Investing in Ups

United Parcel Service (UPS) is one of the world’s leading carriers.  They ship and deliver packages worldwide.  They are common to a majority of citizens and are a household name.  They compete amongst many other carriers both public and private.  Some of the publicly held carriers they are in strong competition with include FedEx (FDX) and TNT (TNTEY).  There are privately held corporations which are in competition with them also.  These include the United States Postal Service and DHL.

They have been in business for a number of years and have steadily improved their business model.  They have made a few recent changes in the development of technology that are and will drive operations.  United Parcel Service (UPS) is focused on improved technology as a means of increasing efficiency and returns.

They have made a number of changes in their technology in recent years.  There are a couple of upcoming releases designed to save time and money.  They will use keyless entry systems to open bulkhead doors.  This will save 3 seconds per stop and $70 million annually.

They will introduce MyChoice technology.  This will allow customers a view into delivery windows, putting them in location right with the driver.  This should increase consumer sales.

United Parcel Service (UPS) recently refined the overall design of their domestic operations.  They have altered the design of their planes located at their hub in Louisville.  This includes wider, larger airplanes which can carry larger loads. This has reduced satellite hub use, reducing costs.

They have made two $1 billion expansions to this Louisville hub, Worldport.  Worldport is the world’s largest fully automated handling facility.  This facility can sort 416,000 packages an hour up from 215,000 in the year 2000.  These expansions were completed ahead of schedule and within budget, adding to their ideal that planning and investments are long-term holistic and built to provide efficiency and superior returns.

Worldport was chosen for expansion because of its location in the center of the country, which allows for faster delivery of ground packages with most locations being reached in a day or two.  This also allowed for the improvements in aircraft and fuel efficiency.  United Parcel Service (UPS) operates the most modern, fuel efficient airline in their industry.

They also have three other major hubs in terms of efficiency and productivity.  These include a hub in Cologne, Germany, one in Shanghai, China at the Pudong International Airport, and one in Shenzhen, China.  This last hub allows for the shipping of package to inner cities within Asia that would not be possible with another hub.

The company is driven by logistics.  Part of what powers logistics for United Parcel Service (UPS) is mobility.  Mobile devices are a large part of their business model.  One mobile device that is a large part of their business is the DIAD, which is the handheld computer that drivers use to enter package information.  This gives the ability to track packages.  Global deployment of the DIAD V has begun.  This newer device will include multi-dimensional imagers instead of laser scanners.  This will increase both speed and accuracy. 

United Parcel Service (UPS) is also the only integrated carrier offering mobile applications across all three smartphone platforms.  This application allows consumers to ship and track packages as well as look up information including store locations.  They will be expanding the number of countries in which the application may be used.

Another part of what powers logistics for this corporation is scalability. This company offers global use systems.  They are very flexible and adaptable.  Their business model is adapted to fit the needs of each market they are part of.  They start with offering limited services and increase them according to the needs of the market.  United Parcel Service (UPS) anticipates and responds to real world events occurring in real time.

A third part of what powers logistics for them is visibility.  Larger customers can track packages across the complete supply chain:  forwarding, distribution, and freight.  Customers no longer need to hunt for information on the company’s web site, information is automatically pushed out.

 United Parcel Service (UPS) is proud of their sustainability.  They have reduced fuel consumption by 3.3% per package.  They have reduced their miles driven by 63.5 million.  They have also reduced engine idle by 15.4 minutes.

They also offer Smart Pickup where drivers do not need to drive to pickup stops that have no packages, resulting in $100 million in cost savings annually.

They are an industry leading, technology focused, logistics driven corporation.  However, there are some problems with package handling at multiple hubs.  With so many packages being transported daily, there are the inevitable lost and mishandled packages.  With an increase in business and additional locations, this is likely to increase. 

There are also the inevitable problems with technology.  Technology is not always reliable.  There can be problems with tracking packages, where information is not entered correctly or a package cannot be located.  This is also likely to increase as business and shipping increases.