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UPS CEO Inspires Confidence in Face of Amazon Threat

It wasn’t the Super Bowl or the World Cup, but to UPS, the holiday-shopping season is a tough competition each year, and its “coach,” CEO David Abney, appeared on CNBC victorious on Tuesday.

In the CNBC cable television feature “Squawk on the Street,” Abney said UPS delivered all of its packages before Christmas, and said the carrier was able to maintain service at a 97 to 98 percent effectiveness rate throughout the peak holiday season after experiencing unexpected volume surges in a few markets on Cyber Monday.

“We were really happy with the way our people responded to the challenge that we received in that week,” Abney said.

CNBC asked Abney about reports that there were growing tensions between UPS and Amazon as the latter grew its own logistics capabilities.

It wasn’t the first time UPS was asked about Amazon – in October, UPS said its integrated network creates efficiencies and value that were very difficult to match. In fact, at the time Abney gave the type of answer one might expect from Amazon when he said, “if we stay focused on taking care of the needs of our customers and on providing that value, then we don’t have to worry nearly as much about what the competitors are doing, because we are listening to our customers and focusing on that value.”

But Tuesday’s interview was the first time UPS addressed Amazon as competitor since reports surfaced in November that the ecommerce giant was testing its own air cargo logistics capabilities.

“We add value and density,” Abney said. “Really we just don’t see how any of our large retailers would be better off without us so we feel very comfortable in that relationship.”

One way UPS managed the holiday season was to work closely with retailers, and Reuters provided some insight into how that played out for merchants.

UPS informed retailers of hard cutoff dates for packages to make it by Christmas using UPS’ cheaper ground delivery service. “As a result, many retailers informed customers free shipping would end the week before Christmas – as shipping by air would be too expensive,” Reuters reported. The newswire quoted the Chief Marketing Officer at LuLu’s who said it had to stop offering free shipping over a week before the holidays as a result. The Reuters piece is also a good recap of how UPS and rival FedEx performed during the holidays.

The Wall Street Journal provided additional color into how UPS set shipping customer expectations. “During Christmas week, UPS required an extra day for delivery on its two-day and three-day shipping options. So by Dec. 21, UPS said packages using three-day shipping would miss the holiday entirely, according to its holiday service schedule that was given to customers in October.”

Abney told the Journal that UPS turned away some last-minute packages from retailers that were trying to shift volume away from other delivery companies, explaining, “You really don’t make anyone really happy if you take a lot of last-minute packages, and then you don’t get them delivered.”

There are three video clips included with the CNBC story worth watching if you’re an ecommerce shipping-news junkie.

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Ina Steiner
Ina Steiner
Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). She is a member of the Online News Association (Sep 2005 - present) and Investigative Reporters and Editors (Mar 2006 - present). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com. See disclosure at EcommerceBytes.com/disclosure/.