Dell drops UPS and will use rivals
Dell has stopped relying on UPS, the world’s biggest package deliverer, to handle its box deliveries in the United States.
Instead, Dell is turning to UPS shipping rivals DHL and FedEx. The move cuts into Sandy Springs-based UPS’ dealings with one of its biggest customers. But it is a boost for DHL’s efforts to grow its presence in the U.S.
UPS spokesman Norman Black said Dell and UPS “were simply unable to reach an agreement for pricing for renewal of this particular contract.”
None of the companies involved would disclose the dollar value of the deals. Dell shipped 20.5 million personal computers for the U.S. market last year, according to IDC, which tracks data about the technology industry. That represented just over half Dell’s worldwide shipment of PCs.
But Dell’s market share has been slipping, and it has been looking for ways to streamline its operations and shave costs for everything from manufacturing to logistics.
UPS had been the carrier for virtually all of Dell’s U.S. package deliveries, Black said. While that ended effective April 1, UPS remains Dell’s primary package deliverer outside the U.S. and will continue to handle logistics issues for the computer maker, he said.
“They are still one of our largest customers,” Black said.
He declined to say where Dell had ranked among UPS’ largest clients. He said the reduction in business between the companies is not a material event from a regulatory financial accounting standpoint.
Ed Wolfe, a Bear Stearns analyst who follows UPS, earlier issued a report suggesting that the lost business is valued at about USD 150 million a year.
Black said Dell’s decision “has absolutely nothing to do with our level of service.”
DHL and FedEx declined to comment on their agreements with Dell. Amy King, a spokeswoman for the computer maker, also declined to comment on contracts.
“We are always looking at ways to maximize our logistics and supply chain processes to provide better value for our customers,” she said.
Dell has stepped away from UPS before. In 2003, the computer company dropped UPS and jumped to FedEx. A few months later, it switched back. And in 2005, Dell negotiated what turned out to be a short-lived program for a contractor to ship some computers to U.S. post offices for customer pickup, rather than having UPS deliver them to the homes of consumers.
Dan Zehr, a staff writer for the Austin American-Statesman, contributed to this article.
