In a move designed to capture network costs associated with retailers who fail to meet peak volume commitments, UPS plans to charge them for shortfalls this year. The charges would cover costs such as extra workers and surplus space on trucks or in distribution hubs based on retailers’ projections and volume commitments.
Meeting the increasingly high demands of ecommerce customers and helping shippers drive efficiency in their fulfillment operations were two of the main themes as UPS and Sealed Air jointly unveiled their packaging innovation center, located on the campus of UPS Supply Chain Solutions near its Worldport air hub in Louisville, KY.
UPS is continuing to push for increased efficiency through hub automation projects and its ORION route optimization system. The company reported Q2 revenue growth of 3.8% to $14.63 billion, with profit up 3.2% to $1.27 billion. Its ecommerce business is on pace to grow faster than expected through the end of the year, officials said, based on strength in U.S. consumer spending.
UPS executives said they will continue to place a $1 billion bet on new technology each year, including major investments in facility automation, robotics and even drones to conduct tasks such as aircraft inspections and inventory counts. See what else the company disclosed about its strategy and operations during media day at its Atlanta headquarters.