Carrier Pushes Ahead on Nearshoring, Identifies Ways to Expand Network
The recent UPS Inc. acquisition of Mexican express delivery company Estafeta takes advantage of a business trend toward nearshoring and aligns with the global parcel carrier’s goal of identifying new ways to expand its network amid shifting customer behavior, CEO Carol Tomé said recently.
“This is a big win for UPS, and it’s a big win for our customers,” Tomé said of the deal during a July 23 earnings conference call. “By combining Estafeta with the end-to-end services we already have in Mexico, and connecting it to the global reach of our integrated network, we will greatly enhance our logistics orchestration capabilities for customers that are shifting manufacturing and distribution closer to the United States.”
UPS said earlier this year that it intended to pursue certain inorganic growth opportunities and laid out four strategic pillars for its outlook. The first acknowledged that there would be a front-loading of costs associated with new labor contracts, which it projected would impact earnings in the first half of the year by as much as 30%. The second was that the company would return to volume growth, which it did in May. A right-sizing of its management structure and exploration of logistics alternatives in the wake of its sale of Coyote Logistics to RXO were also in the mix.
“During the quarter, we experienced a shift toward value products, with shippers choosing ground over air, and SurePost over ground,” Tomé said during the call. “And there was also a notable shift in product characteristics, with a surge in lightweight volume moving into our network.”
She continued, “In the U.S., we expanded our weekend service offering to six additional markets. We are the only private U.S.-based carrier that provides both commercial and residential pickup and delivery services on Saturday as a general service offering. Outside of the U.S., we are continuing to enhance our portfolios to support our customers as they balance the need for speed with cost. For example, in record time, we launched enhancements to our worldwide economy service globally. This is an e-commerce solution for non-urgent cross-border shipment.”
UPS ranks No. 1 on the Transport Topics Top 100 list of the largest for-hire carriers in North America and No. 4 on the TT Top 100 list of the largest logistics companies. RXO ranks No. 20 on the logistics TT100. Coyote ranks No. 4 on the TT list of the top freight brokerage firms.