Air Transport World

UPS: bigger than you think. (United Parcel Service)

Louisville--At one time United Parcel Service did not advertise on television or in print media. It simply handed brochures describing its services to current costumers and depended on word-of-mouth advertising.

At one time UPS, founded in Seattle, Wash., in 1907, did not employ a sales force. It had customer service representatives to deal with current clients, but didn't beat the bushes to develop new ones.

At one time UPS did not talk to outsiders. It is a management-owned company, and doesn't have to reveal many details about its internal workings if it doesn't want To. Mostly it doesn't want to and is still pretty chary about opening its doors.

But in September 1982 UPS began overnight delivery of small packages by air. In the period since it made the decision to enter this highly competitive, high-profile, high-risk business, much has changed in the workings of the very private UPS.

Some things have not changed. UPS won't reveal the breakdown in business between its overnight and second-day air traffic. Federal Express says that 17% of Federal's nightly volume is second day business. UPS won't allow publication of photos of its managers. "We're all a team here," it says.

Still, UPS is one of the most extraordinary stories in the history of U.S. business. It is beginning to get that story out and by the way improve its air express visibility without muddying its traditionally conservative management philosophy.

In sheer size alone UPS stands out. It handles 7.8 million small packages a day. Of that, its air hub in Louisville accounts for about 200,000. UPS' reputation, of course, is based on its extensive ground operation. Its drivers make pick-up stops at 680,000 accounts every day, whether the customer has called or not. Its 140,000-employe work force is big enough to reach every address in the United States, although it no longer serves Alaska. In 1984, it carried 1.9 billion packages on the ground, 55.6 million packages in the air and had total revenues of almost $7 billion. An analyst estimates it ended the year with $600 million.

By contrast, Federal Express, the biggest small package express company by a wide margin before UPS' 1982 entry, had fiscal year 1984 revenue of $1.44 billion. Its 1984 net income was $115.4 million. Its daily volume, which includes a lot of documents that UPS does not yet handle, is up to 400,000 shipments.

UPS is not new to air delivery of small packages. In 1929 it entered the second day air market. Its timing was horrible and it got out very quickly, a victim of the depression. …

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