Dive Brief:
- UPS is building a logistics-as-a-service offering by combining the capabilities of its standalone digital services, CEO Carol Tomé said on an earnings call last week.
- The company's digital services involved include crowdsourced same-day delivery provider Roadie, 3PL Coyote Logistics, delivery platform Delivery Solutions and financial services provider UPS Capital. The offering will also include its "delivery density" partnership with CommerceHub.
- "When we combine logistics-as-a-service with our integrated physical network, we believe we will be unstoppable," Tomé said.
Dive Insight:
Tomé noted there are five pillars of the offering, all of which are technology-driven:
- Delivery density. This focuses on delivering more packages in fewer stops to improve route efficiency.
- End-to-end visibility. UPS wants to improve visibility from the manufacturer to end-of-distribution points.
- Financial solutions. The company does this today through UPS Capital and is looking to add more financial products to the mix.
- Advanced capabilities. This includes technology to help customers understand how to optimize their supply chain via warehousing, fulfillment, or shipping.
- Robust reverse logistics. UPS' returns ties with Amazon are well-known, but the company is looking to extend its business further into reverse logistics.
The pillars build on UPS' existing initiatives. As an example, UPS is currently tackling delivery density through its CommerceHub partnership. CommerceHub holds an order on an order management system until it can match another shipment to the same destination. The hold lasts only as long as the service agreement allows. The initiative has gone live with one customer, and additional customers are being added onto the platform.
Although Tomé said UPS' logistics-as-a-service is still in its "very early days," it will create new revenue streams for the delivery giant as package volumes fall from their pandemic-driven heights. It also showcases UPS' latest strategic approach, which emphasizes a "better and bolder" course to pursue profitability.
"Bolder is about moving faster to grow in our targeted market segment,” she said. “It’s also about combining digital solutions with our global integrated network to create more value for our customers and new revenue opportunities for UPS.”
Rival FedEx created its own logistics as a service offerings earlier this year. In January, it partnered with Microsoft to help companies optimize fulfillment and provide real-time information on deliveries.
