ATLANTA – It started out in 1907 as the brainchild of two teenagers in a Seattle basement, whose fledgling messenger service made deliveries on foot or on bicycle.
As UPS Inc. celebrates its 100-year anniversary later this month, it now is the world’s largest shipping carrier – a $47 billion business with a fleet of trucks, an airline and operations in 200 countries.
Increasing competition for delivery of goods has meant the company has had to broaden its global reach and expand its business beyond small package delivery to shipping heavy freight and providing logistics services for companies.
But even as the Internet has made it easier to send, receive or download items electronically instead of paying a service to deliver them, the breaking down of trade barriers has given shippers such as UPS overseas opportunities they haven’t had in the past.
Edward Jones analyst Dan Ortwerth described UPS as the “oil that makes the gears go” in the global economy. Last month, UPS reported a 4.1 percent rise in second-quarter earnings on a modest increase in sales. The company’s shares, on an adjusted basis, are up more than 14 percent over the last year.
A century from now, Chief Executive Mike Eskew expects that delivering small packages will still be an important part of the Atlanta-based company’s business, but he isn’t sure it will be the largest part. In 2001, the company expanded its services by acquiring the Mail Boxes Etc. chain. Most of the stores were later renamed The UPS Store.
Recognized by its brown trucks and uniforms, UPS’ lifeblood is its 427,700 employees, who will play a big role in future growth. UPS, also known as United Parcel Service, said that’s because customer service – particularly drivers having contact with customers every day – will always be the area that keeps customers coming back.
Contract negotiations between UPS and the Teamsters union, which represents 238,000 UPS drivers and sorters, are ongoing. That contract expires July 31, 2008. Pension and health care benefits are major issues.
Linc Dalimonte, a UPS driver from Grand Rapids, Mich., said he recognizes the importance in a highly competitive industry of controlling costs. Dalimonte, who has been with UPA since he finished college 15 years ago, said he believes UPS can do that by continuing to emphasize safety, which would decrease accidents and the costs associated with them.
“The job of any delivery driver, whether it is UPS or FedEx, just to get up in the morning; we’re basically industrial athletes,” Dalimonte, 37, said. “It’s not user friendly on the body.”
Technological improvements, meanwhile, have led to greater efficiencies.
UPS uses technology to map out the shortest routes for its trucks to reach their destinations. The technology and greater use of alternative fuel trucks have allowed UPS to save on fuel, according to Robert Hall, director of ground fleet engineering at UPS.
In 2006, package flow technology, the software that, among other things, designs routes with right-hand turns, allowed UPS to save 28.5 million miles of driving off its U.S. fleet.
“We’re trying to be proactive,” Hall said. “At the same time, we recognize we have to extend the current supply of oil we have.”
Eskew, who has been with UPS for 35 years, said keeping costs down and people happy is a challenge.
According to the company, the average UPS driver has been with the company for 16 years. Management turnover runs 5 percent to 7 percent per year. The company says its average driver is paid $75,000 a year, while its average pilot salary is $200,000 a year.
“We want to be able to compensate the employees for the great things they do, but also think about the next generation of UPSers,” Eskew said.
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