Dive Brief:
- UPS is expanding its heavy air freight service options to support automotive and industrial supply chains as part of a nearly $50 million investment, according to a news release Friday.
- Starting in August, UPS' North American Air Freight capabilities will begin offering one-day, two-day and three-day service options to and from Mexico. The service expansion will help manufacturers ship high-value, time-sensitive parts with increased speed and predictability, per the release.
- "The UPS North American Air Freight network already covers the U.S. and Canada, so it makes sense to add Mexico to cover all of North America with a seamless, end-to-end air and ground freight solution," UPS spokesperson Jim Mayer said in an email. UPS is also adding more ground capacity in Mexico to serve the network, he added.
Dive Insight:
The service expansion builds upon UPS' efforts to attract more volume from automotive shippers and industrial manufacturers. These customer segments generally provide UPS with more profitable volume compared to lower-yielding e-commerce shipments to homes — a part of the market UPS is distancing itself from.
UPS has seen some momentum from its strategic shift. The carrier's average daily U.S. volume from small- and medium-sized businesses increased 1.6% year over year in Q1, driven by automotive, healthcare and "high-tech" shippers, EVP and CFO Brian Dykes said on an earnings call in April. U.S. average daily volume overall was down 8% YoY, driven by fewer deliveries for Amazon.
As UPS looks to gain momentum in more lucrative verticals, the carrier said Friday that its integration of transportation, brokerage and warehousing into one service is appealing for "production-critical supply chains." UPS’ capabilities provide an edge versus multi-carrier models by limiting handoffs and streamlining the shipping process, according to the release.
“Our automotive and industrial customers want an easy button for logistics,” Matt Guffey, UPS EVP and chief commercial and strategy officer, said in the release.
The $50 million investment has also enabled UPS to establish a team of more than 300 subject matter experts in the automotive and industrial manufacturing spaces. The experts’ role is to understand customers’ business needs and help those customers improve their supply chains, according to Mayer.
Beyond expanded air freight services and subject matter experts, UPS also highlighted in the release additional capabilities that can benefit automotive and industrial manufacturers. These include increased visibility via RFID technology, its UPS Ground with Freight Pricing service for shipments over 150 pounds and same-day delivery via Roadie to dealerships and repair shops.
