Volumes push UPS to expand US air hub
UPS, the world's largest package delivery company, is to invest at least Dollars 1bn in an expansion of its main air hub in Louisville, Kentucky, highlighting rapid growth in express delivery services.
Mike Eskew, UPS chief executive, said the investment was necessary to cope with the surge in parcel volumes generated by increased global trade.
Express delivery companies have been taking an increasingly important role in the global economyas manufacturers and retailers shift towards super-efficient "just-in-time" supply chains.
"We anticipate strong growth in global trade to continue for years to come," said Mr Eskew.
UPS plans to increase the sorting capacity of its Louisville hub by 60 per cent to 487,000 packages an hour by 2010, with work beginning later this year.
Earlier this month, FedEx, the second-largest parcel courier, announced plans to expand its Indianapolis air hub by more than 30 per cent by 2008.
Both companies are also investing heavily in overseas facilities to handle increased international shipments.
UPS has doubled the capacity of its European hub in Cologne, Germany, and is building a new Chinese hub in Shanghai.
FedEx, meanwhile, is moving its main Asian facility from the Philippines to a larger site in Guangzhou, China.
Both companies have ordered 10 giant Airbus A380 aircraft to support the growth in their international businesses.
UPS's express package volume has grown at an average annual rate of 5 per cent since 2003, while international shipments into the US have been expanding at double-digit rates.
UPS Sets $1 Billion+ Expansion of Global Air Hub (UPS press release)
Strong Growth in International & Domestic Express Business Fuels Demand for Additional Hub Capacity
LOUISVILLE, May 17, 2006 – Four years after opening the most technologically advanced air package sorting hub in the world, UPS (NYSE:UPS) today announced a dramatic expansion that will increase sorting capacity over the next five years by 60 percent to 487,000 packages per hour.
The expansion plan for UPS WorldportSM, the sophisticated mega hub at the heart of the company's global transportation network, calls for the addition of three aircraft load/unload "wings" to the hub building followed by the installation of high-speed conveyor and computer control systems.
"We anticipate strong growth in global trade to continue for years to come," said Mike Eskew, UPS's chairman and CEO. "Expanding the centerpiece of our worldwide infrastructure is absolutely necessary to support the long-term needs of our customers."
The expansion plan reflects continued robust growth in UPS's air package volume around the world. In the United States, the overnight package market is strong, generally tracking with the Gross Domestic Product. UPS Next Day Air® package volume has grown on average almost 5% since 2003. The strength of global trade also is having a significant impact. For UPS, international import volume into the United States has grown at a double-digit rate for the last four years.
While the final configuration of the work has yet to be set, the expansion will cost at least $1 billion. Work will begin later this year and be completed by 2010. Despite the mammoth size of Worldport, the innovative "smart label" technology that drives its sort process can propel packages through the building's 197 miles of conveyors in as little as eight minutes.
The movement of packages through the vast facility is synchronized by a sophisticated system of cameras that read the detailed information encoded on package labels, triggering a network of computer-activated sorting and tracking devices that process 59 million database transactions every hour with near-perfect reliability.
The expansion is expected to create more than 5,000 additional jobs. Many of those workers will be eligible to participate in the Metropolitan College program in which UPS and Kentucky jointly pay for the higher education of employees.
"UPS Worldport has a significant economic impact on Louisville and Kentucky even beyond the creation of UPS jobs," said Bob Lekites, UPS's Louisville-based vice president of airline and international operations. "More than 90 companies have moved to Louisville in recent years just to be close to Worldport. So this additional investment will create a better Louisville and a better Kentucky and we're extremely pleased with the support we've received from Gov. Ernie Fletcher and Louisville Mayor Jerry Abramson."
The expansion will increase Worldport's footprint by 1.1 million square feet to 5.1 million square feet – the equivalent of more than 113 football fields. The project also will embrace construction of new ramp space to accommodate the giant A380 and 747-400 cargo planes now on order, plus a new vehicle loading facility for the ground network that serves Louisville.
The Worldport project is the latest of several expansion moves to accommodate international and domestic air growth. Since the start of 2005, the company has announced plans to begin operating an air hub in China by 2007; significantly expanded the capacity of its intra-Asia air hub in the Philippines, and completed the expansion of its European air hub in Cologne/Bonn, Germany, doubling that facility's sort capacity.
Worldport is the home base of UPS Airlines, the ninth largest airline in the world with 275 aircraft. UPS air operations encompass over 1,800 flight segments each day and reach into nearly 800 gateways around the world.
UPS is the world's largest package delivery company and a global leader in supply chain services, offering an extensive range of options for synchronizing the movement of goods, information and funds. Headquartered in Atlanta, UPS serves more than 200 countries and territories worldwide. UPS's stock trades on the New York Stock Exchange (UPS) and the company can be found on the Web at UPS.com.
