MT: With your forays into logistics, financing and technology you have shown a remarkable ability to get into new areas of business. What's the vision behind such willingness to reinvent the company? ...
MT:With your forays into logistics, financing and technology you have shown a remarkable ability to get into new areas of business. What’s the vision behind such willingness to reinvent the company?
Corrigan: From a Canadian perspective, what we’ve seen emerge over the last three years or so is the concept of Canadian companies becoming global companies and realizing they don’t have to go into the US and establish distribution, they don’t have to go overseas and set up facilities. They can manage it from their homebase in Canada without incurring those costs. At the same time they are realizing that technology is moving so fast and the costs associated with keeping up with the technology are so high that even if they wanted to do it, it’s not something within their financial grasp. But they can take advantage of the investments we have made in technology (over $11 billion in the last 12 years). They can import and export their products more efficiently. I think the future is that companies will continue to encourage us to take over more and more of the supply chain so they can focus on their core product.
MT:Canada recently passed legislation aimed at boosting the amount of free trade zones available here. Hamilton airport is looking at setting up a free trade zone. Considering your connection with the Hamilton airport are you involved in any such initiative in Canada?
Corrigan: We are in favor of it. Obviously if you go back to the original strategy meetings and why we located in Hamilton, there was the concept of infrastructure being built, such as highways and access, and a free trade zone. And that’s their vision too, to attract companies into that area, build warehousing there and then have the ability to distribute to global markets from Hamilton. The airport was built up and all the major carriers are in the airport. Any company wanting to move into the area has freight access to the world and having a free trade zone would make it even more conducive. We support that and we expect that is going to happen.
MT:Let’s talk about e-commerce. One of the most challenging parts of it as it affects transportation is the last mile of that delivery – taking that product to a person’s home and the economics behind doing that. Are you actively looking at alternatives?
Wallace: We are experimenting. For example, in the Benelux we have about 500 Esso service stations and when you order by e-commerce, you can request the delivery to be made to a local service station. So it’s really a convenience for the customer and it’s by their request. We have put in another 650 in the United Kingdom under the same concept.
MT:You have a dispute with Canada Post that has involved several investigations. Can you give us a sense of the issues?
Corrigan: The claim is against the government because that’s the only way it could be filed, it’s not against Canada Post and it involves the courier product that Canada Post has, not Purolator. It’s about the fact that the provisions under NAFTA are pretty clear that if you are going to have a monopoly that chooses to compete in services outside its protected area then you have to give the same fair treatment to all the players, including those from outside the country. This is about a level playing field , not about whether we want them out of the courier business. It’s just that you shouldn’t extend certain privileges to a corporation that gives it an unfair advantage against all its competitors. If they are making more money by charging too much for stamps then they are able to charge less for courier services, which gives them an unfair advantage against their competitors.
MT:You operate in over 200 countries and territories with almost 360,000 employees. Being so large, how do you handle the logistics behind decision making to ensure agile reactions to opportunities?
Wallace: When we were founded in 1907 our founders really had a vision as part of our culture to operate with autonomy and at the same time accountability. We operate small units and in our local bases our managers are given a lot of latitude to make the day to day decisions. We really take advantage of learning from mistakes and innovations We can leverage that because we have such a tight communications base. There are 14 of us on the management committee, which oversees the day-to-day business and makes the major decisions. We can make decisions very quickly.
MT:How involved has UPS been in lobbying for free trade agreements around the Americas and how have you dealt with the ethical issues involved?
Wallace: From time to time we face unusual challenges out there. We will not engage in any illegal practices. For example, there is one country where to get a license to operate is somewhat around $1,200 but with some “additional” fees, we could probably have had that license in 30 days. But we stuck by the regulations and paid the standard fee and 12 years later we got the license. So that tells you how persistent we are about integrity. We deal a lot in the Americas and we think free trade is good for their customers and their people. If they truly want global trading partners, they have to open their markets.
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