UPS - United Parcel Service Inc.

03/05/2019 | Press release | Archived content

Technology and Tenacity: The Right Time for Transformational Change

Good morning

Thank you

When Doyle asked me to speak, he told me that you want to hear about UPS's vision for fleet electrification and other alternative fuels for the next 5 plus years.

Now, that sounds a little like a prediction. And I have a one big problem with predictions: They're wrong more than they're right.

Think about it.

In 1957, Popular Mechanics predicted that in 10 years, by 1967, you'd be able to order a light truck that would fly using fans. Didn't happen.

In 2013, futurists said self-driving vehicles would be standard by 2018. Nope.

The reason these were wrong - and the reason most are - is because predictions rest on the assumption that the future is like the past.

And we know better than that. So, when I think about a five-year vision, I think more about a continuous look … at Macro trends.

And there are three big ones we're paying attention to:

  • Urbanization.
  • The E-commerce boom
  • And the environmental damage being accelerated by the previous two trends I mentioned.
  • Each of these trends presents some serious obstacles. But they also suggest some exciting opportunities.

    The two things that are going to make the difference? Technology and Tenacity.

    Let's start with the obstacles. Or, since I work for UPS, maybe I should say challenges.

    Urbanization. By 2050, that's 68% of the world's population will live in cities. Add population growth and we're looking another 2.5 billionpeople living in cities 30 years from now.

    Urbanization has some upsides. It gives people more employment options; access to better schools and health care and upward mobility.

    But it also has some pretty significant downsides. Pollution. Crowding. Lack of mobility.

    And adding to the problem? The E-commerce boom. We have become accustomed to getting anything we want, when and where we want it.

    Online purchases have grown 12 percent annually over the past three years and are expected keep growing. Urbanization plus e-commerce is creating challenges already evident in some cities: environmental damage.

    Even though single-occupancy vehicles are the real culprit when it comes to congestion, delivery trucks make up a disproportionate share of congestion costs. The rise of contracted delivery that uses personal vehicles rather than large trucks has also put more delivery traffic on crowded urban streets. Urban freight delivery is projected to grow 40% by 2050.

    To remain livable, cities must be safe for people to walk and breathe. So some cities are getting smart, building pedestrian-only, low- or zero-emissions zones.

    This is where challenge meets opportunity.

    It's also where those things I mentioned earlier, technology and tenacity, play critical roles.

    Technology is changing things. Tenacity is what it will take for us to make sure those changes are for the better. I believe we, UPS and all of us here today, can make a huge difference in two areas: creating cleaner cities and embracing safer vehicles.

    Urbanization, e-commerce and environmental sustainability have implications for how people get around, how they buy things, and how companies like UPS deliver for customers. In the U.S. transportation sector, 23 percent of the greenhouse gas emissions are generated by medium and heavy-duty trucks.

    Everything comes down to what we put into the air. Carbon is where we can get it right or wrong. Where we can be part of the problem … or part of the solution. Like all of you, UPS wants to be part of the solution. And we should be.

    Every day, 6 percent of everything manufactured in the US and 3 percent of everything manufactured in the worldmoves through the UPS network. Everything from jet engine parts and life-saving vaccines to, my personal favorite, a new set of golf clubs.

    We're a company that operates over 330,000 pieces of equipment including 116,000 power vehicles and more than 500 aircraft. We have 454,000 employees who live and work in 220 countries and territories. We're a company with a significantglobal footprint that feels an obligation to customers, consumers and communities. We're all in.

    And we've always been an early adopter of innovative technologies.

    In the early 1930s, we introduced electric vehicles into our fleet. The business and technology realities of the time led UPS and the rest of the industry to take the internal combustion engine route instead.

    However, recent advancements in battery technology have made it possible to perform in duty cycles that fit into a significant segment of our fleet needs. Today, we have more than 1,000 electric and hybrid electric vehicles in operation worldwide.

    In 2017, we pre-ordered 125 of the Tesla fully electric Semi-trucks, scheduled to begin production within the next year. We hope! We're also collaborating with OEMS to add electric delivery vehicles to our fleet that cost about the same as conventional gasoline- or diesel-powered trucks.

    Narrowing this gap will play an important role in achieving large-scale adoption.

    Some say internal combustions (ICE) engines reached their peak production in 2018. I don't know if that's true. What I do know, and you can quote me on this, is fleets want solutions that work. If the technology doesn't work, it doesn't matter how much it costs or if subsidies are in place.

    I'm optimistic that electric propulsion will be a significant part of the UPS fleet in the coming years.

    OEMS in the audience, I know you wonder if fleets will buy your new alternative energy vehicles. With the technology capabilities available today, I challenge you to build vehicles so efficient, so safe and so advanced that we, as fleet owners, can't do without them. An all-electric class 8 semi that could cover a 600 mile range might be a ways off. But In the meantime we have good reliable cleaner natural gas internal combustion engines that work.

    In fact, UPS has over 6,000 natural gas vehicles on the road running over 1 million miles per day. This proves my point-- fleets want and buy what works for us

    I know what works for the UPS fleet won't work for all fleets, but we should try, where possible, to collaborate and communicate a common vision to OEMs, regulators and utilities of the solutions we want.

    But what about infrastructure? We have to recharge all these vehicles, right?

    Knowing this issue needs to be solved, we joined a UK consortium working to deploy smart-grid technology that allows us to recharge a much larger fleet of electric vehicles - at the same time. This technology could reduce or eliminate expensive upgrades to our facilities and reduce stress on the power grid.

    Would you buy a car if you couldn't find a gas station? Or if the price of gas doubled or tripled depending on the time of day or how much you purchased?

    That's pretty much the case with electricity rates and infrastructure today. Charging options and energy rates will either drive or block progress. Fleets need to know how much these things cost before making significant investments in electric vehicles. Utilities should be playing offense. This is a golden opportunity for them to secure customers for the long haul.

    UPS's relectrification strategy doesn't stop at vehicles, however. It's part of a broad-based collaboration with city partners to develop new package delivery solutions that limit congestion, smog, and noise - critical issues in dense urban areas.

    And we're not alone in trying to create cleaner cities.

    A research study that we conducted with GreenBiz showed that more than 80% of fleets are motivated to electrify their fleets as a result of sustainability and environmental goals.

    Clearly, it's the right thing to do.

    However, I don't believe we'll see wide scale adoption until electric vehicles are the best choice for completing the job.

    A positive impact to sustainability and the environmental will be the excellent byproduct of the best business choice.

    You see, we think fleet electrification has the potential to be more than just a new alternative energy vehicle option. We are in an industry that has seen incremental change but for the most part, many things have remained the same. Fleet electrification should be more than just making the wheels turn with a battery pack and an electric motor.

    With the proper design and vision, the shift to electrification won't be incremental, it could be transformational. For example, an electric drive by wire, brake by wire platform is optimal for connectivity, upgradability, enhanced safety features and other expanded possibilities.

    Electric passenger cars are starting to show us what good looks like. Tesla made electric cars cool. We know other OEMs are launching products to rival this standard. Commercial electric trucks are still a work in progress towards that standard, which other OEMs will compete with.

    Once we have good, affordable choices, I expect the right vehicles for most medium duty applications will be equipped with electric powertrains. Fleet adoption is mission critical for t large scale deployments.

    At UPS, we expect to continue leading the charge on fleet electrification and innovative urban logistics solutions. But the benefits of technology extend beyond what it can do for cities. Technology also helps UPSers around the world work safer and smarter.

    UPS doesn't build trucks but thanks to our scale, our reputation and our experience, we can influence what tomorrow trucks look is like.

    And what we want to see is safer vehicles. Across the industry, there are nearly 100,000 crashes annually. More than half of them involve injury or death. And more than 104,000 industry-vehicles are involved in those crashes.

    Commercial trucks represent just 1 percent of the vehicles on the road, but accidents involving them account for 10 percent of all road fatalities.

    ADAS, Automated Driver Assistance Systems, could prevent up to 63,000 truck-related crashes each year. And that could save a lot of lives. Lane departure warning systems. Automatic emergency braking. Air disc brakes. Video-based onboard safety monitoring systems. These are cost effective technologies that make the roads safer for allof us, includingtruckers at the wheel.

    Today, over 60 percent of our tractor-trailer trucks are equipped with collision mitigation systems. But technology is two-faced. It can be both good and bad, at the same time.

    The only way we're going to tackle the challenges to realize the opportunities is with tenacity.

    Because In today's rapidly changing world, perfect is a moving target.

    We've all seen it.

    Remember rotary phones? With the long cords that stretched around the corner for privacy? Perfect, right? But then we got cordless phones. Bag phones, flip phones, smart phones. Now your 'phone' is your camera, your computer, your news source. You can even hail a ride with it. What will the 'perfect' communication device look like 5 years from now?

    I'm not about to predict that!

    The bottom line is that consumers' expectations are changing faster than ever before. In today's business world it's not enough just to adapt to change. You better be leading the change or it's likely you won't be around long.

    We must be working constantly on new and better ways of doing things. Our competitors certainly are. One thing is for sure 'If you are not the one leading, you are either sitting on the sidelines or trying to keep up'. There are many moving pieces to this transportation evolution.

    There is no doubt fleet owners, OEMs, utilities, and regulators have the capability to make it happen and although there is strength in numbers, this powerful force must work in a synchronized, collaborative fashion.

    If any of these key stakeholders is rowing the ship out of time, we will be working hard but going in circles. Solutions won't just appear. We have to engage - stubbornly -- in the process of developing them.

    I started this presentation by saying I don't make predictions. But what I do make are educated inferences. And I'd like to close with three:

    One: We can't predict the future, but we'd be crazy not to anticipate it. The key? Paying attention to what we see, but never assuming that what is … is what will always be. It won't.

    Two: We can't ignore change and the fact that technology is accelerating it. But we must make sure the changes are positive more often than not. That's where tenacity comes in - it will.

    And three: We must cooperate. Private Industry and Public Agency collaborations are crucial to ensure exceptional service levels in the transportation of goods and services. We are an industry of industries. But we all want the same things - cleaner cities and safer roads. Working together is how we get them. I know we can.

    Thank you.