UPS Explores Same-Day Delivery Option
June 09 2021 - 6:11PM
Dow Jones News
By Dave Sebastian
United Parcel Service Inc. is exploring a same-day option, a
delivery model that has been employed by gig-economy players, as
the pandemic has accelerated the shift to e-commerce.
"We don't have a same-day product today, so we're looking at
it," Chief Executive Carol Tomé said in response to a question on
an investor-day webcast Wednesday. "We don't have this all the way
figured out, but we've got a team of people looking at it."
She said the company is testing the concept and didn't offer
other details. A UPS spokesman said the company doesn't comment on
its pilot programs. The idea comes as the acceleration of
e-commerce has pushed retailers to add more curbside and same-day
delivery options.
Amazon.com Inc., one of UPS's biggest customers, and Instacart
Inc. are among the current providers of same-day delivery. Target
Corp. owns Shipt, which does same-day deliveries from its stores as
well as from chains like CVS and Petco. Food-delivery services such
as DoorDash Inc. and Uber Technologies Inc. have expanded into
groceries during the pandemic, though profits have been
elusive.
UPS and rival FedEx Corp. have long provided overnight services
but they generally don't deliver packages on the same day they
receive them. Both companies have begun offering services where
they pick up parcels from some stores in evenings and deliver them
the next day. FedEx offers same-day services in limited markets. It
has also been testing robots that could make deliveries of
medicine, pizzas and other items to consumers' homes.
UPS's technology infrastructure for ordering and tracking
packages could position it well to pursue the delivery model,
though it is unlikely that the company would go after
already-popular services such as grocery or meal delivery, said
Jeffrey Kauffman, a transportation and logistics analyst at
Vertical Research Partners LLC.
"My guess is e-commerce is going to continue to grow this
market," Mr. Kauffman said of the market for same-day services.
"It's a market worth investigating."
UPS on Wednesday laid out financial targets, saying it expects
revenue to rise to about $98 billion to $102 billion for 2023, but
it set profit margin goals that were below some Wall Street
forecasts. In 2020, UPS had an operating profit of $7.68 billion on
revenue of $84.63 billion.
UPS shares slipped 4% in Wednesday trading. The stock has
roughly doubled over the past 12 months.
Ms. Tomé, who took over as CEO a year ago, has adopted a
strategy of becoming more selective about the packages the company
accepts as well as raising prices and enforcing volume limits.
UPS said Wednesday it is counting on deliveries of small
packages and among small and midsize businesses to drive
growth.
(END) Dow Jones Newswires
June 09, 2021 18:58 ET (22:58 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
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