UPS indicated earlier this summer that it was considering entering the same-day delivery market to benefit from the growth opportunities in that market.
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The big question, however, was how UPS would enter this delivery market segment. Its logistics network was not suited for this type of operation, and most of its workforce is under union contracts, likely requiring them to negotiate to include on-demand same-day delivery services from its current workforce.
UPS has been criticized by unions for some time because it uses the USPS to deliver some last mile packages for its SurePost delivery service in order to reduce the reliance on its own unionized workers.
Among the possibilities we suggested in our previous article was that UPS may consider acquiring a startup such as Roadie or AxleHire which operate similarly to ride-hailing companies such as Uber and Lyft.
Particularly, Roadie seemed a good target for UPS, given its UPS Capital subsidiary already owns a stake in the company offering parcel insurance.
UPS Acquires Roadie
Last week, UPS announced that as part of its customer-first strategy, UPS entered into an agreement to acquire the technology platform Roadie which enables local same-day delivery with operations throughout the US.
“UPS customers, including large enterprises, are increasingly looking for local same-day delivery solutions for goods of all types, not traditional packages. Roadie often provides service for shipments not compatible with the UPS network because of their size and perishable nature, and often because they are in shopping bags without the packaging required to move through the UPS system.”UPS Statement
Combining Roadie’s leading technology with UPS’s portfolio will open up new growth opportunities, the company said. In addition, Roadie’s technology platform will offer UPS the opportunity to improve current small package capabilities and potentially add new ones.
The Roadie platform enables merchants to connect with contract drivers to enable efficient and scalable same-day local delivery services nationwide.
Upon completion of the acquisition, Roadie will continue to operate under the same name, providing the same service to its customers as before. UPS package car drivers will continue to deliver packages within the UPS network.
Goods transported by Roadie will not cross into the UPS network and packages transported in the UPS network will not cross into the Roadie network, the company explained.
This type of acquisition was what the unions feared most, an apparent another attempt by UPS to try to reduce the package volume being sent through its traditional UPS logistics network.
“This company’s goods should not cross over to UPS and vice versa. We will watch closely to ensure that Teamster bargaining unit work is protected,” a Teamsters spokesperson told Modern Shipper, an industry publication.
Impact on Small Business Retailers
The primary reason for this acquisition by UPS appears to be larger enterprise customers that UPS may already serve through its primary parcel business. Reportedly, customers of Roadie include household names such as Home Depot, Tractor Supply, Best Buy, Advanced Auto, and Bed, Bath & Beyond.
The company does cater to small businesses that have a local customer base for same day deliveries, including a recent integration with Shopify.
UPS appears to be keeping a separation between the operations at the moment, so it’s unclear if small businesses that ship with UPS regularly will see any benefits in the short term, such as consolidated invoicing.
Certainly, a consolidation of some backend services like invoicing and managing shipments in one software would make a lot of sense for all sized shippers and enable UPS to offer more shipping solutions under one account.
The two companies did not disclose the value of the transaction. The transaction is expected to close in the fourth quarter of 2021.
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