UPS Expands Gig Driver Utilization Amidst Rising eCommerce Demand
United Parcel Service (UPS) is reportedly amplifying its engagement with gig delivery drivers as the volume of eCommerce transactions experiences notable growth.
According to a recent report from The Wall Street Journal (WSJ), these independent contractors leverage their personal vehicles to transport smaller, low-volume parcels.
The report indicates that UPS has traditionally relied on gig drivers during the peak holiday season and has partnered with the U.S. Postal Service for last-mile deliveries of minor shipments.
Nevertheless, the contemporary eCommerce landscape is characterized by increasingly frequent surges in package volume. These can arise from scheduled events, such as Amazon’s Prime Day, or unexpected increases, such as products that gain viral traction on social media platforms.
This evolving scenario has created a discrepancy between incoming orders and available drivers, compelling UPS to augment its workforce of gig drivers in a bid to enhance profitability amidst an escalating “delivery-obsessed” culture, as noted by the WSJ.
Glenn Gooding, president of iDrive Logistics and a former UPS executive, remarked, “UPS’s Achilles’ heel is lightweight residential packages that don’t offset the labor expense.”
Furthermore, the report highlights that this strategy aligns with a broader initiative at UPS to curtail expenditures. The company has sought to achieve savings through buyouts and the reduction of 34,000 drivers and warehouse staff, yielding approximately $2.2 billion in cost reductions thus far this year.
In its quarterly earnings announcement, released on October 28, UPS outlined its strategic realignment towards industrial shippers, healthcare clients, and supply-chain services, which represent its most sustainable profit base.
UPS CEO Carol B. Tomé stated, We are executing the most significant strategic shift in our company’s history. The changes we are implementing are designed to deliver long-term value for all stakeholders.
With the holiday shipping season nearly upon us, we are positioned to run the most efficient peak in our history while providing industry-leading service to our customers for the eighth consecutive year.
Moreover, UPS’s transformation is driven by a deliberate shift away from the “relentless pursuit of residential volume that defined the pandemic years,” as articulated by PYMNTS.
The company’s domestic revenue for the third quarter saw a 2.6% decline, primarily attributed to “an expected decline in volume.” However, higher yields per shipment and robust air-cargo demand helped to alleviate some of the impact.
Conversely, international operations exhibited a more favorable trend, recording a 4.8% increase in average daily volume.
It is important to note that the reported decline is not incidental; it reflects UPS’s strategic decision to move away from low-margin consumer shipments in favor of contract-based business with enterprise customers, as noted by PYMNTS.
Source link: Pymnts.com.
