The History of UPS: Two Teens and $100 Built a Global Logistics Giant

Known in the industry as “Big Brown”, United Parcel Service, Inc. (UPS) is the world’s largest package delivery company. Now operating in more than 200 countries and territories, the UPS history began in 1907 at the hands of two entrepreneurial teenagers and a $100 loan.

Key Takeaways:

• UPS, founded in 1907, is the world’s largest package delivery company.
• It operates in over 200 countries and territories.
• UPS began as the American Messenger Company, rebranding in 1919.
• Carol B. Tomé became UPS’s first female CEO in 2020.
• UPS’s market cap is $132.29 billion, with major shareholders including Vanguard and BlackRock.

Our experts at Business2Community have gathered all the details you need to understand the history of the United Parcel Service, giving you insight into the trajectory of the company and how it became one of the biggest logistics companies in the US.

Who Owns UPS?

UPS is a publicly listed company with 72.18% owned by institutional investors and mutual funds. Vanguard holds 9.23% of UPS shares and BlackRock owns 7.46%. Only around 0.01% of shares are held by insiders. At the time of writing, UPS’s market cap was $132.29 billion.

UPS is one of the largest shipping and logistics companies in the world.

Who is the UPS CEO?

Carol B Tomé is the Chief Executive Officer of UPS. She succeeded David Abney in 2020. Carole Tomé is the company’s twelfth CEO but the first female leader in its history. She joined UPS in 1995 as Vice President and Treasurer.

In 2022, the UPS CEO’s salary was around $1.5 million. However, Carol Tomé collected nearly $19 million in total compensation, down from $27.6 million in 2021. More than $15 million of Tomé’s 2022 compensation was stock awards. Another $1.2 million was from stock option awards and $1 million was from an ongoing incentive plan.

The History of UPS: Growth and Development

UPS has a fascinating history stretching back to 1907 when two teenage entrepreneurs created what would become the world’s largest package delivery service with just $100 and a ton of hard work.

Here are some key dates in UPS’s development, growth, and product offerings.

1907-1930: Good Service and Competitive Rates

In the summer of 1907, teenagers James Casey and Claude Ryan started the American Messenger Company with a $100 loan from one of the boys’ uncles. Operating out of the basement of a saloon, with two telephones, two bicycles, and six messengers, they delivered packages and messages across Seattle by foot, bicycle, and streetcar.

The pair began to convince other local teens to join them to deliver packages and committed to offering better service and lower rates compared to their competitors. Jim Casey’s motto was said to be: “Never promise more than you can deliver, and always deliver what you promise.” By late 1912, the company employed 100 messengers.

It was only a year later when Jim Casey and Claude Ryan agreed to merge the American Messenger Company and its growing delivery business with one of their rivals: McCabe’s Motorcycle Delivery Service. The company was renamed Merchants’ Parcel Delivery Service. At this time, the company’s fleet of vehicles consisted of a handful of motorcycles and one Model T Ford, its first delivery vehicle.

Jim Casey’s ambition was to get the delivery business of Seattle’s largest department stores. His theory was that the Merchants’ Parcel Delivery Service could save the stores money and customers would benefit from being able to receive goods from several stores in one delivery.

In 1918, the company succeeded in signing up three Seattle department stores. Department store deliveries continued to be a key part of the firm’s business right into the late 1940s.

In 1919, the company expanded beyond Seattle for the first time to Oakland, California. This is when the company first became known as the United Parcel Service. That same year, it also began to paint its cars the synonymous brown color it has used ever since.

By 1930, the United Parcel Service covered cities all over the West Coast and New York City.

1930-1960: Moving With the Times

With this expansion into the East Coast region, the United Parcel Service moved its company headquarters from Los Angeles to East 38th Street, New York City in 1930.

In the previous year, the United Parcel Service had begun to offer delivery via air service through a new division, United Air Express, transporting packages on passenger planes. However, the Great Depression put a stop to this, and United Air Express was shut down in 1931. UPS didn’t repeat attempts to operate an air service until the 1950s.

The American people began to move en masse to suburban areas during the late 1940s. For the United Parcel Service, this presented a challenge. Many of the urban department stores that UPS serviced began following their clients to the suburbs, and more and more people owned cars, enabling them to pick up their own parcels.

The United Parcel Service lost revenue and Jim Casey decided to expand the common carrier service arm of the business, picking up parcels and delivering them for a fixed per-parcel fee.

In 1953, United Parcel Services expanded that common-carrier operation to cover San Francisco, Chicago, and New York, adding to its Los Angeles work, where it had operated the service since 1922. To begin with, the company’s customers were mostly businesses, industrial clients, and commercial shippers, but they also serviced the general public.

The company also reintroduced air service in the same year. Known as Blue Label Air, the two-day air service served all the major cities on the East and West coasts. Just like the doomed air service venture of 1929, Blue Label Air shipments flew on regular commercial passenger flights.

1960-1980: UPS Expands at Home and Overseas

Jim Casey stepped down from the role of CEO in 1962 and was succeeded by George D Smith.

This marked the beginning of a highly lucrative period in the company’s history. From 1964 to 1969, UPS more than doubled its profits, with profit in the region of $31.9 million from sales of $548 million. By 1969, UPS served 31 states on the East and West Coast, closely followed by approval to operate in a further 12 states across the Midwest.

UPS was known for keeping a low profile and not actively pursuing publicity or offering interviews with its leaders. The company remained largely employee-owned during this time with its stock held by a few thousand of its executives. Because UPS was owned by its management, it was able to make plans and decisions without the pressure to make an instant return on investment commonly faced by publicly listed organizations.

However, in 1970, a reform of the United States Postal Service was proposed that would enable it to offer lower prices, offering more direct competition to UPS. In response, UPS engaged a PR consultancy and, for the first time, publicly announced its earnings. The aim was to demonstrate UPS’s integral role in the US economy.

United Parcel Services achieved a long sought-after status in 1975 when it became the first package delivery company to serve every address in the contiguous United States.

The same year, UPS expanded internationally for the first time, launching a delivery service in Ontario, Canada. Then in August 1976, the company launched a service in West Germany with 120 delivery vans and 60 customers. Initially struggling to overcome cultural and language differences, UPS adapted by hiring German managers who understood the local nuances. This gave them a blueprint to become a global player in transport and logistics.

In 1975, UPS also moved its corporate headquarters to Connecticut.

After having been viewed as an employer for life for many years, with drivers being seen as the managers of the future, in 1976 UPS began to try and replace its full-time sorting employees with part-time workers. Some unions accepted the changes, but 18,000 UPS employees in 15 states, from Maine to South Carolina went on strike in 1976.

The strike caused chaos for retailers as suppliers were forced to send Christmas goods through the already overloaded US Postal Service. UPS eventually reached an agreement with the unions, known as Teamsters, but the company’s labor relations continued to be fractious.

1980-1990: Fierce Competition Begins Between UPS and FedEx

1980 provided two crucial legislative acts in the deregulation of surface freight services: the Staggers Rail Act and the Motor Carrier Act. The Motor Carrier Act made it easier for carriers to reduce rates and was intended to benefit consumers, shippers, and the trucking industry as a whole. The Staggers Rail Act deregulated rail rates for some traffic and made it easier for railroads to stop offering services on unprofitable routes.

UPS continued to grow rapidly in the early 80s, assisted by these new laws. However, Federal Express Corporation (FedEx) had begun operations in 1973 and was starting to encroach on UPS’s market share. FedEx was offering to ship packages overnight by air which was attractive to many businesses.

To compete with FedEx, UPS had to become serious about air delivery. In 1981 the company began to build its own global airline. It spent $1 million in 1981 to promote the expanded air service, and in 1982, UPS ran its first TV commercial.

During the early 80s, UPS’s package volume grew as the recession drove companies to ship smaller lots at higher frequency. As UPS’s income continued to rise, labor relations became even more tense. UPS and the Teamsters eventually reached a three-year agreement in 1984.

In 1982, UPS began to offer an overnight air service, UPS Next Day Air, charging almost 50% less than FedEx. By 1983, its second-day and next-day services were shipping a combined 140,000 packages a day.

Then, in 1985, UPS reached another proud milestone with the UPS Next Day Air service becoming the first air delivery network to be able to reach every address in the contiguous United States, as well as Hawaii, and Puerto Rico. The same year, UPS launched an intercontinental air service between the USA and Europe.

The Federal Aviation Administration (FAA) permitted UPS to operate its own aircraft in 1988. This was the start of UPS Airlines. In 2023, UPS Airlines President Jim Joseph said:

The launch of UPS Airlines was a turning point for UPS. The past 35 years have been marked by evolution and change. What’s been constant is the passion, teamwork, and commitment our people show every single day.

Despite the ongoing labor troubles, surveys by Fortune magazine found UPS’s reputation was consistently the highest in the industry. FedEx, however, had a much larger share of the rapidly growing overnight package business. FedEx used the latest technology to automate services and track packages while UPS still did most jobs manually. UPS introduced management and tracking technology methodically throughout the 80s and 90s to improve efficiency and eventually created a system that could track packages door-to-door.

The company launched its first major TV advertising campaign in 1988, with the slogan: “We run the tightest ship in the shipping business.”

As the 80s came to a close, UPS’s ground and air services were growing rapidly. In 1987, the company acquired its Italian partner, Alimondo, in a bid to expand throughout Europe. The company also bought nine small European courier companies to expand its air services.

1990-2000: UPS Focuses on Technology and Joins the NYSE

In 1989, Kent C Nelson became chairman and CEO of UPS, having worked for the company since graduating from college. Under his leadership UPS went through a complete transformation.

UPS launched a whole range of new services in the early 90s, such as timed and same-day deliveries. It also formed UPS Worldwide Logistics in 1993 to offer clients several supply chain management services, from inventory management to storage and delivery.

The UPS delivery information acquisition device, or DIAD, was introduced in 1990. The handheld delivery information acquisition device is carried by all UPS drivers. Drivers use the devices to stay in contact with operation centers and receive schedule changes, traffic updates, and other information. The company claims that the use of DIADs has saved millions of sheets of paper.

Following this, UPS moved its corporate headquarters from Connecticut to Atlanta, Georgia in 1994. This move, the company said, involved an emphasis on energy efficiency and included a tree protection and planting program. 55 Glenlake Parkway, Atlanta, remains the home of UPS in 2024.

The company also first launched its website, UPS.com, in 1994.

During the 1990s, UPS advertised heavily across the world, spending millions of dollars alongside its sponsorship of the Atlanta Olympics Games in 1996. UPS leaders hoped that the campaign would give the company the worldwide recognition it craved.

That recognition would be crucial to the success of UPS’s international trade, which was slow to take off. UPS’s international network spanned 200 countries and territories and in 1995, the company announced plans to invest more than $1 billion in its European operations.

In 1997, James P Kelly became chairman and CEO. His first year at the company was challenging, with a 15-day strike from almost 190,000 of the company’s Teamsters. The strike led to more than seven million packages getting stuck in a backlog and a loss of $780 million for UPS.

In 1999, UPS executives decided that the company needed the flexibility of publicly traded stock to help it go after some larger acquisitions. That same year, UPS completed the largest initial public offering ever conducted in the USA at that time. The company raised $5.47 billion by selling 109.4 million Class B shares at $50 each on the New York Stock Exchange. Class A shares, which maintained 99% of the voting rights at the company, remained with employees and retirees.

2000-Present: Aggressive Acquisition and Diversification

At the start of the new millennium, UPS began an acquisition spree with the purchase of Challenge Air Cargo, a freight carrier operating in Latin America. UPS also gained permission to fly cargo to China and began making regular freight flights to Shanghai and Beijing.

In 2001, UPS acquired Mail Boxes Etc., a chain of over 4,300 retail stores offering packing, shipping, and mailing services. The purchase was expected to expand UPS’s services to small businesses and individual customers.

Within two years, around 3,000 Mail Boxes Etc. stores were rebranded as The UPS Store.

UPS also acquired Fritz Companies, a freight forwarding, customs brokering, and logistics company in 2001.

This became UPS Freight Services which merged with UPS Logistics Group in 2002 to form UPS Supply Chain Solutions, offering specialized supply-chain management services.

As it neared its 100th anniversary in 2007, UPS continued to fare well. One concern for its leaders, however, was the arrival of Deutsche Post AG into the US cargo market through acquisitions of DHL Worldwide Express and Airborne Inc.

UPS continued to expand its portfolio throughout the 2010s, including the acquisition of freight brokerage firm Coyote Logistics in 2015. This enabled UPS to begin offering Saturday delivery and pickup services for the first time in the company’s history.

In 2000, UPS purchased Livingston Healthcare Services Inc., a specialist in supply chain management for healthcare, biotechnology, and medical device companies. This was the beginning of UPS Healthcare, which was launched formally in 2020, and supports the healthcare industry by managing and delivering devices, diagnostics tests, medications, and therapies to customers worldwide.

A fractious relationship with trade unions remains for UPS. In 2023, tense negotiations took place with the Teamster union representing 340,000 UPS workers to agree on a 5-year contract and avoid disruptive industrial action.

What does UPS stand for?

UPS stands for United Parcel Service, Inc.

It was originally called the American Messenger Company and was founded in 1907. It rebranded as the United Parcel Service of America Inc. in 1919. When it went public in 1999, the brand name was shortened to United Parcel Service, Inc.

History of the UPS Logo

The UPS logo is displayed on 147,000 trucks worldwide.

The UPS logo was first created in 1919 when the Merchants’ Parcel Delivery Service expanded into California and renamed itself the United Parcel Service. The first logo showed an eagle carrying a package with the words “safe, swift, sure” written on it. The shield shape was chosen by the founder James Casey.

In 1937, the UPS logo was changed to reflect the rapidly expanding company. The eagle was removed and replaced with the letters UPS.

The third UPS logo was designed in 1961. It featured a package tied with a string above the popular UPS shield and was created by renowned designer Paul Rand.

The next UPS logo was introduced in 2003. The colors were updated to help it work better both on and offline. In 2014, a 2D version of the logo also appeared.

The Future of UPS

Carol B Tomé began her tenure as CEO of UPS in 2020, becoming the first female CEO in the company’s history. But what does the future hold for Big Brown?

At the end of 2023, UPS posted annual revenue of almost $91 billion and earnings of $6.71 billion. These were both down compared to the previous year as was anticipated by the company after lower ecommerce demand and challenging negotiations with trade unions.

UPS CEO, Carol B Tomé, said:

While unfavorable macroeconomic conditions impacted global demand, our US labor contract was fully ratified in early September and volume that diverted during our labor negotiations is starting to return to our network

At the time of writing, UPS remains a strong and successful company but the changing landscape could present further challenges to overcome. It plans to focus on its new healthcare delivery arm, and overall has set a corporate goal of carbon neutrality by 2050.

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