UPS’ Evolving Last Mile

July 25, 2019


UPS’ last mile will include more access points, drones and will increase delivery days from six to seven days. The day before announcing record profits, the company issued a flurry of announcements including not only these enhancements but also a new cross-border service, Worldwide Economy, targeting the small-to-medium sized business. The deferred service, while lower in cost, will come with a longer delivery window.

It continues to be all about e-commerce and UPS seems to finally be reaping the benefits of its investments in technology, its network and facilities.

The last mile is the costliest part of logistics and by adding CVS, Michaels and Advance Auto Parts to its alternative delivery locations or Access Points, the result will be 90% of U.S. consumers having access to an UPS Access Point location within five miles of their homes. FedEx has also been expanding their own access delivery locations by recently announcing Dollar General and Walgreen’s to its network. For the carriers, these alternative locations are often less costly for deliveries and pick-ups versus residential and thus, we are seeing more emphasis on these service options.

Even though it will not be a big profit generator for the foreseeable future, drones are now playing a role in UPS’ healthcare last mile service options. UPS Flight Forward Inc. is a newly formed subsidiary focused on such deliveries. The subsidiary has recently filed an FAA application to operate commercial drone flights. If approved, it would allow drone flights beyond an operator’s visual line of sight, at night and without limit to the number of drones or operators in command. Earlier this year, UPS began using drones to deliver medical samples to the Raleigh, N.C., campus of health-care provider WakeMed Health & Hospitals. According to UPS, the service is the first FAA-sanctioned use of a drone for routine revenue flights transporting a product under a contractual delivery agreement.  A game-changer perhaps that may help reduce the number of visits a package car makes to a particular location – good for the environment and maybe good for some operation costs.

Finally, in answer to FedEx’s announcement that it will begin making deliveries seven days a week, UPS announced they were doing the same beginning January 2020 utilizing its Surepost/USPS relationship and weekend delivery drivers. The move also comes as Amazon announces a change from two-day delivery to next day delivery services for Prime Members.

The new service announcements are impressive. Investments seem to be paying off but will we see the average annual rate increase even more to cover some of the ongoing costs associated with some of these services? Or perhaps new accessorial fees? Shippers will need to plan for 2020 well in advance and will have to utilize forecasting tools and more. Our CEO and founder, John Haber will be speaking on this topic at Parcel Forum in October. Click here for more info on the conference.

 

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UPS’ Evolving Last Mile

July 25, 2019


UPS’ last mile will include more access points, drones and will increase delivery days from six to seven days. The day before announcing record profits, the company issued a flurry of announcements including not only these enhancements but also a new cross-border service, Worldwide Economy, targeting the small-to-medium sized business. The deferred service, while lower in cost, will come with a longer delivery window. It continues to be all about e-commerce and UPS seems to finally be reaping the benefits of its investments in technology, its network and facilities. The last mile is the costliest part of logistics and by adding CVS, Michaels and Advance Auto Parts to its alternative delivery locations or Access Points, the result will be 90% of U.S. consumers having access to an UPS Access Point location within five miles of their homes. FedEx has also been expanding their own access delivery locations by recently announcing Dollar General and Walgreen’s to its network. For the carriers, these alternative locations are often less costly for deliveries and pick-ups versus residential and thus, we are seeing more emphasis on these service options. Even though it will not be a big profit generator for the foreseeable future, drones are now playing a role in UPS’ healthcare last mile service options. UPS Flight Forward Inc. is a newly formed subsidiary focused on such deliveries. The subsidiary has recently filed an FAA application to operate commercial drone flights. If approved, it would allow drone flights beyond an operator’s visual line of sight, at night and without limit to the number of drones or operators in command. Earlier this year, UPS began using drones to deliver medical samples to the Raleigh, N.C., campus of health-care provider WakeMed Health & Hospitals. According to UPS, the service is the first FAA-sanctioned use of a drone for routine revenue flights transporting a product under a contractual delivery agreement.  A game-changer perhaps that may help reduce the number of visits a package car makes to a particular location – good for the environment and maybe good for some operation costs. Finally, in answer to FedEx’s announcement that it will begin making deliveries seven days a week, UPS announced they were doing the same beginning January 2020 utilizing its Surepost/USPS relationship and weekend delivery drivers. The move also comes as Amazon announces a change from two-day delivery to next day delivery services for Prime Members. The new service announcements are impressive. Investments seem to be paying off but will we see the average annual rate increase even more to cover some of the ongoing costs associated with some of these services? Or perhaps new accessorial fees? Shippers will need to plan for 2020 well in advance and will have to utilize forecasting tools and more. Our CEO and founder, John Haber will be speaking on this topic at Parcel Forum in October. Click here for more info on the conference.  

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