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1337Delta764
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Why is UPS still expanding?

Sat Jun 17, 2017 11:12 pm

Since this doesn't pertain to the aviation side of UPS, this belongs in the Non-Aviation forum.

UPS claims that its reason for its continued expansion is due to the growth in e-commerce demand. Here in the Phoenix area, UPS will be opening a new hub in Goodyear to serve parts of the West Valley; currently the entire West Valley is served by the hub on 31st Avenue in Phoenix.

However, I question this, since one of their largest customers, Amazon, seems to be using them less often than they were in the past. Amazon now seems to be using Amazon Logistics or the USPS for shipping more often nowadays, with UPS now being their third choice only ahead of FedEx. Is UPS making a mistake here? What does anyone here think?
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BobPatterson
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Re: Why is UPS still expanding?

Sun Jun 18, 2017 12:35 am

Is there something about the UPS announcement to find fault with?

http://www.bizjournals.com/phoenix/news ... ub-to.html

It seems they are preparing for an expected rise in e-commerce, pretty much expected by everyone.
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1337Delta764
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Re: Why is UPS still expanding?

Sun Jun 18, 2017 1:50 am

BobPatterson wrote:
Is there something about the UPS announcement to find fault with?

http://www.bizjournals.com/phoenix/news ... ub-to.html

It seems they are preparing for an expected rise in e-commerce, pretty much expected by everyone.


But the issue I find fault with is that one of their historically largest customers, Amazon, is moving away from them. With Amazon's Sortation Center network, they are able to cut out UPS and FedEx in many areas using their own linehaul system or Prime Air, with the last mile being delivered either by the USPS or Amazon Logistics. Walmart pretty much uses FedEx exclusively for its online orders.
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910A
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Re: Why is UPS still expanding?

Sun Jun 18, 2017 1:53 am

Quite frankly someone needs to expand their horizons, there are other e-comerce customers besides Amazon.
 
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1337Delta764
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Re: Why is UPS still expanding?

Sun Jun 18, 2017 2:09 am

910A wrote:
Quite frankly someone needs to expand their horizons, there are other e-comerce customers besides Amazon.


But Amazon is by far the largest e-commerce website in the world. UPS was once the preferred shipping carrier of Amazon, but now Amazon has introduced their own linehaul network that feeds into the USPS or Amazon Logistics to deliver the last mile.
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FriscoHeavy
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Re: Why is UPS still expanding?

Sun Jun 18, 2017 2:57 am

1337Delta764 wrote:
910A wrote:
Quite frankly someone needs to expand their horizons, there are other e-comerce customers besides Amazon.


But Amazon is by far the largest e-commerce website in the world. UPS was once the preferred shipping carrier of Amazon, but now Amazon has introduced their own linehaul network that feeds into the USPS or Amazon Logistics to deliver the last mile.


UPS commented about Amazon here a year or two ago. Long story short, Amazon only made up like 2-3% of their business so no, Amazon is not that big of a deal to UPS.
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tommy1808
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Re: Why is UPS still expanding?

Sun Jun 18, 2017 8:42 am

1337Delta764 wrote:
But Amazon is by far the largest e-commerce website in the world. UPS was once the preferred shipping carrier of Amazon, but now Amazon has introduced their own linehaul network that feeds into the USPS or Amazon Logistics to deliver the last mile.


Amazon business will be low margin, because of volume, and expensive to do, because alot of residential deliveries.
In Germany I get shipments via DPD, DHL, UPS at the same address.... that makes me think that there is some kind of bidding going to find the lowest price.

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B777LRF
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Re: Why is UPS still expanding?

Sun Jun 18, 2017 11:29 am

1337Delta764 wrote:
But Amazon is by far the largest e-commerce website in the world.


True as that is, Amazon still only represent a very small part of UPS' business. And if you add up all the e-commerce outlets in the world and stack them against Amazon, they represent shipping volumes orders of magnitude larger. Or, in other words, 97-98% of UPS' business have naught to do with Amazon.

It is also worth noticing, that despite the growth of Amazon and them expanding into providing their own line-haul, the Big 3 (DHL, FedEx & UPS) are still reporting strong earnings and continued growth. Which indicates there's enough room for everybody in an expanding market.
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dfwjim1
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Re: Why is UPS still expanding?

Sun Jun 18, 2017 7:17 pm

I order quite a few things on Amazon for delivery to my home and have found that there is vast difference in the service provided by UPS via Amazon's contract delivery agents. Whenever UPS delivers to my home the driver is always professional, well groomed and friendly while it seems like the independent contractors are the complete opposite. Recently I had a contractor yell at me because I was too slow in taking his call to open the front gate to my complex - I was going to file a complaint about him but since he knew where I lived I decided not to.
 
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1337Delta764
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Re: Why is UPS still expanding?

Sun Jun 18, 2017 9:33 pm

dfwjim1 wrote:
I order quite a few things on Amazon for delivery to my home and have found that there is vast difference in the service provided by UPS via Amazon's contract delivery agents. Whenever UPS delivers to my home the driver is always professional, well groomed and friendly while it seems like the independent contractors are the complete opposite. Recently I had a contractor yell at me because I was too slow in taking his call to open the front gate to my complex - I was going to file a complaint about him but since he knew where I lived I decided not to.


I'm surprised you don't get much USPS. The Amazon line haul network feeds a significant amount of its last mile deliveries to the USPS, either to areas that out of Amazon Logistics' delivery range, or for overflow that Amazon Logistics can't handle. A large portion of Amazon Logistics' volume is Same-Day and One-Day, thus a significant amount of the Two-Day orders should overflow to the USPS for the last mile. UPS is normally the third option for Amazon orders nowadays.
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rfields5421
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Re: Why is UPS still expanding?

Sun Jun 18, 2017 9:48 pm

1337Delta764 wrote:
I'm surprised you don't get much USPS. .


Most of the USPS that I get from Amazon is only dropped at a local post office for last stage delivery. Much of that is carried by UPS up to that point.

So a delivery to your door by USPS might well have a lot of the transportation via UPS. You have to follow the tracking of each order to determine which carriers have moved the item.

---------

One issue in the Amazon future is the increasing number of manufacturers/ sellers who are now bypassing Amazon on e-commerce and going direct to the customer. One of my key suppliers used Amazon as their portal five years ago, but have recently completed moving their entire product line out of Amazon to their own portal, and their nine regional warehouses which supply their brick and mortar stores and their e-commerce customers.
 
Flighty
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Re: Why is UPS still expanding?

Sun Jun 18, 2017 10:39 pm

Totally agree with the contractors being sketchy, I saw an unmarked Ram Promaster on my street just stopped with hazards flashing, blocking the street, so the unprofessional looking deliveryman could make the Amazon delivery. While cars waited! WTF.
 
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1337Delta764
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Re: Why is UPS still expanding?

Sun Jun 18, 2017 11:10 pm

rfields5421 wrote:
1337Delta764 wrote:
I'm surprised you don't get much USPS. .


Most of the USPS that I get from Amazon is only dropped at a local post office for last stage delivery. Much of that is carried by UPS up to that point.

So a delivery to your door by USPS might well have a lot of the transportation via UPS. You have to follow the tracking of each order to determine which carriers have moved the item.

---------

One issue in the Amazon future is the increasing number of manufacturers/ sellers who are now bypassing Amazon on e-commerce and going direct to the customer. One of my key suppliers used Amazon as their portal five years ago, but have recently completed moving their entire product line out of Amazon to their own portal, and their nine regional warehouses which supply their brick and mortar stores and their e-commerce customers.


In my area, USPS deliveries by Amazon are actually carried most of the trip by Amazon's linehaul network or by Prime Air, the former which is distinct from Amazon Logistics (the local last mile delivery network). This is common practice in major metropolitan areas where an Amazon Sortation Center is present. The Sortation Centers sort Amazon packages for specific regions and route packages either to local USPS Post Offices or to Amazon Logistics Delivery Stations depending on address and available capacity.

I actually don't think I have ever gotten a Prime delivery shipped via UPS SurePost.
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dfwjim1
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Re: Why is UPS still expanding?

Sun Jun 18, 2017 11:27 pm

[quote="Flighty"]Totally agree with the contractors being sketchy, I saw an unmarked Ram Promaster on my street just stopped with hazards flashing, blocking the street, so the unprofessional looking deliveryman could make the Amazon delivery. While cars waited! WTF.[/quote t

LOL...how true. The other day I had my garage door open and I heard an unusual noise come from the garage. Went to investigate and the Amazon delivery guy had thrown my box across the garage floor and jumped into his van and took off. Fortunately the item was a box of dried pasta so no damage done but still a bad reflection on Amazon.
 
jetblueguy22
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Re: Why is UPS still expanding?

Mon Jun 19, 2017 12:58 am

1337Delta764 wrote:
910A wrote:
Quite frankly someone needs to expand their horizons, there are other e-comerce customers besides Amazon.


But Amazon is by far the largest e-commerce website in the world. UPS was once the preferred shipping carrier of Amazon, but now Amazon has introduced their own linehaul network that feeds into the USPS or Amazon Logistics to deliver the last mile.

One big misconception about your post is that everything Amazon ships can be handled by one carrier. Even if they wanted to go to one outlet they couldn't do it. They ship that many pieces every single day. And it continues to grow. What they are doing is delivering the easy stuff in cities themselves and handing the expensive rural and suburban stuff off to UPS, FedEx, USPS, etc. The amount of infrastructure required to do what UPS and FedEx do is tremendous. And although the USPS loves to brag they go to almost every address, every day, they lack the delivery fleet to efficiently deliver packages. The small vehicles they have for mail just don't cut it and they are doing multiple trips to/from the building everyday to load back up and go back out. Meanwhile we may have one or two routes in a building that do something like that.
1337Delta764 wrote:
910A wrote:
Quite frankly someone needs to expand their horizons, there are other e-comerce customers besides Amazon.


But Amazon is by far the largest e-commerce website in the world. UPS was once the preferred shipping carrier of Amazon, but now Amazon has introduced their own linehaul network that feeds into the USPS or Amazon Logistics to deliver the last mile.

And that linehaul fleet also feeds into the UPS network through something they call zone skipping. They may load their own trailer in say Allentown, PA and bring it right to the final UPS center in CT.
FriscoHeavy wrote:
1337Delta764 wrote:
910A wrote:
Quite frankly someone needs to expand their horizons, there are other e-comerce customers besides Amazon.


But Amazon is by far the largest e-commerce website in the world. UPS was once the preferred shipping carrier of Amazon, but now Amazon has introduced their own linehaul network that feeds into the USPS or Amazon Logistics to deliver the last mile.


UPS commented about Amazon here a year or two ago. Long story short, Amazon only made up like 2-3% of their business so no, Amazon is not that big of a deal to UPS.

It's more like 10-15% of the business. But they only account for something like .2% of the profits. I'd be willing to bet they make up a bigger portion of the profits January-October. But the amount of extra infrastructure that has to be put in place just for Amazon come December decimates that pretty fast.

As a company UPS needs this infrastructure more than ever. You are putting too much of an emphasis on Amazon. Yes as a customer they are the largest account by volume shipped, but they also put a tremendous strain on our system for relatively little return. A lot of the buildings we operate in were built many years ago, a time when the volume we are getting now wasn't even imagined. December used to be our peak month, but now it is peak year round. I run the preload sort which unloads trailers and loads the package cars. On Tuesday, a regular day, we will do as much volume as we did any day in December 5 years ago. UPS has never needed to invest in infrastructure more.
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DiamondFlyer
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Re: Why is UPS still expanding?

Mon Jun 19, 2017 2:11 am

1337Delta764 wrote:
rfields5421 wrote:
1337Delta764 wrote:
I'm surprised you don't get much USPS. .


Most of the USPS that I get from Amazon is only dropped at a local post office for last stage delivery. Much of that is carried by UPS up to that point.

So a delivery to your door by USPS might well have a lot of the transportation via UPS. You have to follow the tracking of each order to determine which carriers have moved the item.

---------

One issue in the Amazon future is the increasing number of manufacturers/ sellers who are now bypassing Amazon on e-commerce and going direct to the customer. One of my key suppliers used Amazon as their portal five years ago, but have recently completed moving their entire product line out of Amazon to their own portal, and their nine regional warehouses which supply their brick and mortar stores and their e-commerce customers.


In my area, USPS deliveries by Amazon are actually carried most of the trip by Amazon's linehaul network or by Prime Air, the former which is distinct from Amazon Logistics (the local last mile delivery network). This is common practice in major metropolitan areas where an Amazon Sortation Center is present. The Sortation Centers sort Amazon packages for specific regions and route packages either to local USPS Post Offices or to Amazon Logistics Delivery Stations depending on address and available capacity.

I actually don't think I have ever gotten a Prime delivery shipped via UPS SurePost.


Hint, not everyone lives in a major metropolitan area... I've yet to have a package delivered by an Amazon last mile delivery company. And only 1 or 2 packages even gone on Prime Air. There is still a massive amount delivered by UPS, most of my Amazon deliveries are in fact, UPS.
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1337Delta764
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Re: Why is UPS still expanding?

Mon Jun 19, 2017 11:03 pm

DiamondFlyer wrote:
1337Delta764 wrote:
rfields5421 wrote:

Hint, not everyone lives in a major metropolitan area... I've yet to have a package delivered by an Amazon last mile delivery company. And only 1 or 2 packages even gone on Prime Air. There is still a massive amount delivered by UPS, most of my Amazon deliveries are in fact, UPS.


But why should UPS expand within metropolitan areas where the majority of Amazon deliveries are via Amazon Logistics or the USPS? That is how it is here in the Phoenix area. Amazon mostly uses UPS to outlying metropolitan areas that are not within proximity to an Amazon Sortation Center. Even some metropolitan areas without Amazon Sortation Centers are now getting some linehaul going through Amazon Sortation Centers in other metropolitan areas as well with the last mile delivered by the USPS. For example, I know the Phoenix Sortation Center has a significant amount of their linehaul going towards Albuquerque.
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cjg225
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Re: Why is UPS still expanding?

Tue Jun 20, 2017 12:34 am

1337Delta764 wrote:
But why should UPS expand within metropolitan areas where the majority of Amazon deliveries are via Amazon Logistics or the USPS?

The answer to that question lies in the answer to the question, "Why do you keep equating Amazon with UPS?"
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johns624
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Re: Why is UPS still expanding?

Tue Jun 20, 2017 1:11 am

It might be something as simple as traffic congestion. As Phoenix grows, it gets more cars. If the UPS drivers spend an hour a day just driving to their delivery area, that's a lot of wasted time that still has to be paid for. Most drivers have 150+ stops a day. If you open up a hub in their area, they are more productive.
 
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1337Delta764
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Re: Why is UPS still expanding?

Tue Jun 20, 2017 2:12 am

johns624 wrote:
It might be something as simple as traffic congestion. As Phoenix grows, it gets more cars. If the UPS drivers spend an hour a day just driving to their delivery area, that's a lot of wasted time that still has to be paid for. Most drivers have 150+ stops a day. If you open up a hub in their area, they are more productive.


It is true that the West Valley is served by only one hub, the one on 31st Avenue in Phoenix. For comparison, there are two hubs in the East Valley, one in Tempe (which serves Tempe, Scottsdale, Paradise Valley, Carefree, and parts of east Phoenix) and one in Mesa (which serves Mesa, Chandler, Gilbert, Queen Creek, San Tan Valley, and Apache Junction). Perhaps there might be some capacity constraints at the 31st Avenue hub. My guess is that 31st Avenue will serve West Phoenix and the northern part of the West Valley (Glendale, Peoria, Surprise, El Mirage, Youngtown, and the Sun Cities), while the new hub in Goodyear will serve the southern part of the West Valley (Goodyear, Avondale, Tolleson, Buckeye, and Litchfield Park).
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coolian2
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Re: Why is UPS still expanding?

Tue Jun 20, 2017 3:01 am

My last online purchase flew Qantas Freight. It's clear there's a shitload of e-commerce out there for UPS to keep growing.

Even a few years ago when I got a laptop through the Apple Store online, my laptop flew Cathay Pacific.

Apparently my e-commerce must be Oneworld loyal.
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TWA772LR
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Re: Why is UPS still expanding?

Tue Jun 20, 2017 6:44 am

Phoenix is a fast-growing metro area, why would they not expand?

IDK about y'all, but when I order something from Amazon, I order it via USPS because it's the cheapest. Unless what I'm shipping comes from China, then it comes by China Post, which has misleading package trackers btw.

Lastly, this is totally unrelated, but NEVER order no-name brand model airplanes from Ali Baba. The only one I ever have was broken, and it was an An-22! It was a cheap model and didn;t want to deal with the hassle of returning it so I kept it. I wasn't that broken anyway... until my dad went up the attic stairs and accidentally nudged it off my shelf and it broke even more...

Sorry for that rant, my mind totally side-tracked! :)
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stlgph
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Re: Why is UPS still expanding?

Tue Jun 20, 2017 1:38 pm

When did Amazon become the measurement for "make or break?"
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Cadet985
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Re: Why is UPS still expanding?

Tue Jun 20, 2017 5:00 pm

Somebody has to compete with the USPS...they lose a good amount of parcels. I have a package today as a matter of fact that was "delivered" a few hours ago, yet is nowhere on my property.

I've NEVER had this issue with UPS or FedEx. Amazon's delivery service is a completely different story — I've had packages "missing" for days and weeks. Luckily Amazon made good by me but I trust their delivery service as much as I trust gas station tacos.

Marc
 
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1337Delta764
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Re: Why is UPS still expanding?

Tue Jun 20, 2017 5:06 pm

TWA772LR wrote:

IDK about y'all, but when I order something from Amazon, I order it via USPS because it's the cheapest. Unless what I'm shipping comes from China, then it comes by China Post, which has misleading package trackers btw.

)


I am a Prime member and I get USPS for the majority of my orders (although the USPS is really only doing the last mile and the Amazon linehaul network is doing the rest). Since I live in Queen Creek, we didn't get Amazon Logistics until recently since they opened a Delivery Station for their contracted Flex drivers in Chandler.
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AlexAmsterdam
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Re: Why is UPS still expanding?

Fri Jun 23, 2017 9:14 pm

It's expansion or death, they need to stay in the race. I also agree with what has been said, the online market is far from being saturated.

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