Package Carriers Building Up for E-Commerce Delivery
UPS, FedEx are adding bigger parcel hubs for faster distribution for online retailers
UPS will spend $400 million on a single package hub outside Atlanta. Above, a company handling site at Miami International Airport.PHOTO: BLOOMBERG NEWS
Parcel delivery companies are getting closer to online retailers—literally.
The package-delivery operations at FedEx Corp. and United Parcel Service Inc. have been opening more and larger sorting facilities that are readily accessible to their customers—shortening the often time-consuming first leg of a shipment, from e-commerce fulfillment center to shipping hub.
This week, UPS announced plans to open its third-largest facility yet, part of a “multiyear” investment plan to expand and modernize its network. Located near the Fulton County Airport-Brown Field just outside Atlanta, the $400 million, 1.2-million-square-foot distribution center will be highly-automated and capable of handling more than 100,000 packages an hour, according to a company statement.
The addition comes as FedEx’s Ground division has added more than 12 million square feet of package-sorting space since last year, including four major distribution hubs and 19 fully-automated facilities. One hub FedEx Ground opened outside Pittsburgh in September is 300,000 square feet and uses automated systems that can handle 15,000 packages an hour.
The two company’s ground operations, along with the U.S. Postal Service, are the delivery businesses that are growing most rapidly from the surge in online sales.
“It’s been a growth story,” said Perry Colosimo, a spokesman for FedEx Ground. For fiscal year 2017, FedEx Ground plans to invest $2 billion on real estate, facilities and handling equipment. The new facilities “are designed for high-throughput sortation, minimized handlings, and more direct loading that will increase the speed, efficiency and reliability,” Mr. Colosimo said.
“E-commerce is causing a change in supply chains, where bigger shippers want to drop their shipments deeper into the delivery networks rather than go through many different stops and through big hubs,” Mr. Jindel said. “That way the final delivery is faster and more dependable. Service problems in parcel delivery usually come not in the destination city but in the cities that packages must go through to get to their final destination.”Satish Jindel, president of industry research firm SJ Consulting Group Inc., said the new, larger parcel facilities allow high-volume shippers like Amazon.com Inc. to bring more packages to delivery hubs closer to customers, allowing for faster delivery.
Automation helps the parcels move more quickly through the distribution center, Mr. Jindel added. “Instead of Amazon delivering packages to 15 different post offices in Pittsburgh to get overnight delivery, they can go to one FedEx facility and get the same service,” he said.
