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United Parcel Service (UPS)

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United Parcel Service (UPS)

Introduction

As United Parcel Service (UPS ) announces it largest acquision ever, $6.8 billion by absorbing the Dutch company TNT Express, the beginnings of the company started with a loan of only $100 back in 1907. Since then the company has grown into the world's largest package delivery company and a leading global provider of specialized transportation and logistics services.

Company Origins

The beginnings of UPS are very similar to other messaging companies in the early twentieth century. There was a requirement for private messenger and delivery services in most urban areas. The quick response times of the private delivery companies gave rise to a large number springing up and one of those in Seattle, Washington was called the American Messenger Company, started by a 19 year old called Jim Casey and his business partner, Claude Ryan. Casey borrowed $100 to start the company and operated a messenger service that performed tasks as wide ranging as delivering food from restaurants to making deliveries on bicycles. Casey continued as the chief executive of the company until 1962.

As the company became established they concentrated on delivering mail for the United States Postal Office until in 1913 the company purchased their first motorized vehicle, a Model T Ford, and began delivering parcels for the three largest department stores in Seattle. After a merger with another messaging company, the new name for the enterprise was Merchants Parcel Delivery.

Becoming United Parcel Service

After the First World War, the Merchants Parcel Delivery company expanded on the West Coast to Oakland in California and changed its name to United Parcel Service. In 1922 with the success of the Oakland operation, United Parcel Service acquired a delivery company in Los Angeles which operated a process called “common carrier service”. This process incorporated many of the features and operating principles of the retail store delivery service with features not then offered by many other private carriers, or even the United States Post Office. These features included automatic daily pickup calls, acceptance of checks made out to the shipper in payment of cash on delivery (COD), additional delivery attempts, automatic return of undelivered items, and streamlined documentation with weekly billing.

Delivery By Air

In 1929 the United Parcel Service the company had expanded to include all major urban areas on the West Coast, but included the ability to deliver packages by air. The company would provide air deliveries by using privately owned aircraft to provide the air transportation. Unfortunately with the advent of the great depression, the air delivery program was suspended. It was another 24 years before the company resumed delivery services by air.

Expansion To The East Coast

During the 1930’s and 1940’s the company started deliveries for large department stores in New York City and Newark, New Jersey. In addition UPS tried to expand by acquiring common carrier rights to deliver packages between all customers, both private and commercial. This meant the UPS was becoming a direct competitor to the United States Post Office and was threatening to violate the regulations of the Interstate Commerce Commission (ICC). Although the ICC was originally supposed to regulate railroads to ensure fair rates, it was allowed to regulate common carriers, as well as bus lines and trucking companies. Many legal encounters ensued with UPS trying to gain additional operating authority in over a hundred areas.

International Deliveries

It was not until 1975 that UPS finally was able to deliver packages to all 48 contiguous states and two years later the company started deliveries to Alaska to provide coverage across the USA. The company took its first steps outside the US in 1975 when it offered service to Toronto and then in 1976 it moved into Europe with delivery service to West Germany. Today UPS operates international services to 185 countries.

Recent Acquisitions

UPS became a public company in 1999 and as a result has been able to fund expansion of the company by strategic acquisitions. In 2001 UPS purchased Mail Boxes Etc for $197.5 million and rebranded them as UPS Stores where the public and businesses can purchase UPS services. The same year UPS purchased the Fritz Companies, at the time one of the world's leading freight forwarding and customs brokerage firms, for $450 million. This allowed UPS to offer a broad, integrated portfolio of services for moving everything from small packages to heavy freight, by any mode of transport, anywhere in the world. In 2004, UPS paid $260 million for Menlo Worldwide Forwarding, a global freight forwarder that provided heavy air freight forwarding services, ocean services and international trade management. Before the purchase of TNT Express, the costliest acquisition came in 2005 when UPS purchased the Overnite Trucking company for $1.25 billion. The acquisition of Overnite gave UPS the ability to offer a variety of less-than-truckload (LTL) and full truckload (FTL) freight services in North America. At the time of the acquisition Overnite derived 88 percent of its sales from less-than-truckload services.

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