UPS pushes envelope on downtown service
Daniel Ortwerth likens the competition between United Parcel Service and FedEx to the Cold War between the United States and the former Soviet Union.
Each company relentlessly, feverishly attempts to outdo the other. But unlike the Cold War, from which only one country would emerge intact, both UPS and FedEx are strong, healthy companies, with an admirable respect for each other, said Ortwerth, a stock analyst with Edward Jones in St. Louis.
It's within that context that UPS has mounted an offensive, albeit a small one. You might say the Atlanta-based firm is trying to take a hill, and that hill is downtown Cleveland.
Starting late last month, UPS began cutting nearly one hour off its morning delivery time for overnight mail guaranteed to arrive in downtown Cleveland by 10:30 a.m.
So instead of an average arrival time of 9:45 a.m., packages delivered by UPS are being signed for, on average, at 8:50 a.m., said Tom Nolte, director of sales for the Northern Ohio district of UPS.
The expedited delivery targets three downtown ZIP codes and comes with no additional guarantee, but with no additional cost either. It's the first such initiative throughout the UPS system, Nolte said, and it's designed to capture more office business from places like banks, law firms and insurance companies that rely heavily on overnight correspondence.
If it works in Cleveland, it could be rolled out in other cities. UPS has added 13 part-time delivery personnel and redeployed six of its signature brown trucks to allow for earlier deliveries. But the process really begins at company hubs in Louisville, Ky., and Rockford, Ill., where packages destined for downtown Cleveland are sorted and packed inside igloo-shaped containers that conform to the insides of UPS cargo planes.
The containers are placed near the door of the plane, so they can be quickly unloaded at Cleveland Hopkins International Airport.
The packages are then transferred to waiting trucks that take them up Interstate 71 and into downtown Cleveland, rather than to tractor-trailers that shuttle to a sorting warehouse on East 68th Street in the city.
Ortwerth said he would be surprised if FedEx does not respond in some way to the enhanced UPS service. He follows both companies, and his firm has recently provided investment banking services to UPS.
But FedEx spokeswoman Carla Boyd would not speculate. She remarked on the fact that UPS offers no additional guarantee and said FedEx has "a really high customer satisfaction rate" for downtown Cleveland and surrounding areas.
"So we think our customers are really happy with the options we are giving them," Boyd said.
Both UPS and FedEx offer guaranteed 10:30 a.m. delivery, with guaranteed 8 a.m. delivery offered at an additional charge.
DHL spokesman Richard Gibbs did not say how his company might respond, but he offered an e-mailed statement that said DHL's morning delivery service to downtown Cleveland "is consistently ranked among our strongest delivery markets with a large number of our customers in the area receiving their packages before guaranteed delivery times."
DHL has 10:30 a.m. and noon delivery guarantees for Cleveland, but no 8 a.m. service.
One downtown recipient of the expedited UPS service is Sherwin-Williams Co. Mario Canevese, supervisor of the paint company's corporate mailroom, said UPS packages are now arriving early enough to make the 8:30 a.m. mail rounds. Before, they would arrive at the company's dock entrance off Huron Road between 9 and 9:15 a.m. and then be delivered to company offices at 10 a.m. He said that although it's too early to know how the service is being received, there does appear to be a benefit.
"You're gaining an hour to an hour and a half of business time to get your documents and make decisions that are needed," Canevese said.
