UPS: STAND AND DELIVER
big step by adding deliveries to
WakeMed from a doctor’s office
more than 10 miles away. The
idea is to capture a whole new
market for UPS in the health care
segment, where the big providers
need fast, reliable delivery service
and don’t appear to be excessively
price conscious. “We’re going to
expand this very quickly,” Abney
promises. (The CEO will leave the
piloting to others, though, as he
crashed his own drone into his
swimming pool while trying to
impress his grandkids.)
UPS’s next, more ambitious
drone program is part of a grow-
ing partnership with pharmacy
and retail giant CVS. UPS has
already done a trial delivering
prescription items from a CVS in
Cary, N.C., to consumers’ homes,
and it will expand the effort in
- (UPS also has a new deal
to allow plain old non-drone
package pickup and drop-off
at CVS stores.) Other experi-
ments, further from fruition, are
exploring whether drones can
perform some deliveries when
launched from the top or back
of a UPS truck during its daily
route, shortening the distance the
truck drives. The company thinks
larger autonomous craft might
also be able to move thousands
of parcels at a time from its own
warehouses to smaller distribu-
tion locations. That would require
“probably like a Cessna, size-
wise,” Price says.
Still, drone delivery is in the
early innings. Regulators haven’t
drawn up rules yet to govern most
commercial services, and just
how those rules come out—along
with how quickly the technol-
ogy improves—could determine
whether UPS’s experiments ever
turn into real, profit-making
businesses. “We don’t believe we
are going to be flying hundreds
of thousands of drones deliver-
ing dog food and things that we
deliver every day,” Abney says.
“It needs to be profitable,” Price
agrees. That’s why the opportuni-
ties around same-day delivery
of more valuable goods—like
medicines or blood samples—
look “very compelling,” he adds.
“It could be like the first smart-
phone—no one could imagine
the extent that it augments life
now. The same thing will be said
10 years from now about drones.”
n
OT ALL the changes
in UPS’s transfor-
mation program
involve high-tech
solutions that get
good press. To fund Abney’s
growth initiatives while keeping
Wall Street happy, Price has
focused on cost savings. A 2018
early retirement plan sent 2,000
of the most experienced UPS
managers out the door, with
savings from the departures
projected at $200 million a year.
That move involved a tiny fraction
of UPS’s nearly 500,000-person
global workforce, but it included
some of the most highly paid staff
and disconcerted many who
remained.
Even less popular: a five-year
contract with UPS’s unionized
workers that created a new tier of
workers who are lower paid and
who could take weekend shifts as
the company transitioned to mak-
ing more deliveries on Saturdays
and Sundays. A slim majority of
unionized employees voted in
October 2018 not to accept the
contract, but under union rules,
two-thirds would have had to vote
“no” to reject the pact.
UPS’s worker-friendly reputa-
BRAINSTORM HEALTH DAILY tion has also been tested by the
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