The Blue Side Up

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UPS, History In The Making

January 14th, 2012

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Although their chocolate brown box trucks are now a common site in cities and towns all over the globe, the United Parcel Service has grown up from humble beginnings. The company was founded as the American Messenger Company in 1907, though it didn’t get it’s first vehicle, a model T Ford, until 1913. Over the last century, the company has been a model for stable growth – constantly updating its services and incorporating new technology. Now UPS is the largest package delivery company in the world delivering 15 million packages every single day to more than 220 countries worldwide, and employing almost half a million employees.

The origins of UPS reach back to a time when horses and buggies were still the primary mode of transportation for consumer goods. The company’s founder, James E. Casey, was only 19 when he borrowed $100 to start his operation in Seattle, Washington. Having worked for other messenger services in the area, Jim Casey saw a need for a more organized system. The company originally worked out of a basement, responding to telephone requests for message, food and package delivery. Keep in mind that UPS outdates the US Postal System by 6 years. Although many other services came and went over the years, Mr. Casey’s company took root because of his strict policy of courteousness, reliability, low prices, and around-the-clock service.

As time passed, new innovations plus the introduction of the US Postal Service reduced the demand for messenger companies. UPS turned to new innovations in order to stay in business. The most notable was consolidated delivery, meaning that a single vehicle was loaded with all packages for a given neighborhood. This allowed UPS to keep rates low while maintaining a reputation for rapid on-time delivery. During that first important decade, Mr. Casey managed to neutralize his competition by outclassing them where he could and joining with them when he couldn’t. By 1919, Casey and his new partners Evert McCabe and Charlie Soderstrom, had expanded into Oakland, California, had changed the name to the United Parcel Service, and had adopted the now famous brown color. This color was adopted because it was thought to lend an air of class and reliability.

In 1922, UPS acquired an LA company and adopted their practice referred to as common carrier service. This was a novel idea at the time and included features like automatic daily pickup, acceptance of C.O.D. checks, automatic return of undeliverable items, and weekly billing. As it turns out, the choice to continue and expand this service spelled future success for the company and shaped the way that packages would be delivered in years to come.

The innovations kept coming, and in 1924 UPS was the first company anywhere to utilize a conveyor belt system for package sorting. By 1930, the company was operating in all major US cities on the Pacific coast. East coast expansion quickly followed. Despite the Great Depression and World War II, UPS managed to remain profitable by customizing its services to market demand. In 1953, UPS began regular air service, utilizing the cargo holds of commercial jets. By 1978, air delivery was available in all 50 states. During this time, UPS fought a lengthy series of legal battles in order to earn the right to ship between states without federal oversight. It wasn’t until the late 70s that UPS was able to freely deliver packages around the country. This was another company innovation and national first.

The 80s were a busy time as UPS began assembling it’s own fleet of jets and started offering overnight delivery around the country. It also started delivering internationally to several European countries. In 1988, the company received permission from the FAA to operate its own aircraft, and UPS Airlines was born. Now, UPS Airlines is among the 10 biggest airline companies in the country and incorporates some of the most advanced navigation and scheduling technology anywhere.

The company currently maintains a fleet of several hundred aircraft, including:

The clock-like efficiency of the UPS can be explained in part by its use of a hub and spoke model. The way it works is that the company maintains several hubs around the world where packages are received and sorted. Each individual UPS center sends and receives its packages from this hub. This hub then sends its packages to a larger regional hub where it is sorted for delivery to another local center where it is then sorted for delivery to the recipient. The air network operates on the same model, though hubs are usually located at or near airports for rapid sorting and distribution.

Throughout their history, UPS has undeniably experienced incredible growth and has been responsible for many important innovations. Although there have been imposing obstacles, the company has always managed to come out ahead. For an explanation of their remarkable success, we should look to the original vision of the founder, Jim Casey. From the beginning he understood that reliable friendly service at good rates were the key to success. As new challenges and technologies arose, the company has always stayed true to those ideals while finding innovative solutions. Anyone searching for a successful business philosophy would be well advised to take this vision to heart and to study UPS as an example of a company that has truly fulfilled the American dream.