United Parcel Service

For the United States postal service, see United States Postal Service.
United Parcel Service, Inc.
Public company
Traded as NYSE: UPS
Dow Jones Transportation Average component
S&P 500 Component
Industry Courier
Founded August 28, 1907 (1907-08-28)
Seattle, Washington
Founder James E. Casey
Headquarters Sandy Springs, Georgia, U.S.
Area served
 Worldwide
Key people
 David Abney (CEO)
Scott Davis (Chairman)
Products Courier express services
Freight forwarding services
logistics services
Revenue Increase US$ 58.363 billion [1] (2015)[2]
Increase US$ 7.668 billion (2015)[2]
Increase US$ 4.844 billion (2015)[2]
Total assets
  • Increase US$ 38.311 billion (2015) [3]
  • Decrease US$ 35.44 billion (2014) [3]
Total equity Increase US$ 2.47 billion (2015)[2]
Number of employees
 444,000 (2015)[1]
Subsidiaries The UPS Store
UPS Supply Chain Solutions
UPS Capital
UPS Airlines
UPS Express Critical
UPS Freight
UPS Logistics
UPS Mail Innovations
UPS Professional Solutions
UPS i-parcel
Website UPS.com

United Parcel Service, Inc. (UPS) is the world's largest package delivery company and a provider of supply chain management solutions.[4] The global logistics company is headquartered in Sandy Springs, Georgia, which is part of the Greater Atlanta metropolitan area. UPS delivers more than 15 million packages a day to more than 6.1 million customers in more than 220 countries and territories around the world.[5][6][7]

UPS is known for its brown delivery trucks and uniforms, hence the company nickname "Brown". UPS also operates its own airline and air cargo delivery service (IATA: 5X, ICAO: UPS, Call sign: UPS) based in Louisville, Kentucky.

UPS boat on Canal Grande, Venice, Italy

History

Foundation

On August 28, 1907, James Casey founded the American Messenger Company with fellow teenager Claude Ryan[8] in Seattle, Washington,[9] capitalized with $100 in debt.[10]

UPS logo (1919-1937)

In 1913, the first delivery car appeared, a Model T Ford. Casey and Ryan merged with a competitor, Evert McCabe, and formed Merchants Parcel Delivery. Consolidated delivery was also introduced, combining packages addressed to a certain neighborhood onto one delivery vehicle.[10]

UPS logo (1937-1961)

In 1930, a consolidated service began in New York City, and soon after in other major cities in the East and the Midwest. In 1937, the logo was redesigned to reflect the company's new name United Parcel Service.[11] All UPS vehicles are then painted Pullman brown. In 1937, The UPS logo is revised for the first time; it then included the tagline "The Delivery System for Stores of Quality".

1969 Checker Marathon from UPS Canada

From 1940 to 1959, the company acquired "common carrier" rights to deliver packages between all addresses, any customer, private and commercial.

Explosion

Shortly before 3:00 a.m, on the morning of December 5, 1974, a package bomb exploded at UPS's Northside center on Beaver Avenue in Pittsburgh, Pennsylvania, killing 41-year-old John Metz and injuring 10 others.[12][13] The murder case was investigated by Robert Coll, Assistant Superintendent of City Detectives. The package originated in western Ohio and its destination was believed to be a New Kensington motorcycle shop. UPS claimed no liability in the incident, and the case was never solved.

Expansion

In 1975, UPS moved its headquarters to Greenwich, Connecticut and began servicing all of the 48 contiguous states of the USA. UPS also established Canadian operations in 1975. On Feb. 28, UPS Ltd. (later changed to UPS Canada Ltd.) began operations in Toronto, Ontario. UPS Canada's head office is located in Burlington, Ontario. In 1976, UPS established a domestic operation in West Germany.[14]

In 1982, UPS Next-Day Air Service was offered in the US and Blue Label Air became UPS 2nd Day Air Service.

In 1988, UPS Airlines was launched.[14] In 1991, UPS moved its headquarters to Sandy Springs, Georgia, a suburb of Atlanta. In 1992, UPS acquired both Haulfast and Carryfast and rebranded them UPS Supply Chain Solutions. Haulfast provided the pallet haulage and trucking network for the CarryFast group of companies.

In 1995, UPS acquired SonicAir to offer service parts logistics and compete with Choice Logistics. In 1997, a walkout by the 185,000 members of the Teamsters shut down UPS for 16 days.[15]

In 1998, UPS Capital was established. UPS acquired Challenge Air in 1999 to expand its operations in Latin America.[16]

On November 10, 1999, UPS became a public company.

In 2001, UPS acquired Mail Boxes Etc., Inc.[17] In 2003, the two companies introduced The UPS Store brand, and approximately 3,000 Mail Boxes Etc. locations re-branded.

Freight business

In 2004, UPS entered the heavy freight business with purchase of Menlo Worldwide Forwarding, a former subsidiary of Menlo Worldwide. UPS rebranded it as UPS Supply Chain Solutions. The purchase price was US$150 million and the assumption of US$110 million in long-term debt. On August 5, 2005, UPS announced that it has completed its acquisition of less-than-truckload (LTL) trucking company Overnite Transportation for US$1.25 billion.[18] This was approved by the FTC and Overnite shareholders on August 4, 2005. On April 28, 2006, Overnite officially became UPS Freight. On October 3, 2005, UPS completed the purchase of LYNX Express Ltd, one of the largest independent parcel carriers in the United Kingdom, for £55.5 million (US$97.1 million) after receiving approval for the transaction from the European Commission. The first joint package car center operation, in Dartford, Kent, is opened in 2006.

On August 28, 2007, United Parcel Service celebrated its 100th anniversary. In June 2009, United Parcel Service lobbied to have language added to the Federal Aviation Administration Reauthorization Act. FedEx ran a negative ad campaign called Brown Bailout. On March 19, 2012, UPS announced that it intended to acquire TNT Express for $6.8 billion, in a move to help expand its presence in European and Asian markets.[19] However, the deal fell through in January 2013 after it was announced that UPS had failed to obtain permission from the European Commission and as such had been blocked on competition grounds.[20]

Recent years

During Christmas 2013, UPS (as well as FedEx) failed to meet guaranteed Christmas delivery deadlines for a small percentage of customers.[21] UPS blamed the delays on large numbers of last-minute online holiday sales, which were spurred by retailer delivery guarantees and an unusually short holiday shopping season due to a late Thanksgiving.[22] UPS did not deliver on Christmas Day, but sorters worked Christmas afternoon and evening to load planes. Most affected shipments were delayed by one day.[23]

Company structure

UPS's primary business is the time-definite delivery of packages and documents worldwide. In recent years, UPS has extended its service portfolio to include less than truckload transportation (primarily in the U.S.) and supply chain services. UPS reports its operations in three segments: U.S. Domestic Package operations, International Package operations, and Supply Chain & Freight operations.

U.S. Domestic Package

U.S. Domestic Package operations include the time-definite delivery of letters, documents, and packages throughout the United States.

International Package

UPS has service worldwide, including Israel's Ben Gurion International Airport (pictured above).

International Package operations include delivery to more than 220 countries and territories worldwide,[7] including shipments wholly outside the United States, as well as shipments with either origin or distribution outside the United States.

Supply Chain & Freight

Supply Chain & Freight (UPS-SCS for UPS Supply Chain Solutions) includes UPS' forwarding and contract logistics operations, UPS Freight, and other related business units. UPS' forwarding and logistics business provides services in more than 175 countries and territories worldwide, and includes worldwide supply chain design, execution and management, freight forwarding and distribution, customs brokerage, mail and consulting services. UPS Freight offers a variety of less than truckload ("LTL") and truckload ("TL") services to customers in North America.

Other business units within this segment include The UPS Store and UPS Capital.[24]

Competitors

Major competitors in the United States include United States Postal Service (USPS) and FedEx, as well as regional US carriers such as OnTrac, Eastern Connection, and Lone Star Overnight. In addition to these domestic carriers, UPS competes with a variety of international operators, including Canada Post, Purolator, TransForce, DHL Express, Deutsche Post (and its subsidiary DHL), Royal Mail, Japan Post, India Post and many other regional carriers, national postal services and air cargo handlers (see Package delivery and Mail pages).

Historically, the bulk of UPS' competition came from inexpensive ground-based delivery services, such as Parcel Post (USPS) or Choice Logistics. But in 1998 FedEx expanded into the ground parcel delivery market by acquiring RPS (originally Roadway Package System) and rebranding it as FedEx Ground in 2000. In 2003 DHL expanded its US operations by acquiring Airborne Express, significantly increasing its presence in the United States, and adding more competition in the ground delivery market. In response to this, UPS partnered with the US Postal Service to offer UPS Mail Innovations,[25] a program that allows UPS to pick up mail & packages separately from the main Ground network and transfer them to a USPS center, or destination delivery unit (DDU),[26] for final distribution. This process is also known as zone skipping,[27] long used by Parcel Consolidators.[28] UPS also has a separate product called "SurePost" which uses the UPS Ground network to deliver packages to the nearest UPS depot, which transfers them to the USPS DDU for final delivery.[29]

More recently, the continued growth of online shopping, combined with increasing awareness of the role transportation (including package delivery) has on the environment, has contributed to the rise of emerging competition from niche carriers or rebranded incumbents. For instance, the US Postal Service claims "greener delivery" of parcels on the assumption that USPS letter carriers deliver to each US address, six days a week anyway, and therefore offer the industry's lowest fuel consumption per delivery. Other carriers, like ParcelPool.com,[30] which specializes in residential package delivery to APO/FPO addresses, Hawaii, Alaska, Puerto Rico, and other US Territories, arose in response to increased demand from catalog retailers and online e-tailers for low-cost residential delivery services closely matching service standards normally associated with more expensive expedited parcel delivery.

Characteristic features

Brown

The brown color that UPS uses on its vehicles and uniforms is called Pullman Brown. The color is also mentioned in its former advertising slogan: "What can Brown do for you?"[31] Originally founder James E. Casey wanted the trucks to be yellow, but one of his partners, Charlie Soderstrom, stated they would be impossible to keep clean, and that Pullman railroad cars were brown for just that reason.[8]

Font

UPS commissioned brand consultancy FutureBrand to develop its own font, UPS Sans, for use in marketing and communication material. UPS Sans was created by slightly altering certain parts of FSI FontShop International's font FF Dax without permission. This has resulted in an agreement between FSI FontShop International and FutureBrand to avoid litigation.[32]

United Parcel Service logo (1961–2003) designed by Paul Rand

Vehicles

Package cars

UPS package car from rear quarter. US variant, Corpus Christi, Texas
Mercedes Sprinter-based package car in London. The van carries the logo of the London 2012 Olympics, to show that UPS is a sponsor of the games
A UPS trailer parked in Durham, North Carolina

The UPS package car (or van) is a major symbol of the U.S. business world, with its iconic status referenced in an early-2000s ad campaign following UPS' sponsorship of Dale Jarrett in the NASCAR Sprint Cup Series: the ads were about how the company would prefer to race the truck over a stock car despite the futility of doing so, as "people love the truck".

The classic UPS package car is built on a General Motors or Ford chassis, has a manual transmission, manual steering, and no radio or air conditioning. Older vehicles are easily recognizable due to their round headlights and turn signals set onto a sculpted fiberglass hood. These are either Morgan Olson or Union City Body P-500, P-600, or P-800 step vans (a recent redesign changed the look, replacing the round turn signals with ovoid LED ones). The cars lack manufacturer's name or badges.

Newer package cars in North America have either a Freightliner Trucks or Navistar International chassis; automatic transmissions and power steering are slowly appearing in package cars. UPS also operates Mercedes-Benz Sprinter box vans (occasionally with Dodge badges) as well as Dodge Grand Caravan minivans.

UPS has ordered Modec electric vans for its UK and German fleets. Energy costs play a huge part in the potential profitability of package delivery companies like DHL and FedEx.[33]

When UPS ground vehicles reach the end of their useful service life and are no longer roadworthy (typically 20–25 years or more, but generally when the body's structural integrity is compromised), they are almost always stripped of reusable parts, repainted in household paint to cover up the trademark, and then sent to the scrapyard to be crushed and broken up. The only exception to this policy is when a package car is repainted white for internal use, usually at a large hub. Prior to scrapping, UPS trucks and trailers are assigned an ADA (Automotive Destruction Authorization) number and must be crushed under supervision of UPS Automotive personnel, which records the vehicle's destruction, as UPS does not re-sell any of its ground vehicles.

Other trucks

UPS commonly refers to its tractor-trailers as "feeders". The tractor units are painted the same Pullman brown as the package cars, while all company-owned trailers are painted gray. UPS trailers come in a variety of lengths. The shortest trailers (also known as "Pups") are 28 feet (8.5 m) long; longer trailers (also known as "Rails") come in lengths of 45, 48 or 53 feet (16 m). Towing two of the short trailers in tandem are referred to as "double pups" or a "set." There are three different types of feeders — Flatbed, Drop Frame, and Trailer-on-flatcar (TOFC); the latter are put onto railroad cars.

Tractor units are usually made by Navistar or Mack, but a few Ford, Sterling, and Freightliner tractors are in the fleet. Past makes in the fleet include Chevrolet, GMC, and Diamond REO. At one time, UPS used electric-powered trucks, made by White Motors, for deliveries in Manhattan, NYC. There were only a few hundred of them, but they were notable for their "spooky silence" when running.

Bicycles

UPS bike delivery in Hamburg

In 2008, UPS started hiring bike delivery people in Vancouver, Washington, and in Portland, Salem, Corvallis, Antelope, Eugene, and Medford, Oregon.[34]

Trains

UPS contracts with several railroad companies in the United States to provide intermodal transport for its cargo.

Services

UPS offers 27 different services for their U.S., International, and Freight divisions. Services include: Next Day Air, Second Day Air, Three Day Select, Ground, Standard, and more.

Other codes

Operating subsidiaries and alliances

ANA/UPS – All Nippon/United Parcel Deal

All Nippon Airways, a Star Alliance member, and UPS have formed a cargo alliance and code-share to transport member cargo, similarly to an airline alliance.[36]

Personnel structure

Larger UPS package vehicles custom made by Grumman Olson
Smaller UPS package vehicle on a Dodge Sprinter chassis
UPS package vehicle on a Mercedes-Benz Vario chassis
A Boeing 747 in the original UPS Airlines livery in 1998
A UPS Airlines McDonnell Douglas MD-11F aircraft just after takeoff in 2007

UPS employs approximately 395,000 staff: 318,000 in the U.S. and 77,000 internationally.[37] Approximately 240,000 UPS drivers, package handlers and clerks are represented by the International Brotherhood of Teamsters. During the 1997 United Parcel Service strike, the company's only nationwide strike in its history, which lasted 16 days, Teamster President Ron Carey negotiated a new contract for workers.[38]

Chief executives

System design

The UPS Parcel Network is based on a hub and spoke model. UPS operates centers that feed parcels to hubs where parcels are sorted and forwarded to their destinations. Centers typically are the point of entry for parcels and send the parcels to one or more hubs. A hub is a location where many centers send packages to be sorted and sent back out to other centers or hubs. For example, a standard ground parcel being shipped from Wilmington, North Carolina to San Francisco is picked up by a driver and taken to the Wilmington Package Center, where it is loaded on a trailer and driven to Greensboro, North Carolina. At Greensboro it would be loaded onto a trailer and sent by rail (trailer-on-flatcar in most cases) to the Oakland, California Hub. There it would then be forwarded to the delivery center in San Francisco, California, loaded onto the delivery vehicle, and transported to its final destination.

The UPS air network runs similarly to the ground network through a hub-and-spoke system, though air hubs are typically located at airports so airplanes can quickly be unloaded, the packages sorted, and the aircraft loaded again. Centers feed packages to facilities at airports (called gateways), which in turn send them to an air hub to be sorted and put on another airplane to a final destination gateway, and then from there to a center. For instance, a Next Day Air package traveling from Seattle, Washington to Atlanta, Georgia, would be loaded onto an air container at Boeing Field just south of Seattle and flown to the Worldport (UPS air hub) in Louisville, Kentucky. From there it would be sorted to a container heading to Atlanta to Hartsfield-Jackson International Airport, and taken by truck from the airport to the delivery center.

The UPS Store pricing for non-UPS products

Although The UPS Store provides UPS shipping at regular UPS rates, The UPS Store has been sometimes criticized for providing United States Postal Service (USPS) services at prices higher than consumers would have paid for the same services directly from the postal service.[40][41] The UPS Store allows individuals to ship via USPS at varying rates that are not the retail rates the post office charges; this is viewed as more of a convenience fee (akin to paying a slightly higher price for groceries at a convenience store). USPS rules allow third-party stores to charge extra costs that they deem necessary.

Fuel economy

UPS Package Car.

In 2004 UPS announced that it would save fuel by minimizing left turns. Because drivers are idle at intersections while waiting to make left turns, UPS developed software that routes the day's packages with preference to right turns. Since UPS operates a fleet of over 96,000 ground vehicles,[1] the fuel savings are considerable. In 2005, UPS eliminated 464,000 miles (747,000 km) from its travel and saved 51,000 US gallons (190,000 l) of fuel.[42]

UPS is also using hybrid electric vehicles (HEV) for local deliveries. As of May 22, 2007, the company has 50 deployed in Atlanta, Dallas, Houston, and Phoenix. The 50 HEVs are expected to cut fuel consumption by 44,000 US gallons (170,000 l) per year.[43]

Environmental record

As of 2013, UPS has over 96,100 vehicles in operation worldwide including 2,745 alternative-fuel vehicles.[1] In May 2008 UPS placed an order for 200 hybrid electric vehicles (adding to the 50 it had at that point) and 300 compressed natural gas (which are 20% more fuel efficient, and add to the 800 it already has) vehicles from Daimler Trucks North America.[44][45][46]

UPS received a "striding" rating of 80 points out of 100 totals on the environmental scorecard by the Climate Counts Group for its efforts to lessen the company's impact on the environment.[47] UPS has also been awarded the Clean Air Excellence Award by the United States Environmental Protection Agency because of the alternative fuel program it has developed.[48]

In October 2009, UPS became the first small-package carrier to offer customers the chance to buy carbon offsets to neutralize the greenhouse gas emissions generated by the transport of their packages. Although initially only available on ups.com and to high-volume shippers, they are now widely available through UPS shipping systems and UPS Ready third-party shipping systems.[49][50]

Employee theft

UPS had an incident of an employee stealing firearms in transit to licensed firearm dealers.[51] In response, UPS issued a policy in 1999 that all handguns must be shipped overnight. "We're trying to protect ourselves from employees stealing and criminals stealing," UPS spokesman Bob Godlewski said.[52]

On November 11, 2015, A man was arrested in connection with an organized theft ring at a UPS sorting facility and several other employees at the facility are accused of stealing cargo worth $100,000 to $200,000.[53]

Employment actions

In recent years, UPS had some employment actions brought by the Equal Employment Opportunity Commission.[54] In EEOC v. United Parcel Service, Inc. a former UPS employee took a 12-month leave of absence after she began having symptoms that were later diagnosed as multiple sclerosis. UPS had a policy allowing employees to take up to 12 months off for medical leave. When the employee exhausted this medical leave, the EEOC alleges the employee requested an additional two weeks of leave and that she could have returned to her job after those additional two weeks. Instead of allowing the alleged request for an additional two weeks of leave, UPS fired her. In Jackson v. United Parcel Service, Inc., 548 F.3d 1137 (8th Cir. 2008), UPS allegedly demoted a black, female employee after she caused an accident on her first day on the job. The court ruled that the employee failed to make out Title VII race and gender discrimination claims because UPS promptly reinstated her to her former position and paid her full back pay. The court held that "a demotion or denial of a promotion, even when accompanied by a loss in pay, is not an adverse employment action when it is corrected in a timely manner." In EEOC v. United Parcel Service, Inc., 2011 U.S. Dist. LEXIS 111464 (N.D. Ill. Sept. 28, 2011), the United States District Court for the Northern District of Illinois scrutinized agency-initiated suits that do not lay out certain basic legal elements based on the Supreme Court decisions.[55]

In 2012, the Equal Employment Opportunity Commission alleged that UPS violated federal employment law when it allowed supervisors and coworkers to discriminate against and harass an employee for being Arab and Muslim.[56]

Brokerage fees for Canadians

The normal procedure for residential customers in Canada to import goods from the U.S. by mail is relatively simple; they are required to pay 5% GST on the item in Alberta, British Columbia, Saskatchewan, Manitoba, and Quebec and higher rates of HST (Harmonized Sales Tax) in eastern Canada and Ontario (13% HST), plus a C$9.95 handling fee collected by the Canada Border Services Agency (CBSA) on behalf of Canada Post. This applies for mailed items greater than C$20 and gifts greater than C$60 in value;[57] this does not apply to items shipped by couriers such as UPS.

When delivering packages in Canada, UPS brokers clears the item through the CBSA and transfers a cost to the buyer.[58] These fees are not disclosed at the time of purchase by the seller, as many sellers from the U.S. are themselves unaware of this.[59][60][61][62][63][64][65]

As a result, there have been two class-action lawsuits filed against UPS by Canadians. The first one, filed in October 2006 by Robert Macfarlane, a resident of British Columbia[66] alleges that the UPS brokerage is "so harsh and adverse as to constitute an unconscionable practice."[67]

The second, Wright v. United Parcel Service Canada Ltd., claims "that UPS failed to obtain consumers' consent to act as a customs broker; to disclose the existence and/or amount of the brokerage fee; and to provide consumers with the opportunity or disclose to them how to arrange for customs clearance by themselves."[68] In 2011, the Ontario Superior Court ruled that, indeed, the brokerage fee was not properly disclosed.[69][70] An appeal was scheduled for June 2012.[71]

It is possible for a recipient to avoid UPS brokerage fees if a parcel is shipped using a UPS "express" (premium) service,[58] that is, another service other than UPS Standard (Ground). Fees may also be avoided if the recipient clears the parcel themself at a CBSA office.[72]

This distinction is not limited to Canada, or to UPS. As a rule, "mail" import procedures in all countries apply only to items imported by mail, i.e., originated by the exporter's local postal authority (for Canadians, commonly USPS) for delivery by the importer's local postal authority (Canada Post); they do not apply to shipments made by courier services such as UPS, FedEx, or DHL. For example, this distinction is specifically noted by U.S. Customs and Border Protection (CBP) in its website's page on Internet purchases imported into the United States; it also warns that imports by courier may come with "higher than...expected" brokerage fees that "sometimes exceed the cost of (the) purchase", and that prepaid shipping charges on imports by courier normally do not include duties or brokerage fees.[73] (The distinction may be sharper in the U.S. because CBP normally waives duties on mail imports of up to US$200 per day, but not on courier imports of any amount. Use tax, the U.S. equivalent of GST, is collected only by the states, not by CBP or shippers.) What makes this case unique is that UPS charges a substantial brokerage fee on ground shipments to Canada, when other Canadian small-package services apparently charge nothing (UPS "express" services) or a minimal fee (Canada Post).

See also

References

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  23. ↑ The former name for The UPS Store was Mail Boxes Etc., which continues to operate outside the United States and Canada. The UPS Store, Inc. is the franchisor for The UPS Store in the U.S. and Canada. "UPS Sells Off MBE Brand outside US, Canada and India". Retrieved November 10, 2010.
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  64. ↑ UPS Problems – WARNING. Ehmac.ca. Retrieved on July 12, 2011.
  65. ↑ "UPS British Columbia Class Action Lawsuit". Retrieved August 19, 2007.
  66. ↑ "Statement of Claim" (PDF). p. 5. Retrieved August 19, 2007.
  67. ↑ "Ontario Class-action Lawsuit". Retrieved August 19, 2007.
  68. ↑ Drew Hasselback (September 7, 2011). "Ontario judge rules against UPS in consumer protection case". Financial Post.
  69. ↑ "Wright v. United Parcel Service Canada Ltd., 2011 ONSC 5044". Canadian Legal Information Institute. August 26, 2011.
  70. ↑ "Ryan Wright v. United Parcel Service Canada Ltd., 2012 ONSC 3287 (CanLII)". Canadian Legal Information Institute. June 14, 2012.
  71. ↑ "Avoiding Brokerage Fees". Retrieved June 22, 2009.
  72. ↑ "Internet Purchases". CBP. Archived from the original on May 7, 2006. Retrieved August 19, 2007.

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