UPS will start delivering packages on Sundays next year, following the move of FedEx as the two package giants battle to control the nonstop demands of online shopping. UPS, which currently delivers and picks up 6 days a week, will switch to 7 days in January. It will be assisted by the U.S. Postal Service, which delivers some UPS packages to homes for the final leg of a package’s journey.
UPS notes that Americans shop online 7 days a week and that there is increasing demand for deliveries every day. Amazon, one of the biggest package shippers, is building out its own transportation operations and fleet of local delivery vehicles. “The changes illustrate a grand realignment of America’s parcel delivery apparatus as companies try to determine how best to deliver packages for insatiable online shoppers at the lowest cost possible,” writes The Wall Street Journal (July 24, 2019).
UPS recently negotiated a union contract with its workers that created a new type of driver that would work weekend shifts at a lower pay scale than its regular delivery drivers. The company is taking additional steps to meet shipping challenges, including teaming up with the retailers CVS, Michaels. and Advance Auto Parts to use 12,000 of their stores as new drop-off points for deliveries and returns. More of these access points help lower delivery costs because its cheaper to deliver multiple packages to one location instead of singular deliveries to multiple homes.
FedEx itself has pushed ahead into expanding its own onsite network, recently announcing that it would work with Dollar General to use 8,000 of the retailer’s stores as drop-off and pick-up locations. UPS and FedEx both say that more than 90% of Americans will live within 5 miles of a drop-off location in their networks.
Classroom discussion questions:
- Referring to Figure 2.4 (Achieving Competitive Advantage Through Operations), which strategy is UPS following?
- What steps is UPS taking to compete successfully on Sundays?