UPS Meets Logistical Challenges Amidst Pandemic, Discusses Future of Supply Chain and E-Commerce

In 2020, the United Parcel Service was faced with major supply chain issues, such as an online shopping surge and global vaccine deliveries. UPS hired close to 700 people in Dallas-Fort Worth last year, citing the area’s location and access as key advantages for its expanding delivery network.

More than one year into the global pandemic, supply chains have achieved in a matter of months what would have taken years to accomplish. For United Parcel Service (UPS), one of the world’s largest logistics companies, that included re-engineering their processes to deliver more than 27 million pounds of personal protective equipment (PPE) and more than 150 million COVID-19 test kits and biological samples globally.

The company is on track to deliver 3 billion vaccines by year’s end despite many issues supply chains are facing—from port congestion to commodity shortages and even, severe weather. At the same time, companies are preparing for rapid growth as economies reopen.

These were some of the insights shared by UPS at a recent meeting of the Dallas Regional Chamber’s International Task Force. The company discussed their COVID-19 response, learnings in supply chain management, and trends in the e-commerce industry.

ENDING THE PANDEMIC

A year ago, as COVID-19 was spreading, and consumer behavior was shifting—from bulk and panic buying of consumer staples to surges in online shopping—UPS moved quickly to keep their workers safe and deliver needed items as quick as possible. The first priority was procuring PPE for their workers and the country’s frontline workers.

“We had to start looking at how we prioritized our freight,” said Beth McConahay, Director of Marketing at UPS. “If it was PPE, it went on the planes first.”

UPS hired close to 700 jobs in the Dallas Region in 2020, citing the region’s location and access as key advantages for its expanding delivery network.

“In this market, we were able to find a lot of suppliers locally that were able to move quickly,” McConahay added. “As a result [Dallas] was one of the first regions in the company to really have everything our people needed as quickly as possible.”

UPS was simultaneously supporting companies and labs that were developing test kits and had to address the complexities of producing and delivering high volumes of testing equipment. By partnering with the Federal Emergency Management Agency (FEMA) and the president’s coronavirus task force, UPS became a key transporter of test kits. 

As a partner and consultant to Operation Warp Speed, UPS also spent months strategizing to ensure swift delivery of the vaccines. The company’s freezer farms, strategically placed near air hubs, stored millions of vials of vaccines at temperatures as low as -80 Celsius. Through its UPS Healthcare division, the company also ramped up dry ice production to as much as 2 tons of dry ice a day.

With the purpose of ‘moving our world forward by delivering what matters’ and recognizing that risks remain until the world is vaccinated, UPS is pushing for more equitable vaccine delivery. The company has entered into agreements to send portable freezer units to places that are harder to reach and lack the technology and resources.

“We are working with countries that are receiving the Pfizer vaccines through COVAX,” said McConahay. “We picked places where the capital city is easy [distance] enough to receive the vaccines with large scientific grade freezers, hospitals and warehouses, and we then provided portable freezers for the smaller villages and towns.”

UPS also plans to aggressively expand the use of drones, which are currently in use in hospital campuses to speed up lab test deliveries and transport other medical supplies. The company hopes that its drone airline could soon begin serving remote and hard-to-reach populations.

SUPPLY CHAIN AND E-COMMERCE TRENDS

In the years to come, businesses of all types and sizes will look back at 2020 as the year that changed everything. The pandemic put e-commerce at the forefront of retail. Businesses that may have only dabbled in e-commerce moved quickly to establish webstores. Many companies shifted from their traditional core products to PPE production. While some businesses saw sales stall, others saw record growth rates.

Prior to the pandemic, online retail sales were growing at a rate of 8% annually. This number increased to 21% in 2020, and UPS anticipates a 14% rate through 2021. UPS forecasts that online spending will decelerate in 2022 with the gradual return of brick-and-mortar sales, increased mobility, and other additional spending outside of homes.

“The companies and the stores that will continue to have the best success are those that are either highly specialized with a really good niche or those that have an omnichannel presence where they have a web and a store front—and the experience of the customer is similar,” said McConahay.

In the near term, there will be a shift back to services, especially in leisure and entertainment such as sports, recreation and tourism. Companies that experienced a significant boost for selling particular products such as home office equipment, PPE, and day-to-day essential items that may not need to be purchased in bulk again will also need a plan for maintaining high growth.

The pandemic undoubtedly exposed significant vulnerabilities and risks in operating global companies. McConahay notes that ongoing equipment and inventory shortages, port backups, work backlogs and replenishment delays will continue to impact supplier delivery times. Due to uncertainty, however, many are deferring nearshoring and reshoring initiatives in order to have flexibility in the supply chain without making a long-term commitment.

As the need for supply chain resiliency grows, availability of timely and accurate data and technology is vital in helping companies make more informed decisions. This includes accessing logistics information from inventory numbers, warehouse efficiency and carrier status, to product quality and delivery times.

“The information about the goods is almost as important as movement of goods,” said McConahay. “We want to capture that in a smart way and be able to utilize that for quicker and more intelligent decisions.”

The International Task Force (ITF) advises the DRC’s international economic development program of work. ITF members support the development of key programmatic activities including missions abroad, corporate recruitment efforts, talent attraction programming and member engagement in the Dallas Region.

A version of this story first appeared on the Dallas Regional Chamber site. Dallas Innovates is a collaboration of D Magazine Partners and the Dallas Regional Chamber.

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