The many folks who are immersed in or follow UPS Inc.'s unique culture will find something to take away from today's announcement that David Abney, the company's chief operating officer (COO), will become its next CEO on Sept. 1, while Scott Davis, the current chairman and CEO, will stay on as nonexecutive chairman.
The traditionalists will note that Abney, like all but one of his 10 predecessors—Davis being the sole exception— is a UPS lifer; he started 40 years ago at the age of 18 as a part-time package loader. They will cite Abney's core strength as an operator, which mirrors UPS' operations-driven mindset. They will see that Davis, when he retires, will have spent six-and-a-half years as chairman and CEO, which upholds the pattern of CEO tenure that has existed since founder James P. Casey retired in 1962 after 55 years at the helm. And they will also note that, in keeping with UPS legend, Davis ran the company long enough to negotiate one collective-bargaining agreement with the Teamsters Union, which represents about 240,000 UPS employees.
The modernists, meanwhile, will see that UPS is splitting the chairman and CEO positions for the first time in its 107-year history. They will also note that Davis will stay involved in the new role of nonexecutive chairman, as well as maintain his seat on its board of directors. Historically, UPS' chairmen and CEOs divorce themselves from the company once they retire, though the most recent retiree retains a director's position until the next change in command. The company did not comment in its announcement on the reasons behind its moves.
Before being named COO in 2007, Abney ran UPS International, where he led the expansion of the company's global logistics capabilities. He headed the company's logistics and freight divisions in Canada and Latin America and oversaw its global freight forwarding and customs brokerage. Abney served as president of SonicAir, a same-day delivery service that signaled UPS's move into the service parts logistics sector. He also led the team that completed its 2001 acquisition of the Fritz Cos., which propelled UPS into the customs brokerage category.
DAVIS' LEGACY
Davis, 62, has served during one of the most turbulent periods in UPS' history. He took the top job in January 2008 as the
worldwide financial crisis was starting to unfold. He navigated UPS through the subsequent "Great Recession," one of the
most difficult times in U.S. and global transportation history. He embarked on the biggest acquisition in UPS' history, a
proposed $6.8 billion acquisition of rival TNT Express, only to abandon it in January 2013 after European regulators said
they would reject the bid on competitive grounds.
During Davis' tenure, UPS began contract negotiations with the Teamsters in September 2012, months earlier than usual, in the hopes of achieving new agreements covering its small package and less-than-truckload (LTL) operations before their respective July 31, 2013 expiration dates. However, battles with several Teamster locals (notably Louisville's Local 89, the largest local in UPS' system) over riders and supplements to the small-package master contract delayed its effective date well beyond July 31, although the contract had already been ratified 11 months before. Friction also occurred at UPS Freight, the company's LTL unit. There, the rank-and-file last June decisively rejected the company's proposal that had already been approved by Teamster leadership.
UPS Freight employees eventually ratified a five-year pact in January. The small-package contract was implemented on April 25 after the Teamsters' national leaders took the unprecedented step of imposing the contract's terms over the objections of several locals, including Local 89.
Davis' time at the top has seen a profound change in the way goods are ordered, consumed, fulfilled, and shipped. E-commerce, which was in its embryonic stages when he took over, has since become an unstoppable force. Today, business-to-consumer (B2C) shipments comprise a larger portion of UPS' delivery mix than ever before.
In response, UPS developed a program called "My Choice," which put the delivery power in the hands of the "consignee," or in the B2C world, the consumer. The move was a major shift for the venerable company, which had always done business with the shipper in control.
UPS discovered the hard way how dramatically its world had changed last Christmas when an avalanche of last-minute online orders overwhelmed its network and led to millions of late deliveries.
Every UPS chief leaves his imprimatur. Davis' legacy, beyond leaving the company in excellent financial shape with a gusher of free cash flow, is likely to be the broadening of its supply chain capabilities, a project begun under his predecessor, Michael L. Eskew. In a 2009 interview with DC Velocity that appeared in the magazine's annual "Rainmakers" issue, Davis said UPS needed to be "recognized as a solutions company, not merely a transportation company or logistics company that provides a menu of services." The company would succeed "to the extent that our customers view UPS as a provider of solutions that help them succeed," he added.
Toward that end, Davis presided over one of the most important changes in UPS' and the industry's history: the September 2010 launch of the "We Love Logistics" marketing and advertising campaign. The initiative expanded the UPS brand beyond basic transportation, demonstrated to businesses the potential power of a total supply chain solution, and brought the industry into the homes of millions of people who previously had never given it a second thought. In so doing, UPS and Davis elevated the profession to a plateau that old-line transport and logistics practitioners could never dream it would reach.
