For the first time in its 110-year history, UPS Inc. has begun regularly scheduled Saturday ground pick-ups and deliveries across its U.S. network.
The announcement was part of an investor's day in New York where the Atlanta-based transport and logistics giant laid the groundwork for what Chairman and CEO David P. Abney called in a statement the "most sweeping transformation of our network" in its history. As part of the initiative, UPS said it will expedite the development of a "smart logistics network" designed to capture more share of e-commerce, both for business-to-business (B2B) and business-to-consumer (B2C) traffic.
The Saturday ground service is expected to cover half of the U.S. population by the end of 2017, UPS spokesman Steve Gaut said in an email. Additional markets will come on-line during 2018, Gaut said. The coverage area's long-term scope will hinge on volume growth and the economics of providing the service, he said.
UPS began testing Saturday ground deliveries in three markets at the end of last year. It already offers Saturday service through its air network.
By providing ground pickups as well as local sorting services on Saturdays, omnichannel retailers can expand their "ship-from-store" models by arranging pickups over the weekend for delivery the following Monday, Gaut said. He declined to provide demand projections for the service. "Clearly we have enough commitments to believe there is a good business opportunity to commence Saturday service for delivery and pickups," he said.
UPS will use its existing resources to launch the service, according to Gaut. It plans to hire about 6,000 workers over the next couple of years to support the operation, he added.
UPS, which surpassed the $60 billion revenue mark in 2016, plans to expand its top line by 4 to 6 percent annually in 2018 and 2019, the company said at the New York conference. Annual capital investments in the 2018-19 period will equal 6 to 7 percent of revenue, according to Richard Peretz, the company's CFO.
In a related development, UPS said it successfully tested a drone, launched from an electrically powered package car, which delivered a package to a residence and then returned to the vehicle while the driver continued along the route.
UPS conducted the test on Monday in Lithia, Fla., a suburb of Tampa, with Workhorse Group, an Ohio-based battery-electric truck and drone developer. Workhorse built the drone and package car used in the test.
"This test is different than anything we've done with drones so far. It has implications for future deliveries, especially in rural locations where our package cars often have to travel miles to make a single delivery," said Mark Wallace, UPS' senior vice president of global engineering and sustainability, in the statement.