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Supply Chain Case Studies

How Two UPS Business Units Kept Things Moving in 2020

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UPS employees were considered “essential workers” during the pandemic. 
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When it comes to freight forwarding and customs brokerage experience, you could say UPS has been around the block. In fact, it’s been around the world — innumerable times.

The freight-forwarding operation of UPS has been managing shipments for customers for more than 50 years. Its customers today include one-third of the Fortune 100, as well as more than 40,000 small and mid-size market companies.

For even longer, the company’s customs brokerage operation has been moving freight through the red tape of customs systems. After more than 80 years, it serves thousands of origin and destination locations in virtually every country.

Needless to say, with so many years of experience and their global capabilities, these two related divisions have seen it all. Nevertheless, 2020 brought unprecedented challenges. For UPS, the global COVID-19 pandemic added an extra layer of complexity to moving freight around the world and across national boundaries.

And yet, even during the roller coaster year, “Our service has never been better,” maintains Bruce Kidwell, vice president of customs brokerage for UPS. That’s an impressive assessment, and we talked to Kidwell and his counterpart Keith Andrey, vice president of freight forwarding, to learn how they and their teams made it work, how UPS supported pandemic relief efforts and where this past year’s challenges leave them positioned for 2021.

Not Just Useful, But Essential

SCBP: UPS employees were considered “essential workers” during the pandemic. What does this designation mean for your organization?

Keith Andrey: This important designation officially recognizes the importance of UPS supply chain and logistics’ responsibilities to our community. UPS delivers more than just holiday gifts and packages. This designation calls attention to our expansive portfolio of services and capabilities that support customers’ very broad, divergent needs.

Bruce Kidwell: We’ve always known at UPS and specifically in my U.S. customs brokerage business unit that the work our team performs every day is “essential.” Our customers depend on our ability to move goods seamlessly across the border and not have those shipments delayed by U.S. Customs unnecessarily.  

SCBP: UPS-managed Project Airbridge flights have delivered millions of pounds of healthcare materials during the pandemic. What skills or assets did your organization bring to this effort?

Kidwell: From the brokerage side of our business, [it included] our in-depth knowledge of customs procedures of clearing PPEs. We can work with the customers and our transportation side to avoid delays at the border and with U.S. Customs and Border Protection (CBP).

SCBP: How has the pandemic impacted the movement of goods (both PPE and non-PPE) through customs?

Kidwell: Over the last 30 years, we have established a robust engagement with U.S. Customs at the local, regional and national level in Washington, D.C. Those three layers of engagement by our senior management, local operations and public affairs in Washington, D.C., have enabled UPS Customs Brokerage to provide seamless clearance of the PPE and non-PPE products.

SCBP: What steps has UPS taken to protect its workers during the pandemic?

Kidwell: Our U.S. customs brokerage operations has had over 1,900 employees working remotely since late March 2020. We knew that in order to — one — protect our employees and — two — to protect our customers’ business, we needed to rapidly deploy our teams to their home environments.

Our service has never been better, and our customers never felt the change. And, most importantly, our employees were able to be in their home environments to perform their work via our UPS technology.

Andrey: For those who had jobs that required them to report to a center, we created a bubble that restricted access to those locations for everyone but operational personnel. Education campaigns around social distancing, mask wearing, if you have symptoms stay home, get testing, pre-work wellness checklists and behavior changes were done throughout the year.

We provide masks to UPSers. We increased our cleaning standards/frequency to reduce the risk of any outbreaks. Our goal was to make the office and warehouse environment as safe as or higher than our employees’ home environments.

USBR: What role is UPS brokerage/forwarding playing in vaccine distribution, including Operation Warp Speed?

Andrey: [This is] primarily a courier and small package opportunity due to the small size of the shipments and the large scale of the distribution. Our owned asset base global network serves this need well.

U.S. forwarding will handle the more complicated moves of vaccines and dry ice to U.S. territories both in the Pacific and Caribbean. Our global forwarding teams will do the same by handling more complicated destinations where a freight-forwarding solution using commercial partners and assets makes the most sense.

Our performance during operation Air Bridge and other global PPE moves highlighted our capabilities and readiness to move what matters. We geared up for Air Bridge and never reduced our readiness knowing that vaccines and operation Warp Speed were coming.

Kidwell: We are currently engaged with several major pharmaceutical companies with a comprehensive team across UPS. From the UPS Customs Brokerage side, we are part of that team [and] provide global guidelines by country [and understand] the specific procedures and guidelines for a smooth clearance in those destination customs agencies.

Peak Season 2020

SCBP: The National Retail Federation (NRF) forecasted that holiday sales would increase by as much as 5.2% over 2019 to potentially reach $766.7 billion. (In fact, sales increased by 8.3% and reached $789.4 billion.) Did you find that your customers were better prepared for this very busy holiday season because of steps they took to work through the pandemic?

Kidwell: We have customers that are ready and some that are trying to recover from various impacts of the pandemic. Serving each with their independent needs is important. We look at each customer and determine their needs and provide operating plans that fit their commodities, volumes and clearance needs.

Andrey: UPS Freight Forwarding and Brokerage have invested in over 37 webinars since February to help educate our customers and our sales professionals on the market conditions and [offer] suggestions to help the customer navigate this very unique 2020 environment. The combination of the customers’ own experiences and the sharing of our own through the webinars should provide good insights for peak planning and execution.

SCBP: Some called the holiday season “shipageddon.” That made for good headlines, but how did UPS Brokerage and Freight Forwarding prepare for the realities of the season?

Andrey: Not a big fan of the term “shipageddon.” Good planning, communication and execution in the areas of our direct control always drive good results during peak periods.

The customers that have the most challenges during peak usually struggle with accurate advanced forecasting and communication to their providers. UPS Freight Forwarding operated over 456 charters and part-charters globally this year to support short-term customer demand surges, flexing up to meet the unplanned demand.

Kidwell: At UPS Customs Brokerage, we have scale as one of the largest customs brokers on Earth. We have over 2,000 people in the U.S. brokerage unit dedicated to freight forwarding and small package clearance activities for air, ground, rail and ocean modes of transportation. During our peak times of the year, we have operating calls daily for the entire network balancing clearance, compliance and holds processing with U.S. Customs.

SCBP: In or out of the holiday rush, there are widespread calls for the supply chain to become more digital. How do you see that playing out with your customers?

Andrey: UPS wants to meet customers where they are in their own digital journey and evolve as their needs change. This will include full, partial and minimal use of the digital channel.

Even within our customers, there are individuals that choose to use the digital engagement in different ways. We have shippers and consignees that want to use different digital and more traditional engagement methods on the same shipment.

Long term, we will see more digital engagement and less traditional [processes] over time. The speed of the migration will be driven more by generational preferences than by available technology.

Kidwell: What is great about our UPS Customs Brokerage business unit is that we have been paperless in many countries for quite a long time. And [if] what comes into us [is] not paperless, we move it to digital to improve flow of operational and clearance activities.

SCBP: How are you using technology to further improve your operations?

Andrey: We have a single operating system, with integrated scanning and customer visibility software, called Flex Global View. These tools are globally deployed to both our owned and agent countries. The benefits of investing in this technology [are that it] efficiently scales and drives benefits across the globe.

Quality metrics are integrated into a balanced score card and global KPIs to identify and improve results. These efforts a driven by a global industrial engineering team dedicated to driving expected investment results and continuous improvement.

Kidwell: We have had significant investments in UPS Customs Brokerage when it comes to technology. Whether a customer wants to electronically connect with us, manually see where their shipments are through visibility systems or [get] more details on customs clearances in real time, we have the answer for them.

SCBP: Aside from the unusual events of 2020, what normally are your biggest challenges? How do you overcome them?

Kidwell: Challenges only present opportunities. Whether customers present a challenge to us for a clearance they need urgently that is extremely technical, or we have a pandemic that challenges our ability to execute, our UPS team rises to the challenge. By learning from the challenges that occur we continue to improve our network on the behalf of our customers and shareholders.

We listen to our customers on what their pain points are in the cross-border processes and help them succeed. We also listen to our people, the people at the front lines of where it happens every day. The next big idea rarely comes from the board room — it comes from the people that perform the work every day.

For more about UPS’s services, visit here (brokerage) or here (freight).

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