UPS Outsources Weather Forecasting Operation
[Stay on top of transportation news: .]
UPS Inc. has outsourced its proprietary weather-forecasting operations, along with moves to offload some tech support and investment office functions, as the company seeks to cut costs and streamline its business.
The delivery company has long relied on its own meteorologists, who use in-depth weather information to direct the company鈥檚 logistics operations. It made the switch earlier this year to the Weather Co., the owner of the Weather Channel, UPS confirmed in response to inquiries from Bloomberg.
UPS ranks No. 1 on the Transport Topics Top 100 list of the largest for-hire carriers in North America, and UPS Supply Chain Solutions is No. 5 on the TT Top 100 list of the largest logistics companies. The company also ranks No. 3 on the TT Top 50 list of the largest global freight carriers.
The company has also shifted its technology support functions in recent months to third-party tech vendors, following a decision last year to outsource its chief investment officer functions to Goldman Sachs Group Inc. for certain pension portfolios. The bank hired UPS finance employees directly to continue to work on the company鈥檚 business, Chief Financial Officer Brian Dykes said in an interview.
鈥淭hey still serve us but now they have an entire career path with one of the best financial services companies in the world,鈥 he said.
The moves to slim down some corporate functions underscore the broad changes being pushed by CEO Carol Tom茅 in the face of weak parcel volume and slumping shares. Its shares dropped 31% this year through Tuesday, compared to a 10% increase in the S&P 500.
Want more news? Listen to today's daily briefing above or go here for more info
The company has said it plans to excise half of its unprofitable Amazon business by the middle of next year. To accommodate lower volumes, UPS is reorienting its network by consolidating and automating facilities and reducing headcount. The carrier plans to trim its operational workforce by 20,000.
UPS had employed about five full-time meteorologists at its main Louisville hub to track global weather patterns, helping guide planes and trucks to their destinations. Rival FedEx Corp. has its own forecasting group of meteorologists. Tom茅 highlighted UPS鈥 in-house team as a strategic advantage at an investor day last year.
