UPS’ sale of its UPS Freight division sparked a strong, positive reaction in the logistics and transportation markets as many analysts praised UPS for unloading a division that no longer fit with the company’s strategic focus.
Bigger is no longer better according to UPS’ current CEO, Carol Tome but back in the early 000’s, bigger was considered better, a period where we saw lots of acquisitions by logistics providers to become all things to everyone. Today, the environment has changed and we’re seeing the unraveling of many of these acquisitions, including that of UPS Freight.
“The agreement allows UPS to be even more laser-focused on the core parts of our business that drive the greatest value for our customers,” according to Carol Tome in UPS’ press release announcing the sale.
Among those core parts of the business that UPS is focused on is e-commerce in which its Ground and Air networks have particularly seen great growth. What about big, bulky e-commerce items, you may ask? Good question and one that I had when I first heard that UPS was selling UPS Freight. Surely UPS Freight was involved in big, bulky e-commerce deliveries. Nope, very little it seems.
I chatted with some great folks from Transportation Impact and Transportation Insights to find out how UPS was moving big, bulky items and come to find out, most, if not all, are moving through its Air and Ground networks.
Meet UPS Hundredweight
An ideal alternative to traditional LTL (Less-Than-Truckload) service for shipments weighing less than 1,000 pounds, UPS Hundredweight Service is designed for shipments UPS classifies as Less-Than-Pallet Load. With Hundredweight Service, there’s no need for pallets, no extra charge for guaranteed on-schedule delivery, and no worries, as each package has its own address label and unique tracking number.
– UPS sales collateral, effective Jan. 3, 2005
Note that the service is available for Ground and Air and pay no attention to the rates listed on the sales collateral, they’ve gone up a bit since then. 😉
The UPS Hundredweight program has changed since 2005 and now is targeted for multiple-package shipments weighing between 100 and 500 pounds.
According to Clay Gentry at Transportation Insights, over 90% of all e-commerce is 1,000 pounds or less. So, I reckon, there really was no need for UPS Freight in terms of big, bulky e-commerce goods.
Meet UPS Ground Freight Pricing
For those heavier items, UPS’ Ground Freight Pricing is available for multiple-package shipments weighing more than 150 pounds. It is a Ground service that uses a common LTL pricing structure according to its website.
This service is included in the UPS Freight sale. There is a five-year agreement with TFI in which UPS Freight will continue to utilize UPS’ domestic package network to fulfill shipments.
White-Glove Delivery Services
Remember back in 2018 when there were rumors that UPS and Werner Enterprises were in talks to team up to deliver large items such as furniture? Neither confirmed or denied the rumors but UPS was interested in entering the “white glove” services market where providers delivered items such as furniture, appliances, televisions, etc into homes and installed them, removed, and disposal of older items. This service actually existed within UPS back in the early days of UPS SCS, via an outsourced solution. However, it’s a pricy service to offer and profits are thin. I’m not sure if the service is still offered or if it was ultimately abandoned.
Outlook
From where I sit, it’s a bit unknown what UPS’ future plans are for white glove delivery services and large e-commerce items. FedEx is building out large items sorting facilities and it has introduced its own white-glove delivery service via its FedEx Freight division.
When it comes to large, bulky e-commerce is UPS missing out somehow? I’m not sure yet. Perhaps when they report earnings today, we’ll learn more. Stay tuned. This post may be updated later today.
Cathy Morrow Roberson started her career as a librarian – From managing reference and special collections, to storytimes to managing a branch library, and yes, even driving the bookmobile, Cathy worked in several libraries in South Carolina, North Carolina and Georgia.
Most recently, Dean was the Managing Partner for Last Mile Experts where he was responsible for the transportation consulting practice in North America. Dean also served 4Front Consulting Group where he managed general transportation consulting and the design/implementation of cold chain and health care distribution solutions. Dean also served UPS and FedEx for over 37 years across multiple professional positions in sales, marketing, and operations. His vast experience allows him to possess a unique and in-depth view into nearly all aspects of the transportation industry. Dean has experienced much success consulting in the categories of Amazon, e-commerce, and the design/implementation of specialty distribution solutions. He has direct experience designing distribution solutions for the e-commerce shipper community with both cross-border and domestic shipping solutions. Additionally, Dean is expert in understanding the capabilities and pricing practices of the primary transportation service providers and supports carrier contract negotiations for medium sized to large organizations. He possesses a keen understanding of the 3PL services community and their capabilities in support of express, 2-day ground and same-day service solutions. Dean also consults regularly in support of last-mile and on-demand delivery strategies. Mr. Maciuba is active on global consulting platforms and recognized as a subject matter expert on the impact of e-commerce growth on the transportation Industry. He also possesses an understanding of the regulatory landscape as it applies to the carriers and the impact of new technology on the transportation service providers. Finally, Dean has also been popular with the investment community as his opinions on the impact of e-commerce growth on the transportation service providers such as UPS, FedEx, DHL, and USPS are highly respected.