Shipping carriers are exploring dozens of new technologies in research and development departments worldwide. Each promises to transform the way we move goods in order to bring greater efficiency to warehouses, or to make last-mile delivery more effective.
But, UPS is bringing these innovations to the C-Suite.
CEO, David Abney told The Wall Street Journal in September that the company is willing to take risks with new disruptive technologies to be a cutting-edge carrier. “We had to be more apt to take on risk and get involved in some of these technologies at an early stage,” he said—even if early-stage development means it takes years to see returns on investment, if the company sees them at all.
Last year, UPS retitled Chief Information Officer, Juan Perez to chief information and engineering officer. The company said his goal was to “lead a unified team of UPS engineers and IT professionals, laser-focused on building the company’s Smart Logistics Network of the future.”
Perez’s Technology Division works with everyone including existing company silos, startups and university researchers to experiment with emerging technologies that UPS could implement in the next five years.
UPS New Technology and Innovation Division
In 2017, UPS created an Advanced Technology Group, whose mission is to research, test and develop new technologies and operating models that can improve UPS’s network. The team is housed within UPS’s engineering department, but collaborates across the company.
Today, UPS has a budget of about $1 billion to adopt new technology and be early adopters of innovation. That covers everything from software that optimizes drivers’ routes to warehouse machines that can sort packages, to better hand-held devices that drivers use to scan packages when they drop them on doorsteps.
Naturally, these investments are driven by UPS’s need to stay competitive—particularly as Amazon makes moves toward an in-house delivery service.
Barbara Ivanov, a logistics expert at the University of Washington’s Supply Chain Transportation and Logistics Center, told MIT Technology Review in early 2018 that “… the disruptive thing is that (Amazon would) be able to start from scratch, with technology at the center of their operations.” On the other hand, legacy carriers like UPS and FedEx would have to modernize existing systems that may be inherently out of date.
That said, Ivanov explained that having the skills to succeed in the delivery business—a dense global network—is essential. Amazon doesn’t have that yet. UPS does.
Amazon has been early adopters of artificial intelligence for a while which has given them a head start. UPS is working on AI, and has been for longer than most industry watchers realize, Babson College Professor, Thomas H. Davenport told MIT Technology Review in the same piece.
He pointed to the company’s enhanced dynamic global execution (EDGE) program, a suite of projects based on detailed data UPS has been collecting since 2016. EDGE initiatives have changed the arrangement of parcels inside trucks, how temporary holiday workers are trained and even when trucks get washed.
“EDGE is just the latest in a series of large-scale, long-term UPS technology projects related to things like tweaking driving routes and telematics on trucks, with each new thing building on the previous capability,” Davenport told the magazine. AI will be one of those “new things.”
Latest Technology Trends
AI implementation is just one project among many at UPS.
Blockchain—the hottest buzzword in technology today—is also part of the company’s portfolio. A new project hopes to use the blockchain to manage and track the status of claims within UPS Capital, the company’s arm that offers supply chain finance and insurance services.
The blockchain is a public ledger of transactions, and in an industry with notoriously little transparency, the key word is “public.” Greater adoption of blockchain technology could allow shippers and other carriers to see into UPS’s inner workings, which would make the business fairer for everyone.
UPS is also working on installing tiny chips in its package labels. Tracking technology while parcels are in transit is already developed, but this would provide more visibility as to where packages are within a facility at any given time. Drivers and employees who load trucks and aircraft could use this information to greatly increase efficiency in warehouses.
Like most major carriers, UPS is also exploring drone technology, but not exclusively for delivery. Drones currently monitor activity around the perimeter of UPS’s yard in Denver as a security measure.
What Does Adapting to Technology Mean For Shippers
As carriers use technological change like self-driving trucks to make internal processes more efficient, they will be focused on their bottom lines—innovations that can save them money. Shippers should watch their carriers closely to ensure that some of those savings are passed on. As carriers are able to move more volume or packages faster, they will try to increase their margins by charging shippers more. Some rate increases are unavoidable, but shippers can negotiate for moderate, slow increases.
Shipping companies should also be testing technological advances to make their logistics more efficient. Can packaging be improved? What about customer experience like ordering and feedback collection?
The benefits of these new shipping technologies aren’t only applicable to carriers. Make sure you’re taking advantage of them too—both in-house and in your carrier contract.