Monday, August 6, 2007

1907: UPS predecessor delivers first package

In 1907, two teenage entrepreneurs created what would become the world's largest package delivery service. Starting in a Seattle basement with a $100 loan, Claude Ryan and Jim Casey opened the American Messenger Company. With telephones and automobiles scarce, the company fulfilled a range of tasks, from running errands and carrying notes on foot or on bicycle, to making home deliveries for drugstore customers. Their fledgling business entered a competitive marketplace, facing numerous firms that also specialized in message and parcel delivery.

Already experienced in business when he began the company, Jim hired other teens as messengers, and his younger brother George joined the firm's leadership ranks.

A merger with Evert McCabe's competing package delivery business helped the company redefine its primary charge. With enhancements to telephones reducing dependency on messenger companies, in 1913 the American Messenger Company shifted its focus to delivering packages from grocery and drug stores to customers' homes. The company's name changed to Merchants Parcel Delivery, highlighting its new mission.

After adding Evert's motorcycles and a Ford Model T to its transportation reserve, the company began to consolidate its deliveries so that all packages for a specific neighborhood would be loaded onto the same vehicle, maximizing use of resources while keeping expenses low.

The final founding member of the company, Charlie Soderstrom, joined the firm in 1916. With his expert knowledge of automobiles, he helped manage the company's rapidly expanding fleet of delivery vehicles.

The young company's leaders saw a new opportunity to promote their business, and ultimately persuaded retailers to outsource delivery services to their company. 1918, three of Seattle's leading department stores became customers, abandoning their own internal delivery efforts, and turning over business to Merchants Parcel Delivery.

In 1919, the company made its first expansion beyond Seattle to Oakland, California, where the name United Parcel Service debuted. "United" reflected the company's consolidated shipments, while "Parcel" indicated the kinds of deliveries the company made, and "Service," noted Charlie Soderstrom, "is all we have to offer." During the same year, Charlie was credited with the idea of painting all the company's cars brown, chosen for its stately appearance.

In 1922, the company acquired a business in Los Angeles that offered "wholesale delivery" service, shipping products from the manufacturer to the distributor. This section of the company quickly began providing its product transportation services to the public, in the same way that the US Postal Service did. This was known as to common carrier service. The acquisition of common carrier rights enabled the company to deliver packages to private and commercial customer addresses. This step placed UPS in direct competition with the USPS. The offerings included daily pickups, COD payment acceptance, automatic return of undeliverable packages, and weekly billing, all at rates competitive with the post office.

The 1920s marked a period of technological and service innovation. A major new development occurred in 1924, when the company introduced an innovative conveyor belt system used for package handling. Then in 1929, UPS began to offer air service through private airlines. The economic downturn in the US, along with a lack of volume, led to the end of the service two years later.

Geographic expansion emerged as a bold new opportunity for the company. Through the end of the 1920's, UPS expanded its retail delivery service to encompass all major cities along the coastline of the Pacific US, including San Francisco, San Diego and Portland, Oregon. In spite of the economic conditions after the stock market crash of 1929, UPS expanded eastward the following year, opening operations and moving its headquarters to New York City.

UPS grew throughout the 1930s and early 1940s by acquiring delivery responsibilities for department stores in Chicago, Cincinnati, Milwaukee, Minneapolis, and Philadelphia. Fuel and rubber shortages during World War II, combined with rationing of most retail goods, led stores to limit delivery services and encouraged customers to carry their packages home themselves.

After the war ended, America witnessed the development of the suburbs, and new consumer trends emerged. More Americans were buying cars and shopping at suburban malls with large parking lots. UPS recognized that its role in home delivery services for department stores was limited, and its management pursued new growth opportunities.

UPS management sought to expand its breadth of services. In 1953 UPS began common carrier operations by providing package transportation services to the public in cities where the company did not require authorization by the state commerce commissioner or the Interstate Commerce Commission. During the same year, Chicago became the first city outside of California in which UPS offered common carrier service. Amid the determined pursuit of common carrier service deregulation, the company reintroduced air service, offering two-day delivery to major East and West Coast cities in 1953. As with the previous effort, UPS shipments flew on regular commercial flights.

Strict state and federal regulations limited access and entry to major markets. In some instances, shippers were required to transfer a package between several carriers before it reached its final destination. UPS faced unprecedented legal battles to obtain the proper certification to operate over areas wide enough to satisfy growing public demand for its unique services. Over the course of 30 years, UPS pursued more than 100 applications for additional operating authority. By winning these challenges, UPS effectively laid the groundwork for other delivery companies to compete in the marketplace. In 1975, UPS became the first package delivery company to serve every address in the 48 continental United States.

UPS increased its reach in the mid-1970s by growing internationally and at home. In 1975, the corporate headquarters moved from New York City to Greenwich, Connecticut. That same year , UPS went abroad for the first time when it began offering services in Toronto, Canada. The following year saw the start of operations in Germany. Over the next decade, UPS expanded its service throughout the Americas and Europe. After purchasing IML, a British document and parcel delivery company, in 1989, UPS extended service to the Middle East, Africa, and the Pacific Rim.

The need for air shipment increased in the 1980s, and UPS focused on expanding its presence in the skies. Deregulation of the airline industry allowed new opportunities for UPS, as some established commercial carriers reduced flights and even abandoned some routes completely. In order to ensure the company's reputation for dependability, UPS took steps toward creating its own fleet of airplanes.

With increasing public demand for quicker service, UPS entered the overnight air delivery business. By 1985, UPS Next Day Air service was available in all 50 states and Puerto Rico. That same year, UPS introduced international air package and document service between the U.S. and six European nations. In 1988, UPS won approval from the Federal Aviation Administration (FAA) to operate its own aircraft, thus launching UPS Airlines. Organized in slightly more than one year with all the needed technology and support systems, UPS Airlines was the fastest airline start-up in FAA history. Today, it is the world's eighth largest airline.

Currently, UPS runs an international package and document network in more than 200 countries and territories. With its worldwide services, UPS moves nearly 15 million packages through its network each business day.

The early 1990s marked the start of another era of change at UPS. With an eye toward improving cost efficiencies, in 1991 UPS announced plans to move its corporate headquarters to Atlanta.

E-commerce emerged as a potent force for changing the ways companies and consumers did business. Technology linked buyers and sellers in new ways that propelled globalization. Since the late 1990s, UPS has invested billions of dollars in technology development and infrastructure.

In 1993 UPS delivered 11.5 million packages and documents daily for more than one million regular customers. With such massive volume, UPS needed to develop new technology to maintain efficiency, keep prices competitive, and provide additional customer services. Operational technology at UPS spans a broad range, from small handheld devices, to specially designed package delivery vehicles, to global computer and communications systems.

The handheld Delivery Information Acquisition Device (DIAD), carried by all UPS drivers, was developed to capture and upload delivery information to the UPS network. The DIAD even includes digital images of a recipient's signature, giving shippers quicker confirmation of final delivery. This proprietary device also allows drivers to stay in contact with their operational centers, staying abreast of changing pickup schedules, traffic patterns, and other important messages. Finding technological efficiencies have led to environmental benefits. Use of the DIAD eliminates the use of 59 million sheets of paper, equal to 5,187 trees per year.

In 1992, UPS began tracking all ground shipments electronically. In 1994, debuted, and provided the interface to make what was primarily internal operational information available to customers. The following year, UPS added functionality to its Website that enabled customers to track packages in transit. The resulting popularity of online shipment tracking surpassed all expectations. Today receives 15 million online tracking requests daily.

Toward the end of the 1990s, UPS began another transition. While the core business continued to focus on package delivery, UPS expanded its vision to become an enabler of global commerce. The strategy that emerged was to drive growth through a new set of global services to meet the needs of customers seeking more efficient supply chains.

Services added included transportation and distribution for larger shipments via road, rail, air, and ocean. Specialty services were developed for high-tech, automotive, and consumer goods industries, because they increasingly were sourcing globally. UPS began to acquire companies with supply chain management and target industry expertise. In 1998 the company also established UPS Capital, a financial services business unit, expediting the flow of funds and mitigating trade risk throughout the supply chain. In its beginning, UPS Capital offered COD enhancement services, and eventually purchased First International Bank, allowing commercial lending capabilities.

In 1999, UPS offered 10 percent of its stock to the public for the first time. This initial public offering gave UPS the ability to use a publicly traded security to make strategic acquisitions. Prior to this, UPS had been owned primarily by management employees, a practice established by Jim Casey in the 1920s when he gave staff the opportunity to purchase company shares.

In 2001, UPS ventured toward retail business by acquiring Mail Boxes Etc., Inc., the world's largest franchisor of retail shipping, postal and business service centers. Within two years, approximately 3,000 Mail Boxes Etc. locations in the United States re-branded as The UPS Store and began offering lower UPS-direct shipping rates. The stores remain locally owned and operated, and continue to offer the same variety of postal and business services, with the same convenience and world-class service.

UPS continues to expand service worldwide. In Europe, Asia, and South America, customers enjoy an unmatched portfolio of time-definite and supply chain services. Two major enhancements to international service came with the expansion of Worldport, the air hub in Louisville, Kentucky, as well as the European air hub in Cologne, Germany. With Asia identified as a primary growth target, in 2005 UPS launched the first non-stop delivery service between the U.S. and Guangzhou, China. That same year, UPS acquired the interest held by its joint venture business partner in China, giving it access to 23 cities that cover more than 80% of the country's international trade.

UPS continually gains wider access to various markets through acquisitions. The 1999 acquisition of Challenge Air made UPS the largest express and air cargo carrier in Latin America. Purchasing Menlo Worldwide Forwarding in 2004 added heavy air freight shipment capability, while the acquisition of Overnite in 2005 expanded the company's ground freight services in North America. Other recent acquisitions in the U.K. and Poland present new opportunities for growth in Europe.

Over the past 100 years, UPS has become an expert in transformation, growing from a small messenger company to a leading provider of air, ocean, ground, and electronic services. The most recent public change came in 2003, when the company introduced a new brand mark, representing a new, evolved UPS, and showing the world that its capabilities extend beyond small package delivery. The company went another step further, adopting the acronym UPS as its formal name, another indicator of its broad expanse of services. (info & photo from UPS)

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