Cooperating with Your Competitor - How USPS and UPS Do It

By Grant Ricketts

And you thought e-Commerce was automatic. Well, it nearly is thanks to “Big Logistics” and Co-opetition

You’re online and buy something. It arrives the next day, or perhaps a day or two later. You decide you don’t like it, or it doesn’t fit and send it back – with the pre-paid shipping label provided by the online retailer as part of their promise of excellent customer service.

Sounds simple, right? It’s meant to be. That’s part of the rising expectations among consumers these days. But, if you looked more closely, that package may have been picked up by one shipping vendor, such as UPS and delivered to your doorstep by another, such as the U.S. Postal Service. And, on the return route, it might change hands two or three times again.

Interesting, particularly considering that these companies are fierce competitors, to the same degree that are Coke and Pepsi, McDonald’s and Burger King, and many other industry rivals.

How co-opetition works is the topic of yesterday's video interview with U.S. Postal Service CSO, Tom Day and Triple Pundit founder, Nick Aster. It was also the subject of a session at the Sustainable Brands ’13 conference in San Diego last week where executives from both entities, Day from USPS and Steven Leffin, Senior Director for Global Sustainability at UPS openly discussed how they work together to leverage respective parts of each organization’s logistics and delivery networks for the benefit of company profitability, customer service and industry-wide emissions reduction. The panel sought to explore latest trends and conditions to make e-Commerce more efficient, with particular interest in how the partnership between USPS and UPS can foster a long-term sustainable delivery process for online retailers.

Blue + Brown = Green
Each panelist described their relative contributions to the program. The USPS literally touches every doorstep in America, with over 153 million delivery points across the country. It also has processing and handling capabilities that excel in smaller package delivery, which they define as 5 lbs. or less. This USPS unique strength is commonly referred to as the “last mile.”

On the other hand, such widely distributed and relatively random pick-ups by UPS have a much higher associated cost, both in economic and GHG terms. Its strengths are in parcel transportation networks with highly automated distribution hubs that include larger vehicles, rail and airplane use that give it superior routing logistics for large package transport.

It may be efficient for UPS to pick-up a package from the warehouse distribution center and ship it across its network. But, in some circumstances it might not be fully efficient for UPS to deliver that package the “last mile” to a residential location in areas when it can effectively and efficiently hand-off such a package to the USPS and share a modest portion of revenue. Likewise, for UPS to initiate the pick-up and return scenario in some areas may be cost prohibitive, both in economic and GHG terms relative to the USPS’ capability.

This is the essence of the collaborative effort between USPS and UPS. To utilize one another’s distribution, delivery and pick-up capability – its network – on a shared basis to optimize distribution revenue and expense, while lowering carbon emissions and improving customer service. In the days of rapidly rising consumer expectations and online retailing promises for rapid delivery, shared network optimization is a triple bottom-line benefit for the entire e-Commerce eco-system. The next time you pick up an e-Commerce package you may better appreciate the journey it had.

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Grant Ricketts is CEO and Co-founder of Tripos Software, Inc. a software and learning solutions provider for corporate sustainability management, talent development and employee engagement. Previously, he was Vice President and Co-founder of Saba Software, Inc. (NASDAQ: SABA) a leading provider learning and talent management systems used by F1000 companies and several major federal agencies. He brings a unique blend of learning and talent development, as well as and change management expertise to the sustainability field.