UPS's Holiday Shipping Master: They Call Him Mr. Peak
Scott Abell is fretting about free-range turkeys. It’s Nov. 20, and United Parcel Service (UPS) will soon pick up 11,000 of them from a ranch in Northern California and ship them overnight to customers of Williams-Sonoma (WSM) in time for Thanksgiving. Abell, a 31-year veteran of UPS, is known inside the organization as Mr. Peak. He plans next-day, two-day, and three-day shipments during the holidays, UPS’s busiest time of the year. He starts drafting his plan in January and spends the rest of the year refining it. The turkeys are his first big test of the 2013 peak season, which starts in five days.
The birds are impressive: A 24-pounder sells for $185—plus shipping. UPS must handle them gently. The turkeys are not frozen but “meticulously chilled” at around 37F to keep them fresh. They are entombed in special frozen gel packs. Some are embalmed in a brine flavored with a savory blend of rosemary, thyme, garlic, and sage. The birds are most likely being slaughtered as he speaks. “I got an e-mail today that they’re already starting to load them up,” Abell says, discussing their fate with three of his lieutenants at the UPS Global Operations Center in Louisville. “They’re getting them ready.”
An athletic 53-year-old with wire-rimmed glasses, a neatly trimmed mustache, and carefully parted graying hair, Abell is unfailingly gracious, if a little high-strung. He has an elaborate delivery process in store for the “Willie Birds.” On Nov. 25, three days before Thanksgiving, UPS drivers will pick them up at the ranch and transport them to two of the company’s large distribution centers. From there, they will be flown to UPS sorting facilities. The ones bound for the Southwest will be divvied up at UPS distribution in Ontario, Calif. The ones headed east of the Rockies will be processed at Worldport, an enormous operation near Abell’s office in Louisville. Then the turkeys will be jetted to local UPS hubs and handed over to drivers who will carry them to their final destinations. Ideally, this will all happen in 24 hours.
The flight of the Willie Birds has become a holiday ritual for UPS. Concerned about getting it right, Abell has even distributed pictures of Willie Bird boxes to the 6,000 workers who sort packages daily at Worldport so they recognize them. The last thing Mr. Peak wants is for the birds to arrive spoiled. If they’re late, UPS has to reimburse the disappointed Thanksgiving diners.
Coordinating the most time-sensitive shipments during the most hectic time of year has always been a challenge for UPS, but the Internet has made Abell’s job more crucial than ever. It’s become so easy for people to shop via computers and smartphones that they frequently delay their purchases until the last minute. Mr. Peak’s job, in effect, is to fulfill the Internet’s promise of instant gratification.
If Abell can’t come up with a viable scheme, UPS is in trouble. The company expects to ship more than 132 million parcels globally during the week before Christmas alone. If it can’t find space for them all, retailers will almost surely turn to FedEx. In addition, Abell must keep a lid on costs. In the past some investors have worried that UPS is too e-commerce focused. David Vernon, an analyst for AllianceBernstein (AB), notes that it’s usually more profitable to carry large shipments to businesses than to transport books to the cozy homes of Internet shoppers. But he says UPS is managing to turn a profit on the latter with careful planning. “I think some of those fears are starting to recede,” he says.
Maintaining profitability is especially difficult during peak season when UPS’s delivery expenses rise. This year, UPS is adding 55,000 part-time holiday workers, leasing 23 extra planes, and effectively building a second trucking fleet to handle the seasonal package flow. None of this is cheap. It’s up to Mr. Peak to plan accordingly.
Perhaps the biggest holiday challenge for UPS is satisfying Amazon.com (AMZN), which doesn’t behave like a traditional retailer. In November, Amazon unveiled a plan to deliver packages on Sundays with the help of the U.S. Postal Service rather than UPS. In December, Jeff Bezos, Amazon’s chief executive officer, told 60 Minutes the company was experimenting with delivering packages by drone. Many people snickered. UPS did not. Ross McCullough, vice president of corporate strategy, says UPS is studying drone delivery, too. “I believe these things will be part of the system in the future,” he says. “I don’t know when.” He says UPS is also weighing the potential use of driverless vehicles.
Then there are the factors Mr. Peak can’t control. This year there are only 26 shopping days between Thanksgiving and Christmas, compared with 32 last year. That means UPS has to shove what it describes as a record number of parcels through a smaller window. Winter storms can also upset Abell’s plans. “The biggest challenge is the weather. When you have a shorter season, you have less time for recovery,” says UPS CEO D. Scott Davis. “You just hope you don’t have ice storms.” It isn’t only that ice can ground UPS jets and halt its trucks. The company has found that when people are snowed in, they do more online shopping. So when UPS digs itself out, it has to deliver even more presents. Abell doesn’t know what to expect this year from the weather, but he is ready to sort boxes by hand himself if an emergency arises. “I hustled boxes before,” he says. “I can do it again.”
Abell has four calendars in his office. There’s the UPS corporate calendar. Another shows the deadlines for circulating his peak plan to UPS district managers. The third displays dates for when he has to submit his plans to the company’s airplane pilots. Then there’s the small calendar on his desk. Mr. Peak keeps it there so he doesn’t have to constantly crane his neck to look at the other calendars when he’s on the phone.
Abell has four calendars in his office. There’s the UPS corporate calendar. Another shows the deadlines for circulating his peak plan to UPS district managers. The third displays dates for when he has to submit his plans to the company’s airplane pilots. Then there’s the small calendar on his desk. Mr. Peak keeps it there so he doesn’t have to constantly crane his neck to look at the other calendars when he’s on the phone.
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