United Parcel Service of America

views updated May 29 2018

UNITED PARCEL SERVICE OF AMERICA

Headquartered in Atlanta, Georgia, the United Parcel Service of America, Inc. (UPS) is the world's largest package delivery service. It serves over 200 countries and delivers to any address in the continental United States. The company had humble beginnings. In 1907, six years before the U.S. Postal Service began its parcel post system, teenagers Jim Casey and Claude Ryan of Seattle, Washington, borrowed money to expand their bicycle-delivery and messenger service. With the loan they established the American Messenger Company, the precursor to UPS. By 1913 their fleet, renamed Merchants Parcel Delivery, consisted of seven motorcycles. In 1918 the workers joined the International Brotherhood of Teamsters. When the company converted to truck delivery another partner, Charlie Soderstrom, elected to paint the trucks brown, a tradition still carried out by UPS. The company, whose name was changed to the United Parcel Service in the 1930s, pioneered the system of consolidated delivery whereby packages destined for one neighborhood would be delivered by one vehicle. UPS experimented with air service during the Great Depression (1929–1939). Until the late 1940s most of UPS's business was in department store deliveries.

UPS experienced a period of decline following World War II (1939–1945) because the increase in privately owned automobiles allowed people to carry their own packages. Due to the decline of contract service to retail stores, the company began to expand common-carrier parcel service. UPS began offering to pick up parcels (limited in weight and size) from any location and deliver them within a 150-mile radius. This initiative put UPS into direct competition with the U.S. Postal Service.

In the 1950s the need for fast and convenient package delivery in the United States and around the globe was growing. UPS spent several years fighting for federal authority to operate in all of the 48 contiguous states. In 1953 the company resumed air service, which it called Blue Label Air. Between 1964 and 1969 UPS doubled its sales and had expanded into the majority of the U.S. states, making it appear as if UPS would become the only parcel shipping company in the country. Its management team was tightly controlled, and stock was held by its own employees.

In 1976 unrest occurred among UPS package processing employees. The company announced plans to replace them eventually with part-time workers, which prompted a number of local Teamsters unions to go on strike. East coast businesses were disturbed by this, particularly as it came during their Christmas rush. Although the strikes were settled, relations between labor and management at UPS remained strained.

UPS continued to expand during this period, establishing a service in Germany in 1976. In 1980 UPS profits were $189 million out of revenues of $4 billion. Competition was fierce by this time, particularly with the emergence of the Federal Express Corporation (Fed Ex), which offered one-day express delivery. UPS countered with Blue Label Air, promising two-day delivery at a lower cost. UPS also dropped its traditionally conservative promotional policies and ran television advertisements for the first time.

While other businesses suffered from the recession of the early 1980s, UPS actually saw an increase in business volume as companies began to ship smaller lots in order to save money. Relations with the Teamsters union suffered when the union discovered that UPS's net income rose 74 percent in 1981, at a time when union wage increases had been capped. UPS employees continued to be dissatisfied, as reports of increasing profits to the company surfaced over the next two years. In 1984 secret negotiations resulted in a three-year agreement which satisfied the union's demands for better wages and benefits, and a major strike was averted. In 1985 UPS was able to offer next-day air service in 48 contiguous states, as well as international air package and document service.

From 1984 to 1991 UPS was the most profitable U.S. product transportation company. UPS now offered both one-day and two-day service, and had increased its earnings to over $700 million in 1987. Though it lagged behind Federal Express in the overnight package delivery business it was working to improve its computer technology to keep up with the competition. By 1988 UPS had established its own airline (UPS Airline), was delivering almost one billion more packages than the U.S. Postal service, and had begun expanding its European operations.

Kent C. Nelson became chairman and chief executive officer of UPS in 1989, initiating a major transformation of the company. New services such as less expensive two-day and three-day deliveries, inventory management, and warehousing were offered to clients. Technical innovations also increased efficiency, and more money was spent on advertising. UPS increased its global recognition by its sponsorship of the 1996 Olympics in Atlanta, and began to step up the profitability of its European and Asian operations, winning over considerable market share from Federal Express. Though profit margins decreased significantly during this time of expansion, the first six years of Nelson's leadership at UPS resulted in a 69 percent increase in sales. UPS was not as profitable abroad as in the United States, but it continued to develop overseas services. In the late 1990s it beat out Federal Express for a major air hub in Taiwan, and it also planned to expand its services to Latin America.

In 1998 UPS was capable of reaching over four billion people worldwide. Its high-technology data communications network tracked over 820,000 packages daily. UPS supplemented the efficiency and reliability of its operations with customer service improvements such as implementing instant tracking systems, order processing, and inventory control. The company operated on a hub system in which packages from a particular region were processed at a central location prior to shipping, which was located in Louisville, Kentucky. UPS in the late 1990s was still privately owned, its stock exclusively held by its managers, employees, retirees, and their families.

Courier Services

views updated May 29 2018

COURIER SERVICES

COURIER SERVICES are companies that transport and deliver documents, packages, and larger shipments of products, although traditionally they specialized in the rapid delivery of such items as legal documents that required signatures. They Provide services to companies and individuals who need rapid service, accountability, and tracking that regular mail does not accommodate. Major courier services that performed these functions in the early 2000s included commercial delivery services, the U.S. Postal Service, and bicycle messenger services.

Courier services began during the late ninteenth and early twentieth centuries, with small companies in a handful of cities across the United States. When few homes had telephones, personal messages had to be carried by hand. Some early companies provided delivery of luggage and other packages. With the rise of large retail and department stores in the early twentieth century, package delivery services became even more popular. The scale of such services grew over the next several decades. Although fuel and rubber shortages during World War II caused a decline in the courier industry, the use of air freight by courier services after the war allowed for wider markets.

Courier services became multifaceted and competitive after 1970 because of the increasingly far-flung nature of business operations in the international economy, the popularity of mail-order retailing, and rising postal rates. Courier services overlapped other forms of transport, such as trucking, and the differences became less distinct. Commercial delivery services, once a supplement to the U.S. Postal Service, competed with the government operated mail system. The Postal Service responded with greater emphasis on its overnight Express Mail delivery and two-day Priority Mail service.

The growth and diversification of the delivery industry raised regulatory issues. Companies that delivered by plane or truck were often governed by separate laws regarding rates and other aspects of their operations. In the late 1980s the document delivery business faced new competition with the development of fax machines and electronic mail. The need for physical delivery of some items remained, however, and the delivery industry was bolstered By the continuing growth of the global marketplace. Some delivery companies began to branch out and offer new services to their clients. These included "logistics," or support, services to help clients increase efficiency by electronically tracking materials used in manufacturing and assisting with processing sales orders and shipments.

Among the oldest and largest U.S. private delivery companies is United Parcel Service (UPS), founded in Seattle, Washington, as the American Messenger Company in 1907. Originally a local parcel delivery service for department stores, UPS expanded and established a large network to ship and deliver packages. In the early 2000s, UPS was the largest carrier for e-commerce, shipping on-line purchases to customers worldwide. In 1999, UPS shareholders voted to make 10 percent of the company stock available to the public. Another major company, Federal Express, founded by entrepreneur Frederick W. Smith in the early 1970s, pioneered large-scale overnight delivery by air, using its own fleet of planes and a central terminal (originally in Memphis, Tenn.) to sort and reroute items.

Both the large commercial courier services and the U.S. Postal Service have increased the speed of national and international package delivery due to the advent of wide-body airplanes that can carry an increased amount of freight. Yet, bicycle messenger services provide an invaluable and timeless service for small-scale, local delivery. Bike messengers were used as early as the late nineteenth century for rapid delivery of Western Union telegrams and government documents. During the 1980s bicycle messenger services became a particularly popular way to deliver items quickly within cities. Their numbers declined slightly with the advent of fax machines and e-mail, but in the early twenty-first century their services remained important links between businesses in large cities like New York and Washington, D.C., as well as in smaller cities throughout the world.

BIBLIOGRAPHY

Haldi, John, and Joseph F. Johnston, Jr. Postal Monopoly: An Assessment of the Private Express Statutes. Washington, D.C.: American Enterprise Institute for Public Policy Research, 1974.

Moroney, Rita L. History of the U.S. Postal Service, 1775–1982. Washington, D.C.: The Service, 1983.

Side, W. Hampton. "Bicycle Messengers Bite the Dust." New Republic (21 December 1992): 16–19.

JohnTownes/h. s.

See alsoMail-Order Houses ; Postal Service, U.S. ; Office Technology ; Western Union Telegraph Company .

Dictionary of American History Townes, John