UPS is experiencing “significant” growth in its expedited less-than-containerload service since it was launched in March from four northern European ports to delivery destinations in the U.S.
The new service, which UPS calls Preferred LCL, is drawing the biggest interest from U.S. importers of German-made industrial automotive products, which includes auto parts and automotive machine tools. It is also drawing interest from some retailers who are restocking inventories.
“As we continue to present the service to our large customer base in Europe, we expect it to accelerate,” said Keith Andrey, vice president, UPS ocean freight services.
The PLCL service is designed to provide a more economical substitute for air freight. “The product positions itself well across all different sectors of high-end products because of that gap between the speed of air freight and the economy of ocean freight,” Andrey said.
UPS plans to add more Preferred LCL lanes throughout 2013. “As the service continues to expand, we are looking to add additional lanes to the areas we currently service which include Asia and western Europe,” Andrey said.
The westbound trans-Atlantic service saves up to 40 percent in door-to-door delivery time over the traditional LCL ocean freight service, depending on the delivery point in the U.S., or two or three days over the average 18-day LCL service.
It speeds up door-to-door delivery time by connecting ocean shipments loaded on ships at the ports of Antwerp, Hamburg, London and Rotterdam with the company’s domestic U.S. air freight and truck delivery network.
UPS first launched the PLCL service in 2010 for trans-Pacific shipments from Japan and then expanded it to China. It now has 26 points of origin at ports in Asia and Europe that are connected to its domestic U.S. delivery network.
On the ocean leg, shipments travel along with the more traditional UPS LCL services in vessel space that UPS, as a non-vessel-operating common carrier, books with container lines. Andrey said he tries to lock LCL and PLCL shipments into predictable ocean rates, so there is not as much freight rate volatility. “We try to be more consistent with the pricing to our customers,” he said. “But because of the extreme fluctuations in the market we may have to push a rate increase or decrease to our customer, depending on market conditions.”
Rates have been more stable on the trans-Atlantic over the last three years than on the trans-Pacific, so Andrey does not expect to see the same fluctuations on the new service. “That consistency provides value to the customers,” he said.
UPS is projecting a 4 to 5 percent growth in westbound trans-Atlantic volumes this year and less than 2 percent growth in eastbound volumes.