UPS Freight 'never turned out to be what we thought it would be' - CCJ Digital
For a little more than 15 years, UPS attempted to shoehorn a less-than-truckload segment into its parcel delivery monolith.
Last week, the CCJ Top 250 No. 1 carrier announced the end of the experiment and the sale of its UPS Freight business to TFI International (CCJ Top 250, No. 8) for $800 million – about $400 million less than UPS paid in 2005 for Overnite Transportation, the acquisition that gave rise to the division.
While UPS at the time lauded its new subsidiary for its “extensive transportation network, a strong focus on operational efficiency and flexibility,” the parent company’s inability to leverage that efficiency and flexibility was ultimately its undoing, said Donald Broughton, Principal and Managing Partner at Broughton Capital.
“Every single transportation company has one thing in common and that is their biggest expense as a percentage of sales is labor,” he said. “When UPS acquired the old Overnite, they believed they could run it as a non-union silo and [unionized labor] has been a sticking point since the moment they bought it.”
For a little more than 15 years, UPS attempted to shoehorn a less-than-truckload segment into its parcel delivery monolith.
Last week, the CCJ Top 250 No. 1 carrier announced the end of the experiment and the sale of its UPS Freight business to TFI International (CCJ Top 250, No. 8) for $800 million – about $400 million less than UPS paid in 2005 for Overnite Transportation, the acquisition that gave rise to the division.
While UPS at the time lauded its new subsidiary for its “extensive transportation network, a strong focus on operational efficiency and flexibility,” the parent company’s inability to leverage that efficiency and flexibility was ultimately its undoing, said Donald Broughton, Principal and Managing Partner at Broughton Capital.
“Every single transportation company has one thing in common and that is their biggest expense as a percentage of sales is labor,” he said. “When UPS acquired the old Overnite, they believed they could run it as a non-union silo and [unionized labor] has been a sticking point since the moment they bought it.”
