How UPS Is Coping With the Country’s Online Shopping Habit
United Parcel Service is making moves to accomodate our collective habit of getting everything delivered to our front doors.
The shipping giant reported first-quarter earnings on Thursday, and in a call with shareholders, executives delved into the “transformation” plan it announced in December with the hire of Walmart alum Scott Price.
The company plans to reduce costs and drive growth in its operations, responding to increasing parcel volumes and competition from Amazon, which expects to roll out its own logistics network this year.
It’s also adapting to another new normal: Delivery to individual consumers has overtaken delivery to businesses (a segment for which UPS is still the leading provider), a more expensive undertaking because of the difference in density, with drivers dropping off one or two packages to an address rather than a few dozen. In fact, online shopping drove a 4.6 increase in parcel volumes for the company’s U.S. domestic service in the first quarter.
Despite the challenges, UPS’s first-quarter revenues were up 10 percent from last year to $17.1 billion. The company said it has been investing in capital and new technology, adding automation capabilities to its facilities as well as 5 million square feet of distribution space in places like Atlanta, Phoenix and Salt Lake City, plus an additional million square feet abroad.
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“The future of UPS is being designed to create a more flexible and agile company and at the same time enhance our ability to better serve customers,” said COO James Jay Barber.
