UPS is a global logistics and shipping company that ranks Chicago among its top three markets in package volume and revenue. Chicago also holds the distinction of being among UPS’ worst three markets for road congestion.
On-time delivery is vital to UPS’ reputation and its bottom line. While UPS has not quantified the cost of congestion to its business, the company avoids congestion wherever possible. One UPS official described the relationship between a delay in a truck’s departure time and the delay in the delivery of its freight as “exponential.” Overnight air freight shipments to O’Hare International Airport can be particularly sensitive to morning rush hour congestion. Airborne packages arrive at the airport in the early morning hours, with the last flight arriving at 5:00 a.m. Every effort is made to have the cargo on its way by 6:00 a.m. However, if an aircraft is delayed, trucks transporting the cargo to a distribution center can become mired in morning rush-hour traffic.
As congestion has increased, UPS has responded by adding drivers and delivery runs. Although payroll is the largest single cost for many companies, UPS calculates it is substantially cheaper to hire additional staff than the alternative — Guaranteed Service Refunds — which are a significant cost to the company, and a closely monitored internal business metric. Premium packages, many of which must be delivered by 10:30 a.m., are particularly vulnerable to these penalties.
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