Free Encyclopedia of Ecommerce » Free Encyclopedia of Ecommerce » Inc. (UPS) United Parcel Service - Early History, Early Information Technology Efforts, Move To The Internet

Inc. (UPS) United Parcel Service - Early History

delivery firm air packages

Since most individuals did not own telephones in the early 1900s, telegraph messages were carried to homes by hand. In 1907, this fact prompted Jim Casey to establish a bicycle delivery service known as American Messenger Co. in Seattle, Washington, to deliver both telegraph messages and lunches. Six years later, Casey agreed to join forces with a rival business, Merchants Parcel Delivery, and he began focusing on delivering packages for retailers. The newly merged firm, which used the Merchants Parcel name, bought a Ford Model T to speed deliveries and broaden its range. By then, the U.S. Postal Service had started to deliver packages as well, creating increased competition for delivery services like Merchants Parcel. In 1918, three department stores in Seattle contracted Merchants Parcel to make deliveries to their customers on the same day they made their purchases, and the little company employed more than twenty delivery workers. Service to department stores accounted for the bulk of the firm's revenues over the next three decades. During this time, Merchants Parcel developed its consolidated delivery strategy, which called for organizing deliveries so that packages going to one area were all given to the same delivery person.

Moving outside of the Seattle area for the first time, Merchants Parcel acquired Oakland, California-based Motor Parcel Delivery in 1919. To better reflect its more diverse holdings, the firm then changed its named to United Parcel Service (UPS). The word "United" represented the firm's consolidated delivery strategy, which had allowed it to increase efficiency and cut costs. In the early 1920s, UPS began to offer parcel pickup and delivery services to any business in its service area for a flat fee. Expansion into Los Angeles, California—then the fastest growing city in the U.S.—took place in 1922. Three years later, UPS extended its reach to the Eastern Seaboard by launching service in New York City; Newark, New Jersey; and Greenwich, Connecticut. The firm diversified into air delivery services in 1929 via its new United Air Express division, which had convinced airlines to allow UPS packages on passenger planes. However, the air services were cancelled just a short while later due to the economic problems that led to the Great Depression.

Revenues continued to decline after the Depression ended as people purchased automobiles and began to pick up their own packages. In the early 1950s, UPS launched its delivery services in San Francisco and Chicago, and expanded its reach in New York. The firm also relaunched its air service as Blue Label air, completing air deliveries in two days or less. Realizing that the retail delivery market was shrinking, UPS gained permission to act as a "common carrier," an entity that could deliver packages for individuals, as well as businesses. The restrictions placed on both interstate and intrastate deliveries created another hurdle for UPS as the firm was forced to seek permission from each state government to deliver packages within each state, as well as across state lines.

Jim Casey retired in 1962; he was succeeded as CEO by George D. Smith. By the end of the decade, UPS was operating in 31 U.S. states, and sales had reached nearly $550 million. More than 22,000 drivers worked for the firm. The Blue Label air service was expanded in the early 1970s to cover Washington, Oregon, California, and 28 states in the eastern U.S. Ground service in Germany began in 1976, marking the firm's first foray into Europe. To cuts costs, UPS began to use part-time employees to replace full-time package handlers. As a result, 17,000 workers went on strike. Although the strike was resolved that same year, relations between management and employees remained strained. By 1978, the Blue Label air service was offered in all 50 U.S. states.

The deregulation of the U.S. airline industry fueled the firm's growth in the early 1980s as UPS began purchasing planes of its own. For example, UPS paid $28 million for nine used 727 aircraft in 1981. Profits grew to roughly $190 million on sales of $4 billion that year as UPS shipped 1.5 billion packages. The following year, UPS launched its overnight air delivery service, undercutting the rates of rival Federal Express by roughly 50 percent. With 62,000 UPS trucks in operation, sales grew to $5.2 billion. UPS paid $208 million for an additional 13 cargo jets in 1984. Overnight air services were made available to every address in the 48 contiguous states and Puerto Rico in 1985, and International services were launched between a few states in the northeastern U.S. and six European countries. Sales exceeded $10 billion for the first time in 1987. Compared to the 57 percent share of the overnight package market held by Federal Express, UPS held only 15 percent. To strengthen its position against Federal Express, UPS spent $1.8 billion for 110 additional aircraft.

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almost 4 years ago

Question: When did UPS first start using bar codes and who developed this application for UPS?

Thank you.