UPS has unveiled a flood of new investments in delivery services, network capacity expansion, operational technology and electric vehicles along with autonomous vehicle and drone tests ahead of today’s Q4 financial results.
The US package giant explained that it is continuing its “aggressive” roll-out of innovative new services and solutions, “squarely focused” on the needs of its customers, especially small and medium-sized businesses.
Many of the solutions “work together to provide superior visibility, control, convenience and customer value versus competitor solutions that cannot leverage a fully integrated transportation network”, it claimed. Additionally, the company will bring online more investments designed to speed time-in-transit and increase network capacity, providing all UPS customers with additional capabilities for future success.
“In 2019, UPS launched more new services and operational innovations than in any year in the company’s recent history,” said chairman and CEO David Abney. “We are demonstrating further bold action in 2020 as we embrace market trends, invest for growth, partner for added reach and develop unique capabilities using next generation technologies.”
$1.4 billion capacity expansion in US Northeast
In 2020, UPS will continue its multi-year investment strategy to transform and grow its Smart Global Logistics Network. For the third consecutive year, it will bring online substantial processing capacity globally at 20 new or remodeled, highly automated, data-driven facilities, adding more than 5 million square feet of automated sorting capacity, well ahead of the 2020 holiday season.
UPS will kick off with $1.4 billion worth of investments in Pennsylvania, primarily to speed up deliveries for customers in the northeast corridor. There will be a new “super hub” in Harrisburg, to be called the Northeast Regional Hub, along with new automated sortation and distribution facilities in Carlisle, Lehigh Valley and Philadelphia, creating more than 1,700 new jobs in total.
Faster deliveries of online orders and more weekend services
Across the USA, new capacity, lane enhancements and more sort operations at several facilities will provide greater customer access to the UPS Extended Hours service, which now reaches 98% of the U.S. population, up from 85% when announced in mid-2019. The service enables shippers to process online orders later in the evening for local next day ground delivery, offering faster speed to market.
Additionally, UPS announced expanded Saturday and Sunday operations, preparing for an anticipated doubling of weekend delivery volumes in 2020. Weekend network enhancements will expand residential and commercial Saturday volumes by reaching an additional 40 million U.S. consumers. Sunday residential deliveries and commercial pickups will be available to customers on a contract basis.
“Demand for faster delivery is a growing trend with the largest e-commerce shippers moving from two-day to one-day delivery,” said Kevin Warren, UPS Chief Marketing Officer. “Our network enhancements and weekend services give our customers industry-leading choice, convenience and speed to market.”
Providing customers with more access to UPS pickup and drop-off points, UPS also announced the addition of about 1500 Package Express Centers (PEC) to the UPS Access Point Network. PEC locations support the needs of consumers and SMBs through a network of independent retailers such as hardware stores and grocery stores in about 1,500 mostly rural towns and communities across the USA.
“We are extending the reach of our UPS Access Point network into rural and super-rural locations: areas that have been underserved in the e-commerce era and don’t always have access to full-service shipping services,” Warren pointed out.
‘My Choice for business’ in 30 countries and territories in 2020
In terms of international activities, UPS announced plans to launch UPS My Choice® for business – which first launched in the USA and Canada during 2019 – in 30 countries and territories in Europe, the Americas and Asia Pacific. By the end of 2020, 96% of UPS’s small package volume will be eligible to be tracked and controlled through the service, which is particularly designed for small and medium-sized businesses (SMBs). Key features include advance delivery notifications such as day-before and day-of delivery alerts and a new delivery notification that lets customers know when the driver is nearby or up to an hour away.
To simplify cross-border shipping for SMBs, UPS also announced a new International Knowledge Base on ups.com, providing a simple way to manage costs, estimate duties and taxes and support compliance with global customs brokerage standards.
In another commercial move, UPS has added the Square Online Store to its Digital Access Program, giving millions of merchants working with the Square offering in-platform access to UPS, which will be presented as a preferred shipping partner.
ORION upgrade, 10,000 electric vehicles, self-driving car tests and more drones
In terms of operations, UPS will further upgrade its route planning software ORION this year with the initial rollout of Dynamic ORION, the third generation of the software that currently covers 66,000 routes in North America and Europe. Company drivers will now benefit from on-the-fly, dynamic route optimization, improving service and providing additional last-mile efficiencies. Dynamic ORION provides the data that powers customer solutions like UPS My Choice® and UPS My Choice® for business.
“ORION is purpose-built for local UPS delivery drivers, many of whom complete an average of 135 stops each day,” said Juan Perez, UPS chief information and engineering officer. “The new Dynamic Optimization component will improve the accuracy of UPS delivery time estimates and give our customers better visibility into their shipments.”
UPS is also stepping up its fleet electrification by acquiring a minority stake in Arrival, a UK-based innovator and industry disruptor in electric vehicles (EVs) and Advanced Driver Assistance Systems (ADAS). The investment is complemented by a commitment by UPS to purchase 10,000 custom-built EVs, with priority access to additional vehicles. UPS expects to deploy the EVs in Europe and North America.
Arrival is the first commercial vehicle manufacturer to provide purpose-built electric delivery vehicles to UPS’s specifications and with a production strategy for global scale. Since 2016, UPS and Arrival have collaborated to develop concepts of different vehicles sizes. The companies previously announced they would develop a state-of-the-art pilot fleet of 35 electric delivery vehicles to be trialed in London and Paris.
Meanwhile, looking to future innovative uses of autonomous ground vehicles, UPS will soon commence testing with Waymo (a Google sister company) to autonomously pick up packages from a The UPS Store location in the Phoenix, Arizona area and shuttle them to a nearby UPS sortation hub. The vehicle will drive autonomously with a Waymo-trained driver on board to monitor operations. The two companies want to explore how autonomous ground vehicles improve customer service and network efficiency with a goal of jointly developing a long-term plan for how they can work together.
Moreover, UPS also announced expansion of its drone delivery service UPS Flight Forward to the University of California at San Diego Health. In partnership with drone operator Matternet, the program will launch in February on the UCSD health campus for transport of various medical products between health centers and labs, using predetermined flight paths within visual line of sight.
Finally, UPS is teaming up with Henry Schein, Inc., a provider of healthcare solutions to office-based dental and medical practitioners, to test a variety of drone delivery use cases. The initiative will explore the delivery of essential healthcare products by UPS Flight Forward to Henry Schein business customers.
