Ups Case Study

History

100 years of Service

UPS began as a private messenger service in Seattle, Washington in 1907. Jim Casey was 19 years old when he borrowed $100.00 from a friend and started the American Messenger Company. Initially the company delivered for department stores, carried notes and messages, and carried trays of food from local restaurants to customers. Deliveries were made on foot or bicycle. For large department store purchases, a horse and wagon were used. Service was provided around the clock by Jim Casey, his brother George, and their partner Claude Ryan. A handful of other teenagers kept the business going, and their slogan was “best service at the lowest rates”.

For the first ten years the company focused on retail package delivery since the development of the telephone caused a decline in their messenger business. The company also used motorcycles for some deliveries. Their largest customer however was the United States Postal Service, for which they delivered all special delivery mail. In 1913 the company acquired its first car, a Model T Ford, and changed its name to Merchants Parcel Delivery. They also began using the color brown. By 1918, the company delivered for the three largest Seattle department stores and they expanded their company to Oakland California. With the move to Oakland the company changed its name once again, this time to the United Parcel Service. Another innovation was their development as a “common carrier “. This expanded the business to include automatic daily pickups, C.O.D’s, and the return of undeliverables. In 1924 UPS debuted the use of the conveyor belt system for handling packages. This system is still in use in every UPS facility today, and showed that UPS would be at the forefront of embracing new technology.

In 1930 UPS moved to the East Coast and began delivering for large department stores in New York City and Newark, New Jersey. The Great Depression and WWII found UPS searching for new markets as customers started carrying their own packages home from a day of shopping. After the Korean War UPS noticed the trend of people moving to the suburbs and shopping at large retail malls where no delivery was needed. The decision was made to expand their “common carrier” service to include both private and commercial customers. This put UPS in direct competition with the U.S. Postal Service, and in conflict with the regulations of the Interstate Commerce Commission (ICC). The legal battles with government agencies would last for over 30 years.

In 1929 UPS was the first package delivery service to use delivery by airplane. The service was interrupted by the depression and not resurrected until 1953. By 1978 UPS air service, called Blue Label Air, was delivering to all 50 states. In the 1950’s UPS was restricted from operating in many parts of the country due to ICC regulations. Packages were transferred between several carriers in order to cross state lines, and Federal authorization was required for each package. In 1975 the ICC granted UPS the authority to begin interstate service between Montana and Utah. This was later expanded to every state within 2 years. This historic convergence was known internally as the “Golden Link”.

The 1980’s brought Federal Express and its growth, into direct competition with UPS. The deregulation of the U.S. airline industry allowed UPS to expand its airline service. The company began to assemble its own fleet of cargo jets. Up to that time packages were delivered on commercial passenger planes. The growing demand for overnight delivery pushed UPS to operate as an airline. In 1988 the Federal Aviation Administration (FAA) granted UPS the license to operate its own airline. They became the fastest growing airline in FAA history. International business started in 1975 with delivery to Toronto. Service in Germany started the next year. Service began to expand throughout Europe, the Middle East and Africa, and the Pacific Rim. Today UPS operates in 200 countries and is able to service over 4 billion people.

By 1993 UPS was delivering 11.5 million packages daily, and had more than 1 million regular customers. The technology had to advance to keep up with the increased volume. The Delivery Information Acquisition Device (DIAD) was introduced to assist UPS drivers. The DIAD is a wireless device that tracks packages and enters customer signatures electronically. Drivers can now stay in contact with the distribution center to facilitate changes in their schedule. UPSnet is the company’s global data communications network that tracks packages throughout their 1300 distribution centers. They have spent over 5 billion dollars on technology upgrades in the 1990’s. UPS.com went online in 1994.

Services expanded throughout the 1990’s