UNITED PARCEL SERVICE OF AMERICA

Headquartered in Atlanta, Georgia, the United Parcel Service of America, Inc. (UPS) is the world's largest package delivery service. It serves over 200 countries and delivers to any address in the continental United States. The company had humble beginnings. In 1907, six years before the U.S. Postal Service began its parcel post system, teenagers Jim Casey and Claude Ryan of Seattle, Washington, borrowed money to expand their bicycle-delivery and messenger service. With the loan they established the American Messenger Company, the precursor to UPS. By 1913 their fleet, renamed Merchants Parcel Delivery, consisted of seven motorcycles. In 1918 the workers joined the International Brotherhood of Teamsters. When the company converted to truck delivery another partner, Charlie Soderstrom, elected to paint the trucks brown, a tradition still carried out by UPS. The company, whose name was changed to the United Parcel Service in the 1930s, pioneered the system of consolidated delivery whereby packages destined for one neighborhood would be delivered by one vehicle. UPS experimented with air service during the Great Depression (1929–1939). Until the late 1940s most of UPS's business was in department store deliveries.

UPS experienced a period of decline following World War II (1939–1945) because the increase in privately owned automobiles allowed people to carry their own packages. Due to the decline of contract service to retail stores, the company began to expand common-carrier parcel service. UPS began offering to pick up parcels (limited in weight and size) from any location and deliver them within a 150-mile radius. This initiative put UPS into direct competition with the U.S. Postal Service.

In the 1950s the need for fast and convenient package delivery in the United States and around the globe was growing. UPS spent several years fighting for federal authority to operate in all of the 48 contiguous states. In 1953 the company resumed air service, which it called Blue Label Air. Between 1964 and 1969 UPS doubled its sales and had expanded into the majority of the U.S. states, making it appear as if UPS would become the only parcel shipping company in the country. Its management team was tightly controlled, and stock was held by its own employees.

In 1976 unrest occurred among UPS package processing employees. The company announced plans to replace them eventually with part-time workers, which prompted a number of local Teamsters unions to go on strike. East coast businesses were disturbed by this, particularly as it came during their Christmas rush. Although the strikes were settled, relations between labor and management at UPS remained strained.

UPS continued to expand during this period, establishing a service in Germany in 1976. In 1980 UPS profits were $189 million out of revenues of $4 billion. Competition was fierce by this time, particularly with the emergence of the Federal Express Corporation (Fed Ex), which offered one-day express delivery. UPS countered with Blue Label Air, promising two-day delivery at a lower cost. UPS also dropped its traditionally conservative promotional policies and ran television advertisements for the first time.

While other businesses suffered from the recession of the early 1980s, UPS actually saw an increase in business volume as companies began to ship smaller lots in order to save money. Relations with the Teamsters union suffered when the union discovered that UPS's net income rose 74 percent in 1981, at a time when union wage increases had been capped. UPS employees continued to be dissatisfied, as reports of increasing profits to the company surfaced over the next two years. In 1984 secret negotiations resulted in a three-year agreement which satisfied the union's demands for better wages and benefits, and a major strike was averted. In 1985 UPS was able to offer next-day air service in 48 contiguous states, as well as international air package and document service.

From 1984 to 1991 UPS was the most profitable U.S. product transportation company. UPS now offered both one-day and two-day service, and had increased its earnings to over $700 million in 1987. Though it lagged behind Federal Express in the overnight package delivery business it was working to improve its computer technology to keep up with the competition. By 1988 UPS had established its own airline (UPS Airline), was delivering almost one billion more packages than the U.S. Postal service, and had begun expanding its European operations.

Kent C. Nelson became chairman and chief executive officer of UPS in 1989, initiating a major transformation of the company. New services such as less expensive two-day and three-day deliveries, inventory management, and warehousing were offered to clients. Technical innovations also increased efficiency, and more money was spent on advertising. UPS increased its global recognition by its sponsorship of the 1996 Olympics in Atlanta, and began to step up the profitability of its European and Asian operations, winning over considerable market share from Federal Express. Though profit margins decreased significantly during this time of expansion, the first six years of Nelson's leadership at UPS resulted in a 69 percent increase in sales. UPS was not as profitable abroad as in the United States, but it continued to develop overseas services. In the late 1990s it beat out Federal Express for a major air hub in Taiwan, and it also planned to expand its services to Latin America.

In 1998 UPS was capable of reaching over four billion people worldwide. Its high-technology data communications network tracked over 820,000 packages daily. UPS supplemented the efficiency and reliability of its operations with customer service improvements such as implementing instant tracking systems, order processing, and inventory control. The company operated on a hub system in which packages from a particular region were processed at a central location prior to shipping, which was located in Louisville, Kentucky. UPS in the late 1990s was still privately owned, its stock exclusively held by its managers, employees, retirees, and their families.

UNITED PARCEL SERVICE OF AMERICA

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