UPS gropes towards the future of logistics

The scale and shape of the future of logistics is glimpsed when looking at the thrust of UPS’s marketing and technology developments.

For example in a recent marketing offensive it has sought to cultivate its position amongst smaller Chinese manufacturers who are looking to export. The nature of Chinese manufacturing is changing as more of them seek to expand what are often razor-thin margins by creating more direct relationships with customers outside China, rather than relying on the big Western and local purchasers’ in-situ buying operations. Cheaper faster logistics connection delivered by the likes of UPS, might enable at least some small Chinese companies to by-pass these big corporations and enable them to access more profitable channels to market. Or as UPS put it, “We see that a more customer-centric approach built on collaboration, industry-vertical solutions, and robust supply chain strategies will continue to be imperative for Chinese export manufacturers to compete globally.”

A survey conducted by UPS – called ‘Made in China 2.0’- suggests that the businesses targeted by UPS are still heavily concentrated on the eastern seaboard of China. It also asserts that Shenzhen remains the largest single grouping of competitive business in the country. To service this market UPS has two hubs, one in Shenzhen which is designed to provide links to South and North Asia and another in Shanghai, which accesses UPS’ global freight network. The survey also underscored the fact that, for the moment at least, most exporters are focused on selling into Asia.

At the same time UPS has outlined its ideas on how to manage its e-commerce operations through technology and new logistics concepts. The company has been having a hard time managing internet retailing deliveries, particularly around the Christmas peak-season. UPS’ solution is to consolidate several loads over a three day period and make just one visit to each customer. Retail customers can manage this process through a mobile phone application called ‘MyChoice’, which enables the consumer to select the delivery location and time.

Neither of these two developments are particularly revolutionary, however they highlight how supply chains are beginning to evolve. Logistics service providers such as UPS are developing the ability to reach into locations, such as China, that were previously considered hard to access in within a tight timescale and at reasonable cost. These companies are also striving to create the sort of information technology and logistics solutions that will enable them to make large-scale internet retailing an economically viable activity. The big challenge that the likes of UPS will face next is putting the two together to enable a closer relationship between consumers and manufacturers.