UPS’s $20B Problem: Operations Stuck in the 20th Century
wsj.com
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For example : Farnell ships with UPS. Farnell is a mostly B2B electronic components distributor.
EU experience from good to bad : UPS, Fedex, DPD, TNT and then DHL which is the worst from a receivers perspective.
edit: I should add, running a business from a residential location.
http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9N...
Also it's become exceedingly rare for UPS or Fedex to leave me a slip these days the only missed delivery because of signature requirements for me have been USPS attempting to deliver international packages, can't actually remember the last time UPS or Fedex has delivered a package requiring a signature.
So they just leave it in the hallway in front of the apartment door?
Working in the engineering field, people send things at shipping prices of $50-$200 plus per package on the daily. The only thing that matters is that it arrives where it's needed fast. I can't say for sure, but I would expect that UPS is still more inclined to cater to the relatively price insensitive business customer over the Amazon Prime residential customer.
Definitely. The consumer side is less relevant compared to the business side.
We spend tons of money on UPS' insurance products that they must kill us on, but we have no choice, as we send $10k+ packages regularly. USPS' insurance is a complete joke but UPS/FedEx honor theirs pretty regularly, even if there are some hoops to jump.
one time with the USPS, the mail person folded a large hardcover book in half like a taco to fit it into a PO box. when i called the local post office to complain to a manager, she explained that the shipper didn’t purchase insurance and so they couldn’t do anything. when i explained that was for accidents and not intentional destruction of packages she basically yelled at me and that was that. no follow up, no nothing.
these shipping companies hide behind these insurance policies because they basically can do whatever they want with your package and it’s the only little power you have. and it’s obviously something they make a lot of money off of.
Anyway, the apartment management people basically told the USPS inspectors “new mailboxes cost money” and that was that. I moved out a few months later and mentioned that this incident was partially the cause. USPS recommended that I use a post office box to ensure that my mail wouldn’t get stolen, which I understand, but at the same time is pretty ridiculous IMO.
TL;DR USPS was very responsive and sympathetic to my situation, but ultimately couldn’t actually make my huge apartment company secure their mailboxes.
Getting USPS to care is impossible. I actually got a reply from Jeff Bezos in addition to a "?" email because Amazon was using USPS on Sundays for delivery, but USPS is unreachable on Sundays and Amazon has no way of contacting them either, so when USPS deliverymen refuse to deliver packages to my very obviously open business on Sunday citing that we weren't there (bullshit), there's nothing I can do. I wrote it up, sent it to Jeff, and they blacklisted USPS for my route on Sundays and now use Amazon drivers.
Unfortunately, if you go through USPS, they don't care. Much like any other government service you use.
Sure it is, that's an inherently political argument to make.
My counterpoint: I ordered a few things from a vendor (Waytek) recently. Waytek ships via UPS exclusively. I chose UPS Ground service which would've gotten the package to me in about a week. UPS got the package to California, to the regional sorting center in California, sent me an email telling me to expect a delivery, and then got the package to Massachusetts that same evening. UPS said they'll deliver the package in another week or so (assuming they don't bounce it back to the east coast). Despite being able to ship it on their dime cross-country in less than a day, they've put the package on the slow boat back to its intended destination. The UPS response has been: keep an eye on the tracking number and take it up with the vendor if you have any issues. Waytek's stance is that it's officially my property and their duty ended when they dropped the package off with THEIR shipping vendor (UPS).
Tell me again how private corporations are inherently more accountable?
Meanwhile I've ordered replacement parts for the Waytek order from a vendor that ships USPS. The tracking information is showing an estimated delivery date of two days from now (Tuesday), but they're also showing that the package has left the local regional distribution center. That gives me about a 95% chance of having the package in my box 10 AM tomorrow morning (one day early).
There are two reasons why I called it a rant. The first was begging the question of whether that’s true, as you also made the mistake of doing, since there was no attempt to introduce data or analysis showing that the USPS is substantially worse. Since Amazon famously does that kind of analysis, cares a lot about customer satisfaction, and uses a number of carriers it seems especially unlikely that there’s some huge problem they haven’t noticed.
The second reason, however, is the error of treating the quality of government as constant and inalterable. That’s effectively arguing that there’s no difference between South Sudan and Norway, and it’s what really made me regret wasting space on a lazy rant. Even if it was true, the grownup discussion would be how we should have better management and incentives rather than assuming it can never work, just as reasonable people react to a bad experience with a company by supporting boycotts, regulation, or legal improvements rather than saying the private business model can never work.
I think you're running into the policies of your local, privately-owned UPS store. I insure stuff with UPS regularly, with zero interaction with UPS staff. I login to the website, print the label and go. There's no UPS person approving or rejecting my insurance request.
have you ever had to get an insurance payment on a damaged shipment? when shipping this musical equipment, damage can be catastrophic if the insurance coverage is rejected after the fact once a UPS person comes into the picture.
It's common to be able to choose the day and the delivery time. 8am-12pm, 2pm-4pm, 4pm-6pm, 6pm-8pm, 7pm-9pm and I've never had them be 1 minute outside their designated schedule.
And, prices are cheap. Price to send a large package from Tokyo to Osaka (think SF to LA) (larger than the USPS would even allow), $20
Another example of cheap and fast delivery is in New Zealand, which is very roughly similar in size as Japan (and an island!) But infrastructure there is much, much, simpler.
It’s partially because of different relative distribution of supply and demand and partially because infrastructural technology is just better here. (Random customer visible example: high-end apartments in Tokyo generally have an on-site package locker so that companies can drop off packages even when the recipient isn’t home, which is a major convenience and avoids unnecessary redeliveries.)
It was kind of a terrible experience. Just because you had the address and unit number on there, you needed to be "in the system" so they could email/txt you an access code. I had a box of flowers for Mother's day that didn't show up until a week later. When everything did work as expected, it was still very problematic. Any "delivery" alerts were meaningless because it may not have been registered to the package room yet. The package room was a mess and was often difficult to find your packages--then you had to carry them all back to your unit. I'm not sure if they bundled access codes (i.e. 5 packages arrive but they only register the first and give you one code), but this seemed to happen to me. If you did forget a package they expired unused codes after you access. So if you forgot or couldn't carry everything you can no longer access the room.
I'm sure this simplifies things for the carrier, but I wouldn't be surprised if missing packages increased sharply when these were introduced. I also got the feeling packages were delivered to the front office before this system was in place (which would be the same, or perhaps, less work for the carriers). Which negates a lot of the issues mentioned above, but does mean you can only pick up your packages during office hours.
I haven't experienced Japanese package delivery, but when I first heard about it a few years ago I got super envious.
One system I saw recently had a touch screen where the carrier selects the address and individual they are delivering to, and then that individual is notified. They could use their permanent password, door id fob, or a one time access code for each parcel. As for not being able to get it upstairs; there was nothing stopping you relocking parcel.
I still think the worst part of the experience was sifting through all the packages. They had a shelf dedicated for each floor, but a sign saying people move stuff. I saw the office staff go in and resort packages onto the correct shelf everyday.
I've had much, much better experiences with Amazon locker. If I was still in an apartment and one was 0.5 - 1 mile away I would choose it every time (assuming it was a 24hr location).
That said, it's not all perfection. Recently one of the large delivery companies had problems fulfilling all its evening delivery slots and the number of re-deliveries weren't helping. I think every building should have lockable delivery boxes at the front door as standard, then almost all packages can be left without customer interaction.
Economic and political differences probably have a lot to do with the price difference, but another factor is size. Based on the overall difference in geographical size, I would absolutely expect higher shipping costs in the US. That SF to LA shopping cost likely subsidizes the cost of shipping from LA to Orlando (far and moderately expensive) and even the cost of shipping LA to rural Wyoming (closer but possibly even more expensive).
As a country grows in area, a graph between all points within would increase exponentially. So I'd posit that, similar to the square cube law, shipping costs would grow exponentially with increases in geographical area.
"FedEx recently stated that only about 3% of its revenues are derived from Amazon, while an estimated 7% of UPS’s revenues come from Amazon."
https://www.forbes.com/sites/greatspeculations/2017/11/22/wh...
Non-Amazon traffic, for example, business to business traffic, might not be growing as fast, but Fedex/UPS can charge $50+ or even $200+ for a single shipment - that's more than probably the average lifetime shipping profit made from a single Amazon prime user - in one single business-to-business shipment!
A regular North American business would probably have anywhere from 10 to 100 packages a day sent out via courier/UPS/Fedex.
No problem seeing where the profits come from.
Volume does not mean profit, especially when the volume is trying to push for eliminating UPS and FedEx's profits (via offering free shipping)
“Continuously delivery” would probably be difficult. Your typical truck will head out with 6-800 packages to be delivered in a 8-9 hour day, and they don’t all come in at once. Maybe you could send out trucks more often during the day, with fewer packages to be delivered over a larger area, but I’m not sure it would be that beneficial. You’d increase fuel and maintenance costs, plus you’d be paying your (fairly expensive) drivers to spend more time driving rather than delivering packages.
When a package is coming via FedEx, IHOP on their website, no registration required, and rerouted to the most convenient Kinkos. I pick it up when I want.
When a package is coming via UPS, I weep.
You can use Store Hold[1] at UPS Store (formerly known as Mail Boxes Etc). Wikipedia claims they have more locations than Fedex Office (~5000 vs 1900)
[1] https://www.ups.com/us/en/help-center/sri/store-hold.page
Why can't I just order it dropped at the post office for me?
This isn't tenable for the company. The union might be able to stall automation in UPS for a few years, but it'll end with UPS being unable to compete with its competitors. At that point UPS will have a lot more leverage in union negotiations because the alternative will be bankruptcy and everyone losing their jobs. Hopefully union leadership adopts a longer-term view before then.
My guess is that they overutilize seasonal/temp people and understaff later in the year from the unions pov.
Arm chair "logistics experts" should go sling packages for a few weeks to see what it takes to compete with real operations before declaring existing operations dead if they don't "disrupt themselves". UPS, Fedex, and USPS aren't going anywhere.
Also, it is possible the union sees no end-game in sight and is just trying to preserve jobs as long as possible. (The robots won't have a union, and if they did, this union would be unlikely to be a part of forming it.)
I think I agree that the UPS union's decision is possibly a poor one, but come on -- it's easy to see why they made it. Making self-interested, short-sighted decisions is literally what humans are best at.
(Plus, it's not like we can pretend to predict the future and better than they can!)
Unfortunately that's not usually how it works out. See for example, Hostess a couple years back. The union thought management was bluffing about their imminent bankruptcy, turns out they weren't.
The bottom line is that there are ways to make this work and be vastly profitable, but I think ultimately, the question is whether our management and union leaders will work to do that.
Some things actually are zero sum games. And we are a lot closer to that now than 50 years ago when there was so much more room for growth.
Or, all that automation is just vaporware outside of marketing demos and the unions will be fine.
What about most things that you own today? Surely the metals you come across the very electronic you’re typing away on didn’t come from a blacksmith?
I’m sure I could go ad nauseum but I hope you get my point. I’d believe you if you lived somewhere in the artic circle in a remote corner of that desert. But here you are on HN of all places!
Edit: typo
I’m genuinely curious to hear this point of view. I don’t believe unskilled labor (or minorly skilled labor) has a right to a job anymore than a very skilled laborer does.
There’s a reason why cement trucks were created when you could (and can) still mix cement by hand. It’s wildly inefficient at a certain project scale, and I hold the same view for other items.
I’d love to know why you feel it’s socially wrong to push forward automation.
But you know, its all their fault of course, they could've just learned to code!
Should we not have vehicles because it put the horse/buggy drivers out of a job? Have cars made by hand and not by more efficient, safer automation because it puts people out of work?
I completely understand & respect that viewpoint that this does not all happen in a vacuum so the people working manual labor likely did not get or have access to the same opportunities as those "who learned to code".
Who is to say that the automation opens room for better-paying jobs or leads to innovations in health-care that make universal health care more affordable to tax-payers so it can get passed into legislation?
There's negative consequences of slowing automation as well.
Stopping or even slowing automation is though of course completely pointless on multiple levels, if a company isn't going to automate, their competitor will (and drive them out of business), if a country decides to legislate against automation another country will not, in the global economy its a futile effort.
Furthermore there really is no reason for people to "work" at all, if machines can do the same why not let people do what they want to do, instead of pointlessly enslaving humanity forever, that sounds pretty evil.
The big difference is that automation now replaces jobs at a pace that is faster than we can create them. The whole video is good but the particularly interesting stats are at the ~8:00 minute mark.
I really feel that it would do a lot of good in the world to hold back at least some automation of robot type jobs. We as a society need a bigger lead time in the education and social development areas to just expect large swaths of the population to sit around with nothing to do.
Granted, that is the ultimate goal of a would-be post scarcity economy. Unless we're switch to space communism and get matter replicators soon this will only result in social strife.
If UPS doesn't deploy something like that, a competitor will...
The history of companies with incalcitrant unions isn’t the unions getting crushed at the last minute. It’s everyone losing jobs because the company goes bust.
There shouldn't be customer service. If you need to pick up your package, scan your ID or slip or something. If you have an address problem, you use the computer to ensure you're shipping it to the right place. Declarations are handled, and an impact resistant box would probably do well for all the stupid assholes shipping batteries, liquids, dead animals etc.
I know this wouldn't work for a lot of reasons and people would just keep the boxes, but maybe you can keep them from being taken out of the store, like you pull your cardboard box out of it or something.
You get to fill a cardboard box that's barely taped shut and that HAS to fit in the plastic crate. You can't take the crate home.
Actually I think this could work if you offered some money for the empty crates, like with bottle deposits. You could keep the crates if you needed them, but you could also save them until you had a carload to take to the UPS Store and get some cash. If the fee were low enough, the shipping companies would still be saving money over buying zillions of cardboard boxes per year.
I'm not sure if the economics work out, but if we standardized and got USPS/UPS/FedEx/Amazon all on board, it could work.
Both services already do this. They provide free boxes for you to use of standard sizes. So if you choose to ship in another dimension, you're bearing that cost. They incentivize you to use standard sizes.
I could imagine the beds of the trailers being conveyer belts themselves that would "plug in" to the system at the sorting facility. From there the automation could take over. It would be something like training the robots to play a combination of Jenga and Tetris.
> “The problem with technology is that it does ultimately streamline jobs,” says Sean O’Brien, a Teamsters leader in Boston. “It does eliminate jobs. And once they’re replaced, it’s pretty tough to get them back.”
Theyre one of the only companies left that still supports the 20th-century idioms of corporate loyalty-- with only a high school degree, you can start as a truck sorter and work your way up to a vaunted driver or stationmaster position over the course of your career.
Robots might improve a few things though, like safety. If they can not only account for spatial positioning but also weight, automatons might ensure trucks arent over- or unevenly-loaded.
Speaking awhile ago with an expert in this kind of automation, I was told that conveyor belts are much less reliable than I imagined.
Your idea also could be implemented using different tech: Think of the Amazon warehouse bots that lift entire shelving units and bring them to the people who pick items from them. Preloaded racks could be delivered into their places on the truck.
> Is this one of those problems ... ?
It also could be one of those problems that isn't a bottleneck and isn't worth automating.
Loading semis is basically 3D Tetris where you have to consider not only shape (boxes, tubes, cylinders, and everything in between) and size (fits in the palm of your hand up to 2- 3m long), but weight (basically 0-75 kg) and rigidity. Humans pretty easily develop and intuition for these things. I certainly unloaded plenty of semis that were for all intents packed to capacity. In theory you could probably have some kind of fully integrated system that let you know ahead of time the details of every package so you could model the entire load and figure out how to fit it... but doing what humans do loading on the fly would be damned hard.
Loading package cars (the brown delivery trucks) drops the need to maximize volume carried and adds constraints about the order and location of packages so the driver can find them. Again though, it’s a fairly loose system. In theory the load is pretty well distributed across the truck’s numbered shelves by the planning system... except all the days that it isn’t. A loader ends up making a lot of on the fly calls to overflow shelves and rearrange things so they fit on the truck and the driver has a reasonable chance to find them.
tl;dr - Anything is possible, but automating that part of the process is an enormous challenge IMO.
I imagine load distribution, box fullness, rigidity etc can be included as dimensions to optimise. It'd be necessary, really, but doesn't make things any easier.
This is, however, what I believe Amazon are trying to achieve. As you point out, they have the advantage of knowing in advance what the different items being packaged are. They can presumably optimise within a single box, over a single order and across multiple orders and shipments. At their scale it would make sense to devote a large amount of compute to squeezing a few percent extra out of each cargo flight and truck delivery.
The difficulty is to build a machine that can physically put the parcels into the truck.
Elsewhere I complain that software folks think they're smarter than everyone else. And here I am proving it :)
Surely UPS has already solved the logistics planning of putting the right packages with the right drivers, so what's left is prestaging the next truck load for a bot to pick and shift as soon as the truck returns. Although you could argue this means fewer jobs loading it could also potentially mean more jobs driving and frankly if a bot is doing the loading potentially less package damage from careless handling.
There is a lot of idiosyncrasies like this with many of UPS' jobs. Automation will come not to take the paycheck from the low wage worker, but rather from the high wage worker such as driver dispatching, human resources, etc. Those people won't be fired though, most will be reassigned to over see some drivers I would imagine. That is a tough job and those people need all the help they can get.
It is too complicated to design a system that handles 100% of cases, better aim for like 90% with well integrated fallback for the edgecases.
There's no way automate it with the current hub architecture and today's technology. You'd literally have to have a stadium-sized package 'cache' where all package could be unloaded to, some machine vision doohickey to characterize every package, then have a solver identify the idealized load configuration, then picker bots go out and start streaming packages in order so that some high end robot could load the trailer with 90+ percent packing efficiency (which i believe we achieved as loaders getting paid $8/hr).
Then you'd still have to leave the last 8' of trailer space to handle the goats heads and exhaust pipes and all the other crazy shit that people just slap a label on and make someone else's problem. Maybe you could find a way to use air bladders or some kind of encapsulating foam to handle that, but mostly you'd just have to have a floater running from trailer to trailer to load that stuff.
(internet fist bump btw)
https://www.youtube.com/watch?v=kS0Rcgh9-Qw
It's probably just a matter of time.
One aspect of it is powered platforms that move boxes around without human intervention: "Modular storage design: In order to be cost-effective, the loading/unloading, sortation, and storage activities at each DC in the public logistics network must be highly automated since each load might visit a dozen or more DCs while it’s in transit, likely traveling on a different truck between each DC. Since existing automation technologies do not provide the flexibility needed to allow any size load to move to any location at anytime, a new DC design has been developed that would allow packages of varying size to be automatically unloaded at a DC, sorted, stored, and then loaded onto an outbound truck. Such a design would result in diseconomies of scale because it is cheaper to ship a single package compared to a larger consolidated load. Integral to the design is use of arrays of small square modules with orthogonal pop-up powered wheels."
If you're an organisation of hundreds of thousands of workers, you probably can afford to invest in startups that can replace the jobs of the people you're representing. What's better, you already have a relationship with the client and your members have the know-how of the tasks and the business that's about to get automated.
If the investments fail, you keep your jobs. If your investments succeed, you no longer need to work to make living.
We all have seen the graphs showing that the efficiency in the businesses increased dramatically while the salaries stagnated.
Maybe they should pursue investment unions that are aiming to replace their jobs with technology so that they can take the rewards of the increased efficiency.
Edit: In other words, you can't put a price on purpose.
A 4K a year on average per worker will provide 1 Billions $ a year to invest in technology to make UPS jobs obsolete.
There's no rule that one person or company should own all the machines that put people out of work, maybe it can be better for everyone if the machines are owned by a large number of private owners. Basically decentralised communism or if you want it to sound nicer, shared automation economy through crowdfunding.
There is currently no technology that would allow UPS to fully automate, nor would even gain enough efficiencies that would repay the investments needed. The amusing thing to me is - now is probably the right time to fully automate sorting, the technology is much more mature and will likely have a longer lifetime before replacement, than the technology FedEx just installed.
NYMTA, could fully automate - but as a cost greater than building new subways from scratch - the largest issue NYMTA has is a lack of local control, a lack of funding (from Albany), and the tact that if the subways - any of them - shut down for any amount of time, the city devolves to gridlock.
Complicating factors for MTA are, outright corruption, an indifferent management, regulation that makes construction difficult, and a top down safety culture - that prioritizes eliminating the /appearance/ of risk, over reducing realistic risk.
The loss of efficiency was way less than they expected. They did have to spend weeks though fixing containers sent to the wrong location.
It also doesn’t mention that Fedex operates two companies ground and express. Most of the B2B stuff is via FedEx express.
IMO the actual information here is that UPS approached the market based on their long term plan and maximized utilization of their capital investments. Now they’re looking to invest in modernization. The question is, was it smarter to stay the course, learn from Fedex’s experience and lock into tech at a lower price, or should they have scrambled?
The downside of fedex's seperate companies is there is a lack of logistical coordination at the national level. I.e. If they have a ground 28' trailer full at a smaller location and a separate 28' LTL Freight trailer, they will send two drivers instead of 1 long haul driver with a doubles configuration.
[1] https://web.archive.org/web/20080206004244/http://www.fedexf...
[2] https://about.van.fedex.com/our-story/company-structure/cust...
The direction they should take is to bind third party sellers, and to set up a web retailing website.
Amazon is largely a reseller(bar it’s in house developed products like Kindle/Alexa and store branded products) with far lower gross margins than Apple.
Apple has the highest retail gross sales(and associated high margins) in the world.
Many look to Apple/Google/Facebook as leaders in compensation, benefits, perks.
But they are the exceptional companies that have wide Warren Buffett “moats” to protect their high margins.
McDonalds and Amazon(distribution operations, not software dev)have far more in common in value proposition and business model in terms of margins/compensation than Apple and Amazon.
Just my 0.02c
Would,it be worth including that in the total long-term equation?
Every single hourly Amazon distribution worker from the first 5-7 years of the company would be multi-millionaires now had they exercised and held their options.
More recent hourly distribution employees of Amazon would have also done quite well in the most recent 5-7 years with stock units granted.
But I think you raise a good point about comparing Costco with Amazon.
I’d Be keen to compare their respective business models and total compensation systems for employees at the coalface.
Seems strange for Amazon to enter a business with low margins and a low ceiling.
Amazon is a logistics company, first and foremost. From order entry to delivery, they use their logistics systems to deliver whatever it is that you want to buy, from physical goods to movies to third parties' products.
I once read a foreign policy expert talking about drug cartels and why they all seemed to do human trafficking too, and why a terrorist organization tried to use them. The author said that the cartels started with drugs, but they have evolved into logistics organizations which specialize in illegal goods and bypassing customs. They have the means to ship things confidentially and without customs, and they'll put whatever you want to ship into their system. The author's point of view was that Wal-mart and Amazon are the same, but with legal goods and lawful business practices.
(Seems to be the same as archive.is)
Like SciHub basically.
https://chrome.google.com/webstore/detail/unpaywall/iplffkdp...
It doesn't bat 1.000, of course, but it is successful often enough to be useful.
I wouldn’t run my business with the “hope” that regulators are benevolent. If the media publishes a story critical of a country’s government, what’s to stop them from using GDPR as the basis for a very expensive witchhunt? Even if you have done everything correctly, there is still a significant compliance risk.
It isn’t the compliance itself that is problematic — it’s the compliance risk you subject yourself to when serving Europe. Given most news organizations are hanging by a thread financially, one bit of back luck from an aggressive regulator could destroy the business.
It’s the same reason many European banks have refused to service American customers: the FATCA compliance risk.
Those two statements are not mutually exclusive. I think they did have lawyers who advised them. They concluded that the potential risk is larger than the gain (in ads - europeans love their privacy and adblockers; and ad rates are comparatively quite low outside of the UK).
One, I think they should have hired european lawyers for this.
Two, comparing with the FATCA risk is amusing.
I’m just having a hard time understanding the ethics of this.
I find it hard argue against a service that unblocks this kind of news site for europeans from an ethical POV. Copyright law is of course different, but it was you who introduced the ethics aspect.
here ya go: https://twitter.com/WSJ/status/1007786098859413504