Consultant Insight: FedEx, UPS beef up air operations at North American airports

Growth in e-commerce continues to spur upgrades and expansions of FedEx and UPS facilities at various North American airports. Since July, the two integrators have announced several new projects and have opened new and expanded facilities across North America; some projects begun before the pandemic have now set the express companies up to thrive during a period of rapid e-commerce growth. [caption id="attachment_69752" align="alignright" width="298"] Cathy Roberson, Cargo Facts Consulting senior consultant and Air Cargo World columnist[/caption] UPS Canada opened its largest package sorting and delivery facility in Caledon, Ontario, about 25 miles from the Toronto Pearson International Airport (YYZ), just in time for the holiday season. The facility comprises 850,000 square feet and features advanced scanning and sortation technology integrated with data-driven tools to increase efficiency and reliability. Also open in time for the holiday season is FedEx Express Canada’s new small-package sorting facility in Etobicoke, near Toronto. The facility handles smaller e-commerce shipments, and has the capacity to sort up to 20,000 small e-commerce shipments per hour, 24/7. In the United States, UPS announced in August that its facility at Kansas City International Airport (MCI) is being renovated in a project that includes expanding the ramp from two aircraft parking spots to five. The new ramp will be 534,000 square feet. FedEx opened its new ramp operation at Ontario International Airport (ONT) in California on Nov. 19. The company’s 59.5-acre site at the airport includes a 251,000-square-foot, two-story facility that can automatically sort up to 12,000 packages per hour. It will have 490 employees, nine widebody aircraft gates, 14 feeder-aircraft gates, and 18 truck docks. Last month, FedEx Express opened a 203,771-square-foot distribution center in Leon, in the central Mexican state of Guanajuato, where it plans to expand its air hub at Toluca International Airport (TLC) by 43,056 square feet. While peak season volumes for UPS and FedEx will not be known until the companies’ quarterly earnings reports, results for the prior quarter suggest these new facilities will accommodate increased volumes this holiday season. For the quarter ending Aug. 30, FedEx Express reported average daily volumes for U.S. domestic packages were up 8% while total average daily packages were up 5%. For fiscal year 2020, June 1, 2019, through May 30, 2020, average daily volumes for U.S. domestic packages increased 2.9% while there was no change in total average daily packages. Year to date through Sept. 30, UPS’ average domestic U.S. package volume from its U.S. Next Day Air packages are up 6.6% compared with 22.5% for the same period from 2018 to 2019, while U.S. deferred package volumes are up 14.4% year to date in 2020. In 2019, U.S. deferred package average daily volumes were up 13.3%. Year-to-date through Sept. 30, total International average daily package volume are up 6.6% compared with a 0.4% decline in 2019. Through Sept. 30, U.S. e-commerce volume is up 36.7% year over year. “E-commerce sales are now projected to make up more than 20% of all U.S. retail sales this year,” UPS CEO Carol Tome said. “We don't think the penetration of e-commerce retail sales will decline, even after the pandemic.” For FedEx’s part, “Pre-COVID, we projected that the U.S. domestic market would hit 100 million packages per day by calendar year 2026,” said Brie Carere, executive vice president, chief marketing and communications officer at FedEx on the company’s most recent earnings call. “We now project that the U.S. domestic parcel market will hit this mark by calendar year 2023, pulling volume projections forward by three years from the previous expectation.”

Consultant Insight: FedEx, UPS beef up air operations at North American airports

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