UPS Freight, the LTL arm of United Parcel Service, is slashing transit times from western Canada to points across the U.S. in an effort to expand market share and maintain yields, despite the still-struggling economies of both nations.
“Improving and expanding our coverage and service capabilities with our country's largest trading partner is a key element of our overall growth strategy,” said Kevin Hartman, UPS Freight senior vp for strategy. “We have listened to our customers' needs and engineered and piloted faster, more efficient network links. We plan to continue to expand and improve our capabilities throughout key markets in North America.”
In all, UPS Freight said it is reducing transit times across 340 lanes from Calgary and Edmonton to points throughout the U.S. The faster transit times include bringing Calgary to cities in Arkansas, Arizona, California, Kansas, Louisiana, South Carolina and New Mexico within four days. Similarly, one and two days have been shaved off the transit times between Edmonton and U.S. cities along the East Coast from Connecticut to Georgia.
The carrier said its new, faster transit times carry the same on-time, no-fee guarantee offered on shipments originating and destined for points served by the company’s service centers in Calgary, Edmonton, Moncton, Montreal, Toronto, Vancouver, Windsor and Winnipeg. The company added that its on-time service guarantee is available for LTL customers on both sides of the border who ship using the current UPS Freight UPGF525 tariff.
This effort comes as UPS Freight seeks to maintain profit yields despite a continued falloff in revenues. UPS said in its third quarter earnings report that UPS Freight was negatively impacted by increasingly competitive conditions in the freight environment. Nonetheless, the business outperformed the market and gained share while maintaining yields, the company said.
UPS Freight is part of UPS’s supply chain and freight division, which recorded operating profits of $102 million on revenues of $1.86 billion in the third quarter, resulting in an operating margin of 5.5% – down only slightly for the 5.6% margin the division maintained while generating $129 million in operating profits on significantly higher revenues of $2.32 billion in the third quarter last year.
“Although revenue and operating profit declined in the quarter, operating margin was flat with last year due to excellent revenue management and cost control,” said Kurt Kuehn, UPS’s CFO.
“The business environment in the third quarter began similarly to that of the preceding quarter. However, we did see profitability improvement due to effective cost management and firming volume later in the quarter,” he noted. “We’re confident in our ability to thrive by partnering with our customers and providing them the services they need to grow.”