UPS introduced Wednesday investments in electric vans, the testing of self-driving vans and the development of a new “super hub” as a part of its efforts to capitalize on the expansion of e-commerce.
UPS, which sees electric autos as a key a part of its sustainability efforts, will buy 10,000 electric autos from U.K.-based startup Arrival and take a minority stake within the firm. The monetary particulars weren’t disclosed.
The autos might be custom-made for UPS with a modular design that the corporate says will enable for elements to be standardized and cut back the price of upkeep. UPS’ fleet presently has greater than two dozen completely different mannequin autos. The supply vans might be deployed in North America and Europe.
“UPS continues to build an integrated fleet of electric vehicles, combined with innovative, large-scale fleet charging technology,” stated Juan Perez, UPS chief data and engineering officer. “As mega-trends like population growth, urban migration, and e-commerce continue to accelerate, we recognize the need to work with partners around the world to solve both road congestion and pollution challenges for our customers and the communities we serve.”
Last yr, UPS and Arrival partnered on a trial of 35 electric autos in London and Paris.
“UPS has been a strong strategic partner of Arrival’s, providing valuable insight into how electric delivery vans are used on the road and, importantly, how they can be completely optimized for drivers,” stated Denis Sverdlov, Arrival chief government.
The two corporations additionally plan to collaborate on expertise to function the autos autonomously inside UPS services.
Bernstein analyst J. David Vernon stated a shift to electric ought to present a long-term profit.
“Electric is going to allow you to save on the cost of fuel and significantly lower the cost of maintenance,” stated Vernon.
Earlier this month, Hyundai and Kia Motors introduced a $110 million funding in Arrival, and the corporate will develop electric autos designed for supply for the automakers.
Arrival’s prime rival is U.S.-based Rivian, which has partnered with Amazon and Ford. The e-commerce big has invested $700 million in Rivian, which has plans to supply Amazon with greater than 100,000 electric supply vans in 2021. Ford invested $500 million in Rivian, and the businesses will accomplice to construct new electric battery autos.
Meanwhile, UPS stated Wednesday it is testing self-driving minivans with Alphabet subsidiary Waymo within the Phoenix space over the subsequent six months.
In February, an autonomous minivan will transport packages from a UPS Store to a UPS sorting facility. A Waymo engineer will trip within the autonomous automobile to watch operations not less than initially. If the take a look at is profitable, UPS stated, it might increase the take a look at to extra shops and autos.
“UPS is exploring automated and autonomous technologies to enhance network operations,” stated Scott Price, UPS chief technique and transformation officer. “Getting packages to our sortation facility sooner and more frequently, while also creating an opportunity for later drop-offs for next-day service, can add enormous value for our customers.”
The take a look at is attempting to find out if autonomous supply improves effectivity or customer support.
Rival FedEx is testing autonomous robots for supply to houses and companies. And UPS owns an undisclosed stake in self-driving truck startup TuSimple, which is additionally testing in Arizona.
In addition to those efforts, UPS is trying so as to add 7 million sq. toes of sorting area globally earlier than the 2020 vacation season.
It will spend $1.four billion in Pennsylvania to spice up its capability to type and ship e-commerce packages within the Northeast by way of the creation of a tremendous hub in Harrisburg, Pennsylvania. Automation upgrades might be made to 3 different services within the area to hurry sorting and transport of packages between Philadelphia, Pittsburgh, New York, Baltimore and Washington, D.C. All collectively the upgrades will assist add greater than 1,700 new jobs, UPS stated.
Other facility expansions are additionally deliberate for this yr.
As a part of its three-year plan, introduced in 2018, UPS is focusing on $20 billion in capital expenditures.
FedEx has dedicated greater than $17 billion to capex spending between 2018 and 2020, together with an estimated $5.9 billion this fiscal yr, in response to its 2019 annual report. In 2018, the corporate additionally introduced a practically $three billion funding to improve and modernize its two largest hubs, in Memphis and Indianapolis.
“If you think about the Northeast and the amount of population there, it makes a lot of sense. It will reduce the time in transit, and the efficiency will improve margins,” stated Vernon. He stated automation can enable the corporate to be “more dynamic and responsive to changes in volume and changes in demand.”
UPS studies earnings on Thursday earlier than the bell.
The firm’s inventory has a market worth of $99 billion, and shares have risen practically 15% over the previous 12 months. By distinction, Fedex shares, that are valued at $38.eight billion, have fallen practically 15% over the identical interval.