UPS Steps up Digital Technology Deployment for Efficiency and Growth

United Parcel Service (UPS) CEO Carol Tome has revealed the company’s significant investments in technology.
UPS droneDespite a 7.8 percent decline in revenue to $24.9 billion in Q4, UPS’s technology-driven initiatives have played a pivotal role in navigating challenges and transforming operational dynamics. Operating profit witnessed a decrease of 27.1 percent from the previous year, amounting to $2.8 billion.

For the entire year, UPS reported a 9.3 percent decrease in revenue to $91 billion, with operating profit at $9.9 billion, marking a 28.7 percent decline. The operating margin stood at 10.9 percent.

Looking forward to 2024, UPS anticipates a revenue ranging from approximately $92 billion to $94.5 billion, coupled with operating margin ranging from approximately 10 percent to 10.6 percent. UPS is aiming for a significant job cut targeting 12,000 employees.

Bala Subramanian is the Chief Digital and Technology Officer of UPS. Bala Subramanian, who earlier worked with AT&T and Best Buy, is responsible for the overall strategy, design, development and execution of UPS’s technology, industrial engineering and digital transformation functions and will be a key driver in growing the business.

UPS is leveraging technology to help reduce repetitive tasks and physical stress while promoting safety for the company’s employees. The technologies will also improve package flow and overall efficiency of the UPS network.

The company’s innovation strategy has included the use of both digital and automation technologies and this has accelerated with advancements in AI.

Recently, UPS made several improvements in its operations targeting specific processes that can be repetitive and physically demanding such as pick-and-place, loading and unloading, and moving irregular-sized shipments.

UPS is using pick-and-place technologies powered by Dexterity, Fortna and Plus One Robotics to help employees sort small packages – a role that requires repetitive tasks and can be inconsistent as it flexes with customer demands.

UPS is using Pickle Robot’s unloading technologies to ease the challenging job of unloading trailers, making the role less physically demanding for employees and delivering better package care and reliability for UPS customers.

PS is using autonomous guided vehicles (AGV) powered by Dane Technologies, Geekplus, Locus Robotics, Crown Lift Trucks and Toyota-Raymond to simplify demanding jobs.
UPS is also leveraging digital technologies to ensure the safety of every delivery around the world by using Delivery Photo and Delivery Defense to decrease fraud for customers.

In 2023, 57 percent of the packages processed through the UPS network went through automated facilities that are powered by the latest sorting, processing and data capture technologies.

A significant highlight of UPS’s technological advancements is the network of healthcare-compliant distribution space, exceeding 17,000,000 square feet in 2023. Strategic acquisitions of Bomi Group and MNX Global Logistics have further expanded UPS’s cold chain capabilities, facilitating access to new markets and customers.

In 2023, small and medium-sized businesses (SMBs) constituted 28.6 percent of UPS’s total U.S. volume, marking a 60 basis points increase from the previous year. A notable contributor to this growth has been the Digital Access Program (DAP), revolutionizing how small companies engage with UPS. DAP generated $2.9 billion in revenue in 2023, showcasing a substantial 22 percent year-over-year increase.

CEO Carol Tome underscored UPS’s commitment to its workforce, citing a labor agreement that provides stability for the next five years. The company’s operational prowess is evident on its busiest peak days, where over 50 million packages are sorted in the U.S., and more than 30 million packages are delivered worldwide.

Leveraging the agility of its integrated network powered by UPS technology, the company employs network planning tools to match capacity with volume swiftly. Technological innovations have enhanced driver and helper route planning and dispatch, resulting in increased density and a reduced dependency on seasonal support drivers compared to prior years.

In response to the typical surge in returns volume before Christmas, UPS swiftly integrated Happy Returns in the fourth quarter. This integration facilitated box-free, label-free returns in over 5,000 UPS store locations just eight days after the acquisition closed. The Happy Returns digital experience continued to drive returns volume into the first quarter of 2024.

Furthermore, UPS is at the forefront of deploying transformative technology to boost efficiency within its warehousing facilities. A notable example is the UPS Velocity center in Louisville, Kentucky, a state-of-the-art pick, pack, and ship facility leveraging robotics, automation, machine learning, and artificial intelligence to process over 350,000 units per day. This technological investment aims to provide a best-in-class experience for UPS customers and their end consumers.

Rajani Baburajan

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