In connection with UPS’s quarterly earnings report on July 26, the company’s CEO, Carol Tomé, announced that UPS is now conducting pilot programs aimed at improving cost efficiency on driver routes by delivering more packages per stop. This will be achieved by having a technology partner hold an order on a scalable digital platform until another order can be matched to the same address.
For UPS, it pays to deliver more packages with fewer stops, since a last-mile delivery of a package is reported to cost an average of $5.50, with only 60 cents in additional marginal cost per package that can be delivered at the same time.
“Imagine the value that could be unlocked if we improve density, and we will pass on some of that value to our customers,” said Tomé, noting that previous efforts to address rising downstream delivery costs have not been successful.
Carol Tomé explained that the company is now instead focusing on improving delivery frequency upstream.
– We have recently completed two pilot projects, and we are truly pleased with the results. We are building a new, scalable digital platform, and we look forward to sharing more details in the coming quarters.
It should be added that UPS is already highly profitable. The latest quarterly report shows that the company’s revenue increased by 5.7 percent and profit by 9.3 percent compared with the same period in 2021. All of the group’s business areas increased their profitability during the quarter.
