Trucking Industry’s Largest Carrier Turns 100
By Susan L. Hodges, Special to Transport Topics
This story appears in the July 9 print edition of Transport Topics.
Order a T-shirt from Jockey online or send your Toshiba laptop for repair, and your new shirt probably will arrive the next day, your repaired computer within the week. Both likely will come from Worldport, UPS Inc.’s 4 million-square-foot international air hub in Louisville, Ky.
These events seem ordinary enough until you learn that the T-shirt is actually stocked, picked and boxed at UPS, and the computer is repaired by a UPS employee.
The world’s largest package delivery company does a heck of a lot more these days than deliver boxes.
The messenger service, begun in 1907 in Seattle by 19-year-old Jim Casey, has metamorphosed into a global enterprise that provides an array of services in 220 nations and territories. Whether delivering packages by canoe in Zambia or by mule in rural Egypt, UPS has established 8,000 hubs around the world to reach 4 billion people.
Along the way, it has created the world’s 12th largest airline, gone public, acquired 30 companies and formed seven new ones of its own under the UPS banner.
Norman Black, national media relations manager at UPS, said much of its success has come from Casey’s foresight and his subsequent willingness to discard one business model and quickly build another.
Before its first reinvention, Black said, Casey realized he would have to do more than deliver meals from restaurants and telegrams from Western Union to keep his little operation alive. By 1913, the American Messenger Company, as it was then named, had forged contracts with Seattle department stores and was transporting packages to store customers by motorcycle and Model T.
Just six years later, the renamed United Parcel Service had expanded to department stores in Oakland, Calif. With the purchase in 1922 of a Los Angeles-based company implementing what later would be called common carrier service, UPS was on its way to reaching the rest of the nation.
Common carrier service included regular daily collection calls, acceptance of checks made out to the shipper for payment of C.O.D. orders, repeated delivery attempts and automatic return of undeliverables. By studying these processes carefully and making improvements, UPS was able to provide this service at rates comparable to the U.S. Parcel Post.
By the early 1950s, UPS had begun a 25-year battle with the postal service and the Interstate Commerce Commission for the right to compete with Parcel Post throughout the 48 contiguous United States.
“Common carriage meant anyone who wanted to use us could,” said Black, “and the U.S. Postal Service did all it could to stamp us out.”
Gerry McKiernan, manager of media relations for the U.S. Postal Service, concurred that the U.S. Parcel Post service grew in weight and volume until 1952. That year, in a bow to an alliance of railroad companies known as the Railway Express Agency, Congress limited the poundage and distance of packages that the Parcel Post Service could deliver to 40 pounds up to 150 miles, and 20 pounds beyond 150 miles. This legislation, McKiernan said, gave all other package delivery companies an advantage over the U.S. Parcel Post.
“At the time, there was some vigor [on the part of the U.S. Postal Service] to maintain our foothold on the package delivery business,” said McKiernan, “but that waned as the decade went on.”
Today, the U.S. Postal Service doesn’t see itself as in direct competition with any package delivery companies, McKiernan said. “We see UPS as a very fine company,” he added. “They’re our customer, and we are theirs.”
Besides, McKiernan said, “We believe that this market is big enough for everybody, especially with global services growing all the time.”
Casey grew UPS with a commitment to customer courtesy, round-the-clock service and low rates, which endeared the company to its customers. These qualities, together with a steady focus on internal operations, spawned a corporate culture at UPS long before business consultants discovered that such cultures existed. Drivers were using company-installed shoe-shine kits and shaving mirrors as early as 1925 to add finishing touches to their appearance, already distinguished by crisp brown uniforms and starchy bow ties.
About the same time, UPS began using electric vehicles to deliver parcels in New York City. The company also installed the first conveyor belt used for moving packages.
While these innovations represented environmental foresight and improved efficiency, Black admitted another motivator: “Jim Casey never stopped trying to save money.” But most of the savings were reinvested in the business.
UPS first offered air service in 1929 but, because of the Great Depression and a lack of volume, shut it down later that year. By 1952, UPS had resumed air operations with a promise to deliver packages long distance in just two days. But Frederick Smith, founder of rival Federal Express, went a step further and in 1973 began offering one-day service for about twice the price.
“No one at UPS ever thought anyone would pay that much for next-day delivery,” said Dan McMackin, manager of UPS Public Relations, “but Fred proved there was a small but growing market willing to pay that kind of money.”
FedEx’s overnight delivery was clearly a major market innovation, said Jim Rice, director of the Integrated Supply Chain Management program at the Center for Transportation and Logistics at the Massachusetts Institute of Technology. However, Rice sees UPS as both a pioneer of the package delivery industry and a continuing leader in process optimization and technology.
“First, they paved the way for everyone else to operate in the 48 contiguous states,” Rice said. “Now, they’re leaders in global commerce and synchronization.”
For example, he noted, each package undergoes more than 300 checks before it’s placed in a delivery truck. And once the driver reaches a delivery address, he or she makes specific moves designed for top efficiency.
“The driver turns the ignition off with the right hand, opens the [truck] door with the left hand, and then takes the keys out with the right hand as the door opens,” said Rice. Next, the driver swings out of the truck and places his keys on the pinky finger of the left hand, “and this process continues as they bring the package to the front door,” Rice continued. “When they get there, they put the package down, ring the bell, and get the DIAD [Delivery Information Acquisition Device] ready. There’s no waiting.”
Having worked with UPS on multiple projects during his 13 years at MIT, Rice can vouch for UPS’s ability to solve a wide variety of service and logistics problems for manufacturers and retailers.
When an unpredicted ice storm crippled Louisville in January 1994, Rice recalled, UPS leveraged its flexibility by flying in hub operators from other states when Louisville International Airport opened just one day after the storm.
“The city was closed for a week, but the airport was open and UPS knew they could use employees from any other location to operate the hub because their processes and standards are all the same across operations,” he explained. With imported employees manning operations, UPS could work to extract its local workers from layers of ice. It wasn’t long afterward that UPS formed its own group of weather forecasters.
Whether it’s the efficient choreography each driver performs as he moves from his vehicle to deliver a package or the 122 miles of belts a parcel can travel at the Worldport as it’s sorted and routed to a specific state, community and street block, Rice said UPS has been and continues to be the rising tide that lifts all boats.
Before lifting anyone else’s boat, though, Jim Casey looked after his own employees. Believing they should share in company profits as well as its work, Casey began issuing stock to his staff in 1927.
“This was one of the most important decisions Casey made,” said McMackin. “That the company is owned by its managers [employees] and managed by its owners has helped guide our culture.”
Employee ownership has helped prevent high turnover at UPS, where the average career is 17 years, but it’s not the only influence. In 1939, the company affiliated with the Teamsters union, making it the first company in the common carrier industry to do so.
In their book, “Driving Change: The UPS Approach to Business,” Mike Brewster and Frederick Dalzell wrote that for 58 years, UPS and the union signed agreements that paid UPS drivers better than most and gave UPS the flexibility it needed for hiring part-time drivers, moving some containers by rail and cutting hours when work decreased. Even so, disagreements over pensions and part-time workers led to a 15-day strike in August 1997 that cost the company $750 million in revenue and left its customers shaken.
The strike proved a boon for FedEx Airborne Express and the U.S. Postal Service as thousands of customers vowed never to be caught with only one delivery vendor again.
UPS took the consequences in stride and then set another transition in motion — this time to become a broker for global commerce.
Said Black, “We were going to become the middle man making it possible for any business in any country to grow its business around the world.”
Work on that goal continues as UPS employs 102,000 drivers for 91,000 “package cars” — company parlance for trucks — and uses up to 300,000 independent contractors with their own vehicles who buy routes and deliver company packages. An additional 3,900 employees serve UPS Airlines.
Meanwhile, if your business needs supply-chain solutions, or money to pay for them, you can apply for a loan from the UPS bank, known as UPS Capital. You also can buy shares of UPS on the New York Stock Exchange, even though employees still own 90 percent of the company.
“You can debate whether to use a bunch of different providers or one integrated service provider like UPS for your logistics requirements,” Rice said, “but there’s a lot to be said for UPS’s integrated offerings. With so many handoffs across borders, you really need a complete grasp on the coordination of these operations, and UPS is a master coordinator.”
And no matter the location or the operation, said Black, you can expect UPS to do what it’s always done.
“We don’t make widgets; we serve people,” he said, “and that’s still the thread that runs through us.”
This story appears in the July 9 print edition of Transport Topics.
Order a T-shirt from Jockey online or send your Toshiba laptop for repair, and your new shirt probably will arrive the next day, your repaired computer within the week. Both likely will come from Worldport, UPS Inc.’s 4 million-square-foot international air hub in Louisville, Ky.
These events seem ordinary enough until you learn that the T-shirt is actually stocked, picked and boxed at UPS, and the computer is repaired by a UPS employee.The world’s largest package delivery company does a heck of a lot more these days than deliver boxes.
The messenger service, begun in 1907 in Seattle by 19-year-old Jim Casey, has metamorphosed into a global enterprise that provides an array of services in 220 nations and territories. Whether delivering packages by canoe in Zambia or by mule in rural Egypt, UPS has established 8,000 hubs around the world to reach 4 billion people.
Along the way, it has created the world’s 12th largest airline, gone public, acquired 30 companies and formed seven new ones of its own under the UPS banner.
Norman Black, national media relations manager at UPS, said much of its success has come from Casey’s foresight and his subsequent willingness to discard one business model and quickly build another.
Before its first reinvention, Black said, Casey realized he would have to do more than deliver meals from restaurants and telegrams from Western Union to keep his little operation alive. By 1913, the American Messenger Company, as it was then named, had forged contracts with Seattle department stores and was transporting packages to store customers by motorcycle and Model T.
Just six years later, the renamed United Parcel Service had expanded to department stores in Oakland, Calif. With the purchase in 1922 of a Los Angeles-based company implementing what later would be called common carrier service, UPS was on its way to reaching the rest of the nation.
Common carrier service included regular daily collection calls, acceptance of checks made out to the shipper for payment of C.O.D. orders, repeated delivery attempts and automatic return of undeliverables. By studying these processes carefully and making improvements, UPS was able to provide this service at rates comparable to the U.S. Parcel Post.
By the early 1950s, UPS had begun a 25-year battle with the postal service and the Interstate Commerce Commission for the right to compete with Parcel Post throughout the 48 contiguous United States.
“Common carriage meant anyone who wanted to use us could,” said Black, “and the U.S. Postal Service did all it could to stamp us out.”
Gerry McKiernan, manager of media relations for the U.S. Postal Service, concurred that the U.S. Parcel Post service grew in weight and volume until 1952. That year, in a bow to an alliance of railroad companies known as the Railway Express Agency, Congress limited the poundage and distance of packages that the Parcel Post Service could deliver to 40 pounds up to 150 miles, and 20 pounds beyond 150 miles. This legislation, McKiernan said, gave all other package delivery companies an advantage over the U.S. Parcel Post.
“At the time, there was some vigor [on the part of the U.S. Postal Service] to maintain our foothold on the package delivery business,” said McKiernan, “but that waned as the decade went on.”
Today, the U.S. Postal Service doesn’t see itself as in direct competition with any package delivery companies, McKiernan said. “We see UPS as a very fine company,” he added. “They’re our customer, and we are theirs.”
Besides, McKiernan said, “We believe that this market is big enough for everybody, especially with global services growing all the time.”
Casey grew UPS with a commitment to customer courtesy, round-the-clock service and low rates, which endeared the company to its customers. These qualities, together with a steady focus on internal operations, spawned a corporate culture at UPS long before business consultants discovered that such cultures existed. Drivers were using company-installed shoe-shine kits and shaving mirrors as early as 1925 to add finishing touches to their appearance, already distinguished by crisp brown uniforms and starchy bow ties.
About the same time, UPS began using electric vehicles to deliver parcels in New York City. The company also installed the first conveyor belt used for moving packages.
While these innovations represented environmental foresight and improved efficiency, Black admitted another motivator: “Jim Casey never stopped trying to save money.” But most of the savings were reinvested in the business.
UPS first offered air service in 1929 but, because of the Great Depression and a lack of volume, shut it down later that year. By 1952, UPS had resumed air operations with a promise to deliver packages long distance in just two days. But Frederick Smith, founder of rival Federal Express, went a step further and in 1973 began offering one-day service for about twice the price.
“No one at UPS ever thought anyone would pay that much for next-day delivery,” said Dan McMackin, manager of UPS Public Relations, “but Fred proved there was a small but growing market willing to pay that kind of money.”
FedEx’s overnight delivery was clearly a major market innovation, said Jim Rice, director of the Integrated Supply Chain Management program at the Center for Transportation and Logistics at the Massachusetts Institute of Technology. However, Rice sees UPS as both a pioneer of the package delivery industry and a continuing leader in process optimization and technology.
“First, they paved the way for everyone else to operate in the 48 contiguous states,” Rice said. “Now, they’re leaders in global commerce and synchronization.”
For example, he noted, each package undergoes more than 300 checks before it’s placed in a delivery truck. And once the driver reaches a delivery address, he or she makes specific moves designed for top efficiency.
“The driver turns the ignition off with the right hand, opens the [truck] door with the left hand, and then takes the keys out with the right hand as the door opens,” said Rice. Next, the driver swings out of the truck and places his keys on the pinky finger of the left hand, “and this process continues as they bring the package to the front door,” Rice continued. “When they get there, they put the package down, ring the bell, and get the DIAD [Delivery Information Acquisition Device] ready. There’s no waiting.”
Having worked with UPS on multiple projects during his 13 years at MIT, Rice can vouch for UPS’s ability to solve a wide variety of service and logistics problems for manufacturers and retailers.
When an unpredicted ice storm crippled Louisville in January 1994, Rice recalled, UPS leveraged its flexibility by flying in hub operators from other states when Louisville International Airport opened just one day after the storm.
“The city was closed for a week, but the airport was open and UPS knew they could use employees from any other location to operate the hub because their processes and standards are all the same across operations,” he explained. With imported employees manning operations, UPS could work to extract its local workers from layers of ice. It wasn’t long afterward that UPS formed its own group of weather forecasters.
Whether it’s the efficient choreography each driver performs as he moves from his vehicle to deliver a package or the 122 miles of belts a parcel can travel at the Worldport as it’s sorted and routed to a specific state, community and street block, Rice said UPS has been and continues to be the rising tide that lifts all boats.
Before lifting anyone else’s boat, though, Jim Casey looked after his own employees. Believing they should share in company profits as well as its work, Casey began issuing stock to his staff in 1927.
“This was one of the most important decisions Casey made,” said McMackin. “That the company is owned by its managers [employees] and managed by its owners has helped guide our culture.”
Employee ownership has helped prevent high turnover at UPS, where the average career is 17 years, but it’s not the only influence. In 1939, the company affiliated with the Teamsters union, making it the first company in the common carrier industry to do so.
In their book, “Driving Change: The UPS Approach to Business,” Mike Brewster and Frederick Dalzell wrote that for 58 years, UPS and the union signed agreements that paid UPS drivers better than most and gave UPS the flexibility it needed for hiring part-time drivers, moving some containers by rail and cutting hours when work decreased. Even so, disagreements over pensions and part-time workers led to a 15-day strike in August 1997 that cost the company $750 million in revenue and left its customers shaken.
The strike proved a boon for FedEx Airborne Express and the U.S. Postal Service as thousands of customers vowed never to be caught with only one delivery vendor again.
UPS took the consequences in stride and then set another transition in motion — this time to become a broker for global commerce.
Said Black, “We were going to become the middle man making it possible for any business in any country to grow its business around the world.”
Work on that goal continues as UPS employs 102,000 drivers for 91,000 “package cars” — company parlance for trucks — and uses up to 300,000 independent contractors with their own vehicles who buy routes and deliver company packages. An additional 3,900 employees serve UPS Airlines.
Meanwhile, if your business needs supply-chain solutions, or money to pay for them, you can apply for a loan from the UPS bank, known as UPS Capital. You also can buy shares of UPS on the New York Stock Exchange, even though employees still own 90 percent of the company.
“You can debate whether to use a bunch of different providers or one integrated service provider like UPS for your logistics requirements,” Rice said, “but there’s a lot to be said for UPS’s integrated offerings. With so many handoffs across borders, you really need a complete grasp on the coordination of these operations, and UPS is a master coordinator.”
And no matter the location or the operation, said Black, you can expect UPS to do what it’s always done.
“We don’t make widgets; we serve people,” he said, “and that’s still the thread that runs through us.”
