UPS CEO Carol Tome said in a press release on Monday (Jan. 25) that the agreement with TFI gives UPS the ability “to be even more laser-focused” on its central business and to give its customers “the greatest value.” UPS is pulling out of the domestic trucking market to focus on the escalating small package delivery business.
UPS Freight included the less-than-load (LTL) and truckload divisions of UPS, generating an estimated $3.15 billion in 2020 revenue. The combined entity with TFI, called TForce Freight, will be the most extensive North American LTL network in the U.S. and Canada. TFI, which includes truckload, less-than-truckload and logistics operations, reportedly generated revenue of approximately $4.1 billion in 2019.
The decision to sell UPS Freight aligns with the company’s “better, not bigger” strategy that followed an examination of its business and portfolio. The new entity will be able to use the UPS domestic package network to fulfill shipments for five years.
UPS Freight currently has 14,500 employees, who will transition to the new TFI unit, which will continue to cater to the needs of UPS’ LTL needs after the deal. UPS Ground customers will also be able to receive freight pricing.
In September, TFI acquired third-party logistics provider DLS.
According to the company, UPS Freight is one of the largest LTL carriers in the U.S.; for 85 years, it has offered a full range of regional and long-haul solutions, along with an on-time delivery guarantee for LTL shipments.
In a PYMNTS interview, Brian Reed, vice president of business development and supply chain optimization at GEODIS, indicated that the pandemic’s impact on the supply chain has imparted valuable lessons.
The fulfillment and delivery crunch over the course of the pandemic escalated over the holiday shopping season, with delivery giants like UPS curtailing shipments from some retailers in order to keep up with the overall demand.