UPS will increase US sorting capacity by about 5%, open and expand facilities, take on moreworkers and operate on more days in the forthcoming peak season to avoid a repeat of last year’s ‘
system overload’ that caused significant delays and resulted in late Christmas presents.The company has responded to last year’s e-commerce-driven unexpected late volume surge thatoverwhelmed its sorting and delivery capacity by engaging in close talks with major retailcustomers about their volume expectations and investing an additional $175 million on operationalcapacity measures across the USA.
“You can depend on UPS this holiday season. We’re more nimble and better prepared than ever,”the company declared in a 2014 peak season preparations overview made available toCEP-Research.
Already last January, then COO and now CEO David Abney stressed that UPS had been “workingaround the clock to determine how to improve the company’s operations and service performance,ensuring we do not have a repeat of 2013”. Executives again emphasised at the Q2 resultspresentation in late July that UPS has been investing heavily in network capacity ready for thepeak season stretching from Thanksgiving Day through to Christmas.
The UPS 2014 peak season planning revolves around four key areas: better volume forecasting;improved visibility of shipments; enhanced communications with shippers and receivers; and expandednetwork capacity.
UPS said it has been talking since early this year with larger high-impact retail shippers overmutual commitments on volume forecasts, has integrated changing omnichannel retail fulfilmentstrategies into its planning, added more trend data and improved its network utilisation planning.The company has not yet released figures about what peak season volumes it expects.
In addition, UPS will improve the “timely and accurate” visibility of shipments by gettingearlier information about trailer arrivals and load information from large shippers, improveprioritisation of air express, perishable and time-sensitive shipments within its integratednetwork, and introduce the ORION telematics solution, which cuts driving distances and makes routesmore efficient, on 45% of US delivery routes.
One key measure will be to have full ground delivery and pickup operations on the Friday afterThanksgiving rather only air operations as in the past. “We have two new operating days – one by anadditional calendar day between U.S. Thanksgiving and Christmas and another because we will beusing the Friday after Thanksgiving as a full operating day for all UPS services. Historically, we only had air and international deliveries that day and no ground operations. Thatwill position volume for processing through the weekend and the next week’s anticipated increase inwhat has become ‘Cyber Week’,” UPS public relations director Susan Rosenberg told CEP-Research.
Operationally, new, expanded and temporary sorting facilities will go into service and therewill be a 5% increase in overall sorting capacity through 50 additional hub sorts. More temporarystaff will be taken on than usual, there will be significantly more flights, more use of regionalair hubs such as Dallas, Rockford, Philadelphia and Miami, and additional handling space at themain Worldport hub as well as diverse other measures.
On the ground, the company is adding three new fully-automated hubs in Dallas, Richmond (nearSan Francisco) and Laredo (Texas). In Dallas, there are two new sorting centres with 420 workers.Details of the other two facilities have not yet been announced. In addition, UPS is increasing thecapacity of existing facilities. For example, capacity at a facility at Menifee, south of LosAngeles, is being more than doubled at a cost of $17.5 million.
In addition, there will be more regional sorting of air volumes to supplement Worldport, some900 additional trailer parking positions at Worldport and a 10% increase in capacity from ‘mobilevillages’.
“The 10% relates to the additional capacity of delivery centres for package car parkingpositions. These are either temporary facilities erected as 30-60- or 90-car mobile deliveryvillages adjacent or nearby our existing centres or modular units that add temporary belts and carpark positions on to the end of existing buildings,” Rosenberg explained.
“We tested one of these mobile villages last year while a new package automated hub and centrewas under construction in New York (that became operational in November). Then we disassembled andshipped it by rail across country to northern California where it has been operational while wegutted a building to retrofit new automation and processing technologies. It will continue at thatlocation when the building itself re-opens in November.”
Another creative solution will be to set up temporary storage units for staging delivery in somenew or fast-growth suburban residential neighbourhoods. Regular UPS drivers shuttle parcels to thisstorage unit several times a day and seasonal helpers then make local deliveries from these unitson foot or even using golf-carts with mini-trailers.
Communications with shippers and receivers will be improved with web and mobile app upgrades onpackage location and delivery status, enhanced MyChoice status alerts and expanded social mediacustomer support.
