May 11, 2018

UPS revives program offering 3PLs parcel delivery service at LTL rates

Initiative aimed at filling void for LTL shippers with loads eligible for pallet breakdown and migration to parcel.

By DC Velocity Staff

UPS Inc. has re-launched a pricing program offering third-party logistics (3PL) providers an opportunity to move their customers' shipments through UPS' small-package network at more economical less-than-truckload (LTL) rates.

Under the initiative, which goes by the somewhat unwieldy name of "Ground Freight Pricing Through General Pricing," UPS breaks down an LTL pallet and sweeps cartons into its small-package operation for processing and delivery. However, the user—whether it be a 3PL or direct shipper—has already negotiated LTL prices typically well below what the Atlanta-based company charges for small-parcel services.

The service works best for shippers tendering between 10 and 17 parcels at a time. That's because it is too expensive for shippers to tender such relatively small consignments for hauls aboard a 28- or 53-foot trailer. Though LTL rates, with all things being equal, are lower than parcel rates, a shipper with less than 20 parcels that have been palletized must bear a disproportionate share of the cost of utilizing a large truck relative to the volume it is tendering. UPS launched the program in 2012 by marketing it directly to shippers. That remains in effect. The initiative was expanded two to three years later to resell it to 3PLs. However, the expansion stalled out because the technology was not yet advanced enough to connect the complex UPS rating and service matrix with 3PLs' transportation management systems (TMSs).

Toward the end of 2017, UPS executives engaged Cleveland-based IT provider Banyan Technology to develop an interface between UPS and the 3PLs' TMSs to generate a fast and simple data flow to support the product. Banyan's involvement and execution was the catalyst to kick-start the reseller program, according to people familiar with the program.

The pilot phase is in its eighth month, and there is no set timetable for rolling out it to more 3PLs. The product is being sold by UPS Freight, UPS' LTL subsidiary. Revenue from UPS' 3PL operations is logged under the company's "Supply Chain and Logistics" business unit.

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