UPS overshadowed its earnings report last week when it announced a deal to take reverse logistics startup Happy Returns off Paypal’s hands, saying the new returns capabilities would be good for profits.
But the company quietly launched a new expedited delivery option ahead of the 2023 holiday season that could help capture profitable volume from B2B and B2C clients, according to CEO Carol Tomé.
In an earnings call last Thursday, Tomé briefly mentioned Hyperlocal, the new service she says is designed to give a few choice customers faster next-day delivery. Tomé didn’t provide details on which markets will offer Hyperlocal, or how much the service costs.
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Tomé said the new service launched this month, and will leverage the company’s more than 1,000 U.S. facilities.
“We’re harnessing our data to deliver more agile and targeted products that meet our customers’ needs,” Tomé said.
A UPS spokesperson told Sourcing Journal that Hyperlocal provides cost savings for qualifying customers with points of distribution close to their consumers.
According to a Freightwaves report, the new service revives a project that UPS launched nearly five years ago. At the time, the idea was to pick up local volumes from a retailer’s fulfillment center in the early morning, transport the goods in time for the morning UPS presort process and then deliver orders to customers the same day.
The service was marketed for consumers and businesses to order as late as 9 p.m. for next-day delivery, but the project shut down in 2019, the report said.
Hyperlocal makes its debut as UPS prepares for the holiday season, with plans to hire 100,000 temporary workers. The company wants to ensure deliveries are completed by Dec. 23 because it won’t pick up or deliver on Christmas Eve or Christmas Day.
“Service matters all the time, but especially at peak,” Tomé said in the call. “So to prepare, we are collaborating with customers on volume projections, and the timing of their promotions. We will also leverage technology, like our network planning tools, to control how the volume comes in, utilize available capacity, and adjust the networks to operate as efficiently as possible.”
UPS is trying to win back the 1.5 million packages that shippers diverted to other carriers before the Teamsters strike they were worried about was avoided when the two sides reached a five-year deal. While as many as 600,000 packages have returned to the UPS delivery network, the company experienced a 12.8 percent sales decline in the third quarter to $21.1 billion. Additionally, consolidated operating profit plummeted 56.9 percent year over year to $1.3 billion.
UPS also recently added to its last-mile offering through its Roadie subsidiary, which has a network of 200,000 crowdsourced drivers to make deliveries. Launched in September, Roadie Direct gives retailers a way to offer their customers local home delivery of e-commerce orders directly from their existing warehouses.
On the whole, brands and retailers are taking advantage of last-mile delivery carriers, with companies using an average of 6.1 such providers as of July, according to data from Project44. This is more than the 4.8 carriers utilized on average as of January 2022, and marks an even bigger increase from the 4.2 carrier average as of October 2020.
Hyperlocal also comes as Amazon continues enhancing its same-day delivery capabilities with regionalized fulfillment. According to logistics consulting firm MWPVL International, the tech titan now operates 49 “sub-same-day delivery” facilities that fulfill orders in less than five hours after customers hit the buy button. Although Amazon has said it plans to double the number of these sites, MWPVL believes the footprint will triple.
During the earnings call, UPS also gave another update on its Smart Package, Smart Facility RFID initiative, which is expanding beyond facilities to its vehicle fleet.
While Tomé said in an August earnings call that half of the RFID-fitted buildings saw improper loading incidents improve from one in 400 to one in 1,000, that rate has drastically improved in 200 facilities in the third quarter to one-in-2,500.
“Deployment of Phase 2 is already underway, which equips our package cars with RFID readers,” Tomé said. “Over time, this will allow us to virtually scan smart packages during pickup and eliminate delivery scans during bulk delivery, both of which will enhance customer visibility and make our drivers more efficient.”
