UPS Adds Sunday Service; Forms Commercial Drone Unit And Files To Expand Operations
UPS Inc. (NYSE: UPS) late Tuesday rolled out extensive changes to its product portfolio that include ground pick-ups and deliveries on Sundays for the first time in its history, a new commercial drone unit and an application with the federal government to expand U.S. drone operations, extended hours for U.S. shippers tendering packages for next-day ground delivery, and a global product designed to support the rapid growth of lower-priced items moving in cross border e-commerce.
The Atlanta-based giant also said it has expanded its Saturday air and ground delivery network, as well as its "MyChoice" platform to now include businesses. The My Choice platform, which up until now has been available only to consumers, allows end users to manage the receipt of their packages, giving them visibility and control over their shipping that they had never before experienced with UPS.
Taken together, the changes are arguably the most extensive ever announced by UPS at one time. Some are competitive responses to earlier moves by FedEx Corp. (NYSE: FDX), its chief rival. FedEx Ground, the company's ground unit, announced in May its plan to expand to seven day a week deliveries on January 1, 2020. That is the same day UPS launches its Sunday service, which will be available on a contractual basis and serve major U.S. commerce centers. FedEx also has an "extended hours" program to accommodate shippers seeking next-day delivery.
FedEx has expanded its network of "access points" – locations like retail stores, gas stations and supermarkets where packages can be held for pick-up and dropped off for returns. UPS, which has operated an access point network for years, countered in today's announcement by saying it would add 12,000 access points, which would give it 21,000 such locations in the U.S. and about 40,000 worldwide by 2020.
The drone unit, called "UPS Flight Forward," would require certification from the Federal Aviation Administration (FAA) in order to be formed and to operate in the manner that UPS seeks. If certified, the unit would operate an unlimited number of drones, and would do so beyond the line of sight and at night, UPS said. The company and its drone partner, Matternet, currently run limited drone services at WakeMed hospitals in Raleigh, North Carolina under a separate FAA certificate. Obtaining the broader FAA authority, known as "Part 135," would enable UPS to serve other U.S. healthcare networks that have an interest in the service, the company said.
The extended-hours service will be available only to contract customers, UPS said. Its execution will depend on UPS' nighttime package-sorting schedules and the location of a customer's distribution point.
The expansion of the company's Saturday service and the launch of the Sunday operation will be supported by internal expansion, the broadening of the access point network, and continued reliance on the U.S. Postal Service (USPS) for final-mile deliveries from local post offices to residences, UPS said. UPS, FedEx and other parcel providers tender parcels to USPS for final-mile delivery to residences, instead of dispatching drivers and equipment to service areas that may have low population densities. By law, USPS must serve every address in the United States.
The global e-commerce product, called "UPS World Economy," will deliver low-valued items within a five- to 12-day transit time window, according to Steve Gaut, a UPS spokesman. Many international merchants want to make more low-priced goods available for cross-border e-commerce, but do not want to offer free shipping services for long-distance deliveries that may or may not require customs clearance and other ancillary services.
The offering will initially be available in the U.S., the United Kingdom, Canada, China and Hong Kong, UPS said.
The slew of announcements comes just prior to the release of UPS' second-quarter financial results on July 25.
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