
UPS’s $20B Problem: Operations Stuck in the 20th Century - dsr12
https://www.wsj.com/articles/upss-20-billion-problem-operations-stuck-in-the-20th-century-1529072397
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jmharvey
The thing I find curious about UPS/Fedex operations is that they're still
oriented around a "make deliveries during business hours" model that made
sense decades ago when businesses were overnighting documents to each other,
but makes less sense when traffic is largely goods ordered online and shipped
to residences. To an outsider, it seems like door tags/missed
deliveries/redeliveries must be inefficient, expensive, and almost entirely
predictable for the carrier, while also being a major driver of customer pain.

~~~
quasse
While I agree with you about the inconvenience of most residential shipping
services, I think people not interacting directly with the industry tend to
forget how absolutely huge the business-to-business market still is for UPS. I
expect the margins are quite a bit larger for them there as well.

Working in the engineering field, people send things at shipping prices of
$50-$200 plus per package on the daily. The only thing that matters is that it
arrives where it's needed fast. I can't say for sure, but I would expect that
UPS is still more inclined to cater to the relatively price insensitive
business customer over the Amazon Prime residential customer.

~~~
greggman
Proof it can be done better, Japan.

It's common to be able to choose the day and the delivery time. 8am-12pm,
2pm-4pm, 4pm-6pm, 6pm-8pm, 7pm-9pm and I've never had them be 1 minute outside
their designated schedule.

And, prices are cheap. Price to send a large package from Tokyo to Osaka
(think SF to LA) (larger than the USPS would even allow), $20

~~~
justinator
How is this accomplished? Is it because of Tokyo's railway system?

Another example of cheap and fast delivery is in New Zealand, which is very
roughly similar in size as Japan (and an island!) But infrastructure there is
much, much, simpler.

~~~
patio11
Between the DCs they use 18 wheelers; they’re then taken on a smaller truck to
a local site and take to the end user by a truck or handcart.

It’s partially because of different relative distribution of supply and demand
and partially because infrastructural technology is just better here. (Random
customer visible example: high-end apartments in Tokyo generally have an on-
site package locker so that companies can drop off packages even when the
recipient isn’t home, which is a major convenience and avoids unnecessary
redeliveries.)

~~~
pfranz
I was just staying in a place in the US that had a package room with per-
parcel codes for access.

It was kind of a terrible experience. Just because you had the address and
unit number on there, you needed to be "in the system" so they could email/txt
you an access code. I had a box of flowers for Mother's day that didn't show
up until a week later. When everything did work as expected, it was still very
problematic. Any "delivery" alerts were meaningless because it may not have
been registered to the package room yet. The package room was a mess and was
often difficult to find your packages--then you had to carry them all back to
your unit. I'm not sure if they bundled access codes (i.e. 5 packages arrive
but they only register the first and give you one code), but this seemed to
happen to me. If you did forget a package they expired unused codes after you
access. So if you forgot or couldn't carry everything you can no longer access
the room.

I'm sure this simplifies things for the carrier, but I wouldn't be surprised
if missing packages increased sharply when these were introduced. I also got
the feeling packages were delivered to the front office before this system was
in place (which would be the same, or perhaps, less work for the carriers).
Which negates a lot of the issues mentioned above, but does mean you can only
pick up your packages during office hours.

I haven't experienced Japanese package delivery, but when I first heard about
it a few years ago I got super envious.

~~~
Normal_gaussian
This sounds like a terribly implemented package room, not a significant
problem with the concept.

One system I saw recently had a touch screen where the carrier selects the
address and individual they are delivering to, and then that individual is
notified. They could use their permanent password, door id fob, or a one time
access code for each parcel. As for not being able to get it upstairs; there
was nothing stopping you relocking parcel.

~~~
pfranz
The system in place was obvious they didn't want to give all tenants
unrestricted access to the room. Each time you entered a code you had to sign
for your package and it took a photo. The room was also video monitored. Who
knows if it was bad design, appreciable increase in theft, or insurance
reasons.

I still think the worst part of the experience was sifting through all the
packages. They had a shelf dedicated for each floor, but a sign saying people
move stuff. I saw the office staff go in and resort packages onto the correct
shelf everyday.

I've had much, much better experiences with Amazon locker. If I was still in
an apartment and one was 0.5 - 1 mile away I would choose it every time
(assuming it was a 24hr location).

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kevan
>Representing 260,000 UPS drivers, sorters and other workers, the union wants
UPS to hire more full-time workers to help handle the surge in packages. It
has opposed technology such as autonomous vehicles and drones and is wary of
projects that do work with fewer employees.

This isn't tenable for the company. The union might be able to stall
automation in UPS for a few years, but it'll end with UPS being unable to
compete with its competitors. At that point UPS will have a lot more leverage
in union negotiations because the alternative will be bankruptcy and everyone
losing their jobs. Hopefully union leadership adopts a longer-term view before
then.

~~~
dmead
Or they could do the socially correct thing and not automate.

Or, all that automation is just vaporware outside of marketing demos and the
unions will be fine.

~~~
brogrammernot
Why is it socially correct to not automate?

I’m genuinely curious to hear this point of view. I don’t believe unskilled
labor (or minorly skilled labor) has a right to a job anymore than a very
skilled laborer does.

There’s a reason why cement trucks were created when you could (and can) still
mix cement by hand. It’s wildly inefficient at a certain project scale, and I
hold the same view for other items.

I’d love to know why you feel it’s socially wrong to push forward automation.

~~~
zorkw4rg
I assume people are against automation because it leads to more unemployed. In
the future we will probably have most manual labor automated by robots and
have massive amounts of people without jobs, no healthcare, barely surviving
at all in terrible conditions.

But you know, its all their fault of course, they could've just learned to
code!

~~~
brogrammernot
I think the fear is exaggerated, automation has been happening throughout the
history of mankind.

Should we not have vehicles because it put the horse/buggy drivers out of a
job? Have cars made by hand and not by more efficient, safer automation
because it puts people out of work?

I completely understand & respect that viewpoint that this does not all happen
in a vacuum so the people working manual labor likely did not get or have
access to the same opportunities as those "who learned to code".

Who is to say that the automation opens room for better-paying jobs or leads
to innovations in health-care that make universal health care more affordable
to tax-payers so it can get passed into legislation?

There's negative consequences of slowing automation as well.

~~~
mpjme
I used to hold the same viewpoint - automation is nothing new - but this video
by Kurtzgesagt (more specifically the statistics cited in it) convinced be is
that automation actually IS different this time
([https://www.youtube.com/watch?v=WSKi8HfcxEk](https://www.youtube.com/watch?v=WSKi8HfcxEk)).

The big difference is that automation now replaces jobs at a pace that is
faster than we can create them. The whole video is good but the particularly
interesting stats are at the ~8:00 minute mark.

------
notananthem
They need to standardize package sizes. USPS, UPS, everyone. I know this would
be ridiculous, but what about essentially milkcrate-like containers of
standard stackable sizes with fixed rates for residential bullshit.
Residential shipping has to be the biggest fucking pain in the ass- I know
I've done it. I moved via UPS one time, packaging tons of random 3' square
boxes with shit unpadded, the delivery people actually taped them back closed
with my stuff inside. You should never accept those. Basically, have a few
sizes of really over-built injection molded milkcrates with honeycomb for
impact protection, and customers bring a box of crap to the store and pick out
their crate, put all their stuff in, set it on the conveyor with their
name/payment/etc and it rolls up to the front. A machine inflates a tight
plastic bladder which secures the material inside, closes it, charges you and
spits out a receipt.

There shouldn't be customer service. If you need to pick up your package, scan
your ID or slip or something. If you have an address problem, you use the
computer to ensure you're shipping it to the right place. Declarations are
handled, and an impact resistant box would probably do well for all the stupid
assholes shipping batteries, liquids, dead animals etc.

I know this wouldn't work for a lot of reasons and people would just keep the
boxes, but maybe you can keep them from being taken out of the store, like you
pull your cardboard box out of it or something.

You get to fill a cardboard box that's barely taped shut and that HAS to fit
in the plastic crate. You can't take the crate home.

~~~
Analemma_
> I know this wouldn't work for a lot of reasons and people would just keep
> the boxes,

Actually I think this could work if you offered some money for the empty
crates, like with bottle deposits. You could keep the crates if you needed
them, but you could also save them until you had a carload to take to the UPS
Store and get some cash. If the fee were low enough, the shipping companies
would still be saving money over buying zillions of cardboard boxes per year.

I'm not sure if the economics work out, but if we standardized and got
USPS/UPS/FedEx/Amazon all on board, it could work.

~~~
whoopdedo
I've often wondered why UPS doesn't pick up boxes for recycling. How many
trucks are half-empty after making a round of deliveries?

~~~
rblatz
Because there isn’t any money in used boxes. Why would UPS pay for fuel and a
driver to drive the route 2x?

------
wuliwong
It is interesting/surprising to me that there isn't the suggestion of auto-
loading/unloading the trucks themselves. Is this one of those problems that
seems pretty tractable from the outside looking in but it turns out there are
some fundamental difficulties that aren't obvious at first but make it much
more difficult than first imagined?

I could imagine the beds of the trailers being conveyer belts themselves that
would "plug in" to the system at the sorting facility. From there the
automation could take over. It would be something like training the robots to
play a combination of Jenga and Tetris.

~~~
russdpale
The loading of the trucks requires much more dexterity than a machine would be
able to deliver. Also the packages themselves would be difficult for a machine
as you get these huge pieces that come down the belt weighing 150 pounds and
the weight isn't evenly distributed at all. In these cases we have to stop the
belt and two loaders load the item quickly, and the belt is restarted. What
happens when a package comes down a slide and busts open and gets over
everything? This actually happens quite a bit.. one time a goats head came out
of the package and blood went everywhere. Or better yet, what happens when a
package accidentally has two labels instructing the package to go to two
different trucks, perhaps even two separate parts of the facility? We call
this a double label and it usually requires a human to sort it out.

There is a lot of idiosyncrasies like this with many of UPS' jobs. Automation
will come not to take the paycheck from the low wage worker, but rather from
the high wage worker such as driver dispatching, human resources, etc. Those
people won't be fired though, most will be reassigned to over see some drivers
I would imagine. That is a tough job and those people need all the help they
can get.

~~~
jononor
The system needs to know its limitations and divert packages that cannot be
handled automatically to manual handling.

It is too complicated to design a system that handles 100% of cases, better
aim for like 90% with well integrated fallback for the edgecases.

~~~
russdpale
This is a good thought. Something like git, where the relatively complicated
task of merging is handled by a human.

------
mrtksn
I always wonder, why unionised workers won't pursue investment in technology
that will make their jobs obsolete rather than fighting a futile war against
the technology?

If you're an organisation of hundreds of thousands of workers, you probably
can afford to invest in startups that can replace the jobs of the people
you're representing. What's better, you already have a relationship with the
client and your members have the know-how of the tasks and the business that's
about to get automated.

If the investments fail, you keep your jobs. If your investments succeed, you
no longer need to work to make living.

~~~
gomox
The idea is interesting but intuitively I don't think the math works out. I
understand the hedge angle, but done at large scale this type of investment
-labor automation companies- is unlikely to yield very good returns (say, 10%
yearly or so) and is therefore incapable of providing enough income for a
worker to retire on (based on a plausible investment amount available to a
unionized worker).

~~~
mrtksn
Good point, but the idea here is that if the workers invest in the inevitable
future and turn automation into a passive income instead of total loss for
them(as it will happen when their trade is robotised by someone else). They
might as well invest in anything else however collectively investing in the
business they understand and are part of could bring considerable advantages
such as educated “bets” in the startups and structured job losses(as not
everyone will lose their jobs to the automation at the same rate) and all the
the benefits that come with scale as opposed to individual micro investments.

------
exabrial
This is largely in part to the same reason New York's subways are stuck in the
20th century: Unions. While they serve a vital function to prevent labor
abuse, nowadays they are abused to prevent innovation.

~~~
nhaehnle
The interesting thing from a German perspective is that over here, unions seem
to have a much more positive influence on business decisions. I wonder where
the difference is coming from.

~~~
occamrazor
In Germany union representatives regularly participate to management meetings.
Moreover the labour union system is completely different: unions represent all
workers, and in each company there are usually different unions.

------
elvirs
the article talks about UPS as an old outdated and lagging behind its main
competitor FedEx while in my experience as a regular shipper I have to say UPS
is a lot more reliable with its delivery schedule and serving its shipper
customers needs.

~~~
pests
I'm drawing a blank to which company but this reminds me of when a huge
worldwide shipping company was hit with WannaCry and did everything by paper.

The loss of efficiency was way less than they expected. They did have to spend
weeks though fixing containers sent to the wrong location.

~~~
AmVess
That would be Maersk.

~~~
pests
Oh yes! Thank you.

------
yeukhon
If you are not familiar with how big players like Fedex (or UPS) run their
operations, go check out
[https://www.youtube.com/playlist?list=PLDctEAS0fw_zzOnWDJA7d...](https://www.youtube.com/playlist?list=PLDctEAS0fw_zzOnWDJA7dZ47Ne1UYEfdH)

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mistrial9
anecdotal background says -- pre-IPO the UPS company aggressively fired union
employees and promoted low-power middle managers by the thousands, then got
the IPO with a promise to expand to EU and Middle East, and then with loads of
cash, blundered through execution with multiple public errors and
mismanagement.

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achow
Non paywall link: [https://outline.com/xD5B8c](https://outline.com/xD5B8c)

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amelius
They should try to become Amazon, or they will be made obsolete by them.

The direction they should take is to bind third party sellers, and to set up a
web retailing website.

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tehlike
This is an opportunity for Amazon to thrive into. It already has a lot of
experience in a related industry, combining that with logistics is only
logical.

~~~
Spooky23
The problem is that they will never be able to reach the potential in the
market. Many shippers would refuse to do business with a competitor, and
hiring random kids in moms minivan to schlep boxes won’t retain B2B.

Seems strange for Amazon to enter a business with low margins and a low
ceiling.

~~~
kevin_thibedeau
Amazon shipping doesn't have to grow into a dominant position. All it needs to
be is a big enough threat that they can negotiate better rates with outside
parties.

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richardfeynman
I wonder if Amazon will buy them.

~~~
LateRuin
Why would Amazon want to inherit UPS's union and pension liabilities? Easier
to just start from scratch with the latest tech and zero legacy costs.

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neonate
[http://archive.li/5YnbM](http://archive.li/5YnbM)

~~~
tofu8
I can't access this link (ERR_NAME_RESOLUTION_FAILED). Anyone else having the
same problem?

~~~
curiousgal
You're having DNS issues.

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ljw1001
Can someone please label WSJ articles as "paywall" in the title?

