How UPS Delivered Through the Disaster

Decisions made before and during the attack helped it cope

At first, Joe Liana thought it was just his cell phone acting up. But United Parcel Services Inc.'s (UPS ) district manager for Manhattan grew suspicious as calls to his wife and his office were greeted with busy signals on the morning of Sept. 11. He had taken a rare day off to play golf in Queens, and as he dialed for the umpteenth time, he saw a boy running up to him on the third hole. The World Trade Center had been attacked, the boy cried. Liana had 27 people working there. He threw down his clubs and raced off the course, calling out to his stunned golf partners: "I'm going to Manhattan if I have to swim."

Liana caught one of the last trains to Manhattan that day, then flagged down the first UPS truck he saw to take him to UPS's vast complex on 43rd Street near the Hudson River. Once there, the burly 30-year UPS veteran had wireless messages sent to every driver's computerized clipboard, telling them to call in. Within three hours, he learned that his only casualties were four trucks, crushed in the buildings' collapse. Then he summoned all 4,000 of his employees to 43rd Street. With air traffic halted and many streets closed or impassable, they sorted through tens of thousands of packages, looking for medical supplies, then made 200 deliveries to hospitals, doctors, and pharmacies. "I've learned to stay out of the way and let our folks run the system," says UPS Vice-Chairman Michael L. Eskew.

Every shipper, from FedEx Corp. (FDX ) to Emery Worldwide, bounced back quickly. Within days, packages were arriving at homes and offices across the U.S., thanks to smart crisis management and Herculean efforts to solve logistical nightmares. UPS was more fortunate than rival FedEx because it's less reliant on airplanes for deliveries. A series of key decisions at UPS, the world's largest private shipper, helped to keep its trucks running on time. The $27-billion-a-year company carries 7% of the country's gross domestic product on any given day. Its ability to cope was the result of decisions made both years ago and in the chaotic first moments of the disaster.

What saved UPS was a combination of corporate culture and technology. Its decentralized system empowers district managers such as Liana to make key decisions. Most disasters, after all, are local. But each district is tied to a worldwide computer network that enables managers to pinpoint the location of each package, whether a box of semiconductors from Singapore or a truckload of vegetables from California. "That saves us from having to unload 20 trucks to find one little package, the way we had to do it five years ago," says Darden. Other shippers have similar systems.

FAST WORK. Still, the disaster tested UPS to the core. Although most of its air deliveries are made at night, UPS had 56 of its 620 planes in the air when airports were shut down, says Robert L. Lekites, general manager of the airlines unit. Planes bound for Anchorage, for example, were diverted to Vancouver, B.C. Packages had to be transferred to trucks. To prevent its ground fleet from choking on the extra volume, Eskew and Darden decided early on to deliver only packages that could reach their destinations within three days, gambling that UPS would be able to fly again to both coasts by the end of the week. That hunch proved correct, though UPS had to beg and borrow equipment to get airborne again.

UPS is up and running again, but challenges remain. It takes drivers four hours to run the gauntlet of new security checks at the Pentagon. Two zip codes in lower Manhattan were obliterated, and five can no longer be reached by UPS trucks. And UPS must figure out where to deliver 25,000 to 40,000 packages destined for the buildings that collapsed; they now sit in 27 tractor-trailers.

They won't sit for long. UPS executives say they're determined to find an appropriate recipient for those packages, if just to prove that no one can thwart its delivery system.

By Charles Haddad in Atlanta

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