CSPF. As a result, at the December 31, 2018 measurement date, the best estimate of our projected benefit obligation increased by $1.6 billion for coordinating benefits that may be required to be directly provided by the UPS/IBT Plan to the UPS Transfer Group.

The future value of this estimate will be influenced by the terms and timing of any MPRA filing, changes in our discount rate, rate of return on assets and other actuarial assumptions, presumed solvency of the PBGC, as well as potential solutions resulting from federal government intervention. Any such event may result in a decrease or an increase in the best estimate of our projected benefit obligation. If the uncertainties are not resolved, it is reasonably possible that our projected benefit obligation could increase by approximately $2.4 billion, resulting in a total obligation for coordinating benefits of approximately $4.0 billion as previously disclosed. If a future change in law occurs, it may be a significant event requiring an interim remeasurement of the UPS/IBT Plan at the date the law is enacted. We will continue to assess the impact of these uncertainties on our projected benefit obligation in accordance with ASC 715.

Collective Bargaining Agreements

As of December 31, 2018, we had approximately 283,000 employees employed under a national master agreement and various supplemental agreements with local unions affiliated with the Teamsters. The current National Master Agreement ("NMA") was ratified on April 28, 2019, and will expire on July 31, 2023. Most of the economic provisions of the NMA are retroactive to August 1, 2018, which is the effective date of the NMA. The UPS Freight business unit national master agreement was ratified on November 11, 2018.

We have approximately 2,800 pilots who are employed under a collective bargaining agreement with the Independent Pilots Association ("IPA"), which becomes amendable on September 1, 2021.

We have approximately 1,400 airline mechanics who are covered by a collective bargaining agreement with Teamsters Local 2727 which becomes amendable November 1, 2023. In addition, approximately 3,100 of our auto and maintenance mechanics who are not employed under agreements with the Teamsters are employed under collective bargaining agreements with the International Association of Machinists and Aerospace Workers (“IAM”). On May 2, 2019, the IAM ratified a new collective bargaining agreement that will expire on July 31, 2024.

GOODWILL AND INTANGIBLE ASSETS

6 Months Ended

Jun. 30, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND INTANGIBLE ASSETS

The following table indicates the allocation of goodwill by reportable segment as of June 30, 2019 and December 31, 2018 (in millions):



	U.S. Domestic Package		International Package			Supply Chain & Freight			Consolidated
December 31, 2018:	$	715	$	417		$	2,679		$	3,811
Acquired	—		2			—			2
Currency / Other	—		(1		)	(1		)	(2		)
June 30, 2019:	$	715	$	418		$	2,678		$	3,811

The change in goodwill for both the International Package and Supply Chain & Freight segments was primarily due to the impact of changes in the value of the U.S. Dollar on the translation of non-U.S. Dollar goodwill balances.

The following is a summary of intangible assets as of June 30, 2019 and December 31, 2018 (in millions):



	Gross Carrying Amount		Accumulated Amortization			Net Carrying Value
June 30, 2019:
Capitalized software	$	3,898	$	(2,579	)	$	1,319
Licenses	117		(50		)	67
Franchise rights	146		(108		)	38
Customer relationships	735		(253		)	482
Trade name	200		—			200
Trademarks, patents and other	55		(40		)	15
Total Intangible Assets, Net	$	5,151	$	(3,030	)	$	2,121
December 31, 2018:
Capitalized software	$	3,693	$	(2,478	)	$	1,215
Licenses	117		(36		)	81
Franchise rights	145		(105		)	40
Customer relationships	736		(217		)	519
Trade name	200		—			200
Trademarks, patents and other	52		(31		)	20
Total Intangible Assets, Net	$	4,943	$	(2,867	)	$	2,075

As of June 30, 2019, we had a trade name with a carrying value of $200 million and licenses with a carrying value of $4 million, which are deemed to be indefinite-lived intangible assets and are included in the table above.

LEASES

6 Months Ended

Jun. 30, 2019

Leases [Abstract]

LEASES

NOTE 10. LEASES

We adopted ASU 2016-02, Leases (Topic 842), on January 1, 2019. The standard requires lessees to recognize a right-of-use ("ROU") asset and lease liability for all leases. Some of our leases contain both lease and non-lease components, which we have elected to treat as a single lease component. We have also elected not to recognize leases that have an original lease term, including reasonably certain renewal or purchase options, of twelve months or less in our consolidated balance sheets for all classes of underlying assets. Lease costs for short-term leases are recognized on a straight-line basis over the lease term. We elected the package of transition practical expedients for existing contracts, which allowed us to carry forward our historical assessments of whether contracts are or contain leases, lease classification and determination of initial direct costs.

We lease property and equipment under finance and operating leases. We have finance and operating leases for package centers, airport facilities, warehouses, corporate office space, aircraft, aircraft engines, information technology equipment (primarily mainframes, servers and copiers), vehicles and various other equipment used in operating our business. Certain leases for real estate and aircraft contain options to purchase, extend or terminate the lease. Determining the lease term and amount of lease payments to include in the calculation of the ROU asset and lease liability for leases containing options requires the use of judgment to determine whether the exercise of an option is reasonably certain, and if the optional period and payments should be included in the calculation of the associated ROU asset and liability. In making this determination, we consider all relevant economic factors that would compel us to exercise or not exercise an option.

When available, we use the rate implicit in the lease to discount lease payments; however, the rate implicit in the lease is not readily determinable for substantially all of our leases. In such cases, we use an estimate of our incremental borrowing rate to discount lease payments based on information available at lease commencement.

Aircraft

In addition to the aircraft that we own, we have leases for 335 aircraft. Of these leased aircraft, 34 are classified as finance leases, 12 are classified as operating leases and the remaining 289 are classified as short-term leases. A majority of the obligations associated with the aircraft classified as finance leases have been legally defeased. The long-term aircraft operating leases are operated by a third party to handle package and cargo volume in geographic regions where, due to government regulations, we are restricted from operating an airline.

In order to meet customers' needs, we charter aircraft to handle package and cargo volume on certain international trade lanes and domestic routes. Due to the nature of these agreements, primarily being that either party can cancel the agreement with short notice, we have classified these as short-term leases. Additionally, all of the lease payments associated with these charter agreements are variable in nature based on the number of hours flown.

Real Estate

We have operating and finance leases for package centers, airport facilities, warehouses, corporate office space and expansion facilities utilized during peak shipping periods. Many of our leases contain charges for common area maintenance or other miscellaneous expenses that are updated based on landlord estimates. Due to this variability, the cash flows associated with these charges are not included in the minimum lease payments used in determining the ROU asset and associated lease liability.

Some of our real estate leases contain options to renew or extend the lease or terminate the lease before the expiration date. These options are factored into the determination of the lease term and lease payments when their exercise is considered to be reasonably certain.

From time to time, we enter into leases with the intention of purchasing the property, either through purchase options with a fixed price or a purchase agreement negotiated contemporaneously with the lease agreement. We classify these leases as finance leases and include the purchase date and purchase price in the lease term and lease payments, respectively, when the option to exercise or purchase is reasonably certain.

Transportation equipment and other equipment

We enter into both long-term and short-term leases for transportation equipment to supplement our capacity or meet contractual demands. Some of these assets are leased on a month-to-month basis and the leases can be terminated without penalty. The lease term for these types of leases is determined by the length of the underlying customer contract or based on the judgment of the business unit. We also enter into multi-year leases for trailers to increase capacity during periods of high demand, which are typically only used for 90-120 days during the year. These leases are treated as short-term as the cumulative right-of-use is less than 12 months over the term of the contract.

The remainder of our leases are primarily related to equipment used in our air operations, vehicles required to meet capacity needs during periods of higher demand for our shipping services, technology equipment and office equipment used in our facilities.

Some of our transportation and technology equipment leases require us to make additional lease payments based on the underlying usage of the assets. Due to the variable nature of these costs, these are expensed as incurred and are not included in the ROU asset and lease liability.

The components of lease expense for the three and six months ended June 30, 2019 are as follows (in millions):



	Three Months Ended June 30,		Six Months Ended June 30,
	2019		2019
Operating lease costs	$	166	$	323
Finance lease costs:
Amortization of assets	18		$	37
Interest on lease liabilities	4		9
Total finance lease costs	22		46
Variable and short-term lease costs	240		518
Total lease costs	$	428	$	887

Supplemental information and balance sheet location related to leases is as follows (in millions, except lease term and discount rate):




	June 30, 2019
Operating Leases:
Operating lease right-of-use assets	$	2,477

Current maturities of operating leases	$	487
Non-current operating leases	2,026
Total operating lease liabilities	$	2,513

Finance Leases:
Property, plant and equipment, at cost	$	2,513
Accumulated amortization	961
Property, plant and equipment, net	$	1,552

Current maturities of long-term debt, commercial paper and finance leases	$	77
Long-term debt and finance leases	368
Total finance lease liabilities	$	445

Weighted average remaining lease term (in years):
Operating leases	9.2
Finance leases	10.6

Weighted average discount rate:
Operating leases	2.70		%
Finance leases	4.37		%

Supplemental cash flow information related to leases is as follows (in millions):



	Six Months Ended June 30,
	2019
Cash paid for amounts included in measurement of liabilities:
Operating cash flows from operating leases	$	311
Operating cash flows from finance leases	9
Financing cash flows from finance leases	85

Right-of-use assets obtained in exchange for lease liabilities:
Operating leases	$	56

Maturities of lease liabilities as of June 30, 2019 are as follows (in millions):



	Finance Leases			Operating Leases
2019	$	62		$	293
2020	94			522
2021	42			441
2022	38			366
2023	37			292
Thereafter	293			1,077
Total lease payments	566			2,991
Less: Imputed interest	(121		)	(478		)
Total lease obligations	445			2,513
Less: Current obligations	(77		)	(487		)
Long-term lease obligations	$	368		$	2,026

As of June 30, 2019, we have additional leases which have not commenced. These leases will commence when we are granted access to the property, such as when leasehold improvements are completed by the lessor or a certificate of occupancy is obtained. These leases will commence in 2019 and 2020.

Disclosures related to periods prior to adoption of the new lease standard

The following table sets forth the aggregate minimum lease payments under capital and operating leases (in millions) as of December 31, 2018:



	Capital Leases			Operating Leases
2019	$	158		$	578
2020	95			477
2021	42			399
2022	39			325
2023	36			262
After 2023	293			926
Total lease payments	663			2,967
Less: Imputed interest	(129		)
Total lease obligations	534
Less: Current obligations	(140		)
Long-term lease obligations	$	394

LEASES

NOTE 10. LEASES

Aircraft

Real Estate

Transportation equipment and other equipment

The components of lease expense for the three and six months ended June 30, 2019 are as follows (in millions):



	Three Months Ended June 30,		Six Months Ended June 30,
	2019		2019
Operating lease costs	$	166	$	323
Finance lease costs:
Amortization of assets	18		$	37
Interest on lease liabilities	4		9
Total finance lease costs	22		46
Variable and short-term lease costs	240		518
Total lease costs	$	428	$	887

Supplemental information and balance sheet location related to leases is as follows (in millions, except lease term and discount rate):




	June 30, 2019
Operating Leases:
Operating lease right-of-use assets	$	2,477

Current maturities of operating leases	$	487
Non-current operating leases	2,026
Total operating lease liabilities	$	2,513

Finance Leases:
Property, plant and equipment, at cost	$	2,513
Accumulated amortization	961
Property, plant and equipment, net	$	1,552

Current maturities of long-term debt, commercial paper and finance leases	$	77
Long-term debt and finance leases	368
Total finance lease liabilities	$	445

Weighted average remaining lease term (in years):
Operating leases	9.2
Finance leases	10.6

Weighted average discount rate:
Operating leases	2.70		%
Finance leases	4.37		%

Supplemental cash flow information related to leases is as follows (in millions):



	Six Months Ended June 30,
	2019
Cash paid for amounts included in measurement of liabilities:
Operating cash flows from operating leases	$	311
Operating cash flows from finance leases	9
Financing cash flows from finance leases	85

Right-of-use assets obtained in exchange for lease liabilities:
Operating leases	$	56

Maturities of lease liabilities as of June 30, 2019 are as follows (in millions):



	Finance Leases			Operating Leases
2019	$	62		$	293
2020	94			522
2021	42			441
2022	38			366
2023	37			292
Thereafter	293			1,077
Total lease payments	566			2,991
Less: Imputed interest	(121		)	(478		)
Total lease obligations	445			2,513
Less: Current obligations	(77		)	(487		)
Long-term lease obligations	$	368		$	2,026

Disclosures related to periods prior to adoption of the new lease standard

The following table sets forth the aggregate minimum lease payments under capital and operating leases (in millions) as of December 31, 2018:



	Capital Leases			Operating Leases
2019	$	158		$	578
2020	95			477
2021	42			399
2022	39			325
2023	36			262
After 2023	293			926
Total lease payments	663			2,967
Less: Imputed interest	(129		)
Total lease obligations	534
Less: Current obligations	(140		)
Long-term lease obligations	$	394

DEBT AND FINANCING ARRANGEMENTS

6 Months Ended

Jun. 30, 2019

Debt Disclosure [Abstract]

DEBT AND FINANCING ARRANGEMENTS

The carrying value of our outstanding debt as of June 30, 2019 and December 31, 2018 consists of the following (in millions):



	Principal Amount			Carrying Value
	Principal Amount		Maturity	2019		2018
Commercial paper	$	2,871	2019-2020	$	2,871	$	2,662

Fixed-rate senior notes:
5.125% senior notes	1,000		2019	—		998
3.125% senior notes	1,500		2021	1,531		1,492
2.050% senior notes	700		2021	698		698
2.450% senior notes	1,000		2022	1,001		1,023
2.350% senior notes	600		2022	598