UPS Caught Out by Cross-Border eCommerce Boom?
According to an article by the Louisville Courier-Journal, UPS may have been caught out by the exploding growth in global eCommerce.
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While the company apparently managed to handle last year’s holiday season pretty well, it seems it may be struggling to keep up with air cargo.
Two unions, one representing Pilots and the other aircraft mechanics, have filed grievances against the company alleging that it is outsourcing air lift capacity beyond agreed terms.
According to the story, UPS claims that long wait times on new aircraft has forced the company to seek outside contractors to handle the growing air parcel business.
“While these new aircraft are being produced and delivered, we face a choice: either accept our customer’s demand for added air capacity through leased lift, or turn our customers away and let a competitor win that business. Our decision, which we believe is compliant with our bargaining agreements, is to lease additional air capacity to support our customers’ demand.”
UPS Statement to Louisville Courier-Journal
UPS also said it plans to buy “35 new and converted Boeing 747 and 767 freighters through 2022. The additions will increase air lift capacity by approximately 30 percent” compared with 2017. “We have received five of the new aircraft so far and expect to continue to receive the remainder on an expedited schedule,” UPS said in the same statement to the paper.
Global Growth to Blame?
While the article doesn’t get into the reasons for the problems UPS is facing trying to keep up with air cargo services, looking at the general business of eCommerce and cross-border trade it seems that must be high on the list.
The shipper has done well managing ground shipments in the U.S., last year the company even added standard Saturday delivery to most major metro areas, but globally it faces stiffer competition from DHL and FedEx.
DHL has been aggressively adding more eCommerce logistics services primarily aimed at cross-border trade in eCommerce and specialty logistics services for the fashion industry.
FedEx, also recently announced it would increase capacity at its main Memphis hub.
And last year it announced plans to further expand air lift services with the purchase of more feeder planes, which are smaller cargo planes to handle parcels to less populous areas.
While UPS is not standing still, the company recently added a new non-stop route from U.S. to Dubai, freeing up European air lift capacity, there is a definite race among logistics companies to meet the booming market.
For SMEs in eCommerce this should be a sign that cross-border trade is major expansion opportunity. Even if UPS is currently sorting out contractual issues with two of its unions, the fact is there are working to solve these problems.
The bottom line is that UPS, FedEx, and DHL are all vying for the global eCommerce trade business and companies like Sweden’s NA-KD rely on global logistics.
This is just the beginning and shippers are working aggressively with businesses to meet the cross-border demand.
If a company of the size of UPS appears to be playing a bit of catch-up, small businesses need to pay attention to not be left behind in the growth opportunity cross-border trade brings.
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Richard is co-founder of eSeller365. He has over 17 years of experience on eBay which includes tens of thousands of sales to buyers in over 100 countries and even has experience with eBay’s VeRO program enforcing intellectual property rights for a former employer. And for about two years Richard sold products on Amazon using Amazon FBA in the US.
To “relax” from the daily business grind, for a few weekends a year, he also works for IMSA as a professional race official.