DC Velocity - October 2014

UPS Inc. unveiled after Labor Day a series of operational measures designed to avoid a repeat of the delivery problems that plagued it during last year’s peak holiday shipping season. The moves should also position the company for the rapid and secular changes occurring in shipping habits.

For the first time in UPS’s 107-year history, it will operate a full U.S. air and ground pickup, delivery, and sorting network on the day after Thanksgiving, which this year falls on Nov. 28. In the past, the Atlanta-based transportation and logistics giant has only operated its domestic air-delivery network on that day.

By deploying its full network capabilities on Nov. 28, UPS will gain an additional operating day during what will be, like last year, a relatively compressed peak season. It will also help UPS maintain a more balanced operation throughout the peak period because it will not forfeit a full pickup and delivery schedule, Mark Wallace, vice president of engineering for U.S. domestic operations, said in early September.

UPS this peak season will have 19 delivery days and 18 pickup days (it does not make pickups on Christmas Eve). There were 17 delivery days in 2013. One additional day this year will come by virtue of the calendar. Operating its full network on the day after Thanksgiving will create the second additional day, Wallace said.

GEARING UP FOR CRUNCH TIME

On the infrastructure front, UPS will add about 6,000 of its familiar brown package-delivery cars to its fleet over the peak season, a move Wallace said will boost its package-car capabilities by 10 percent over last year. At Worldport, UPS’s Louisville, Ky.-based primary global air hub, the company will add 900 staging positions for the trailers that bring letters and packages to the 5 million-square-foot facility for sorting and that then deliver sorted pieces to their final destinations. The expansion will increase the number of trailer-staging positions at Worldport to 1,500.

UPS has also built what it calls “mobile distribution cen-
ter (DC) villages” that will function across its U.S. network,
starting with the peak period, Wallace said. The facilities,
which the executive described as “pop-up” DCs, will be
hauled by train to selected sites, assembled, and placed in
operation. The centers come in different sizes, with their
dimensions distinguished by the number of truck dock
doors. A prototype of the largest size, which consists of 90
doors, was used in Queens, N.Y., during last year’s peak
period; it has since been moved to Richmond, Calif., near
Oakland, where it sits today. In the years ahead, UPS plans
to reposition these mobile centers to provide additional
capacity as e-commerce demand warrants, Wallace said.

In the Dallas-Fort Worth metroplex, an increasingly important part of UPS’s network, the company will open a 400,000-square-foot package distribution facility at Fort Worth’s Alliance Airport complex. This facility, set to open by the start of peak season, will be capable of processing 20,000 packages per hour and accommodating 152 package cars. If the complex opens on time, it will have been built in less than a year. Wallace says that it is unprecedented for UPS to construct a fully operational hub from scratch in such a short period. In addition, UPS will open a package pickup and delivery facility with 150 package car positions and 24 dock doors in McKinney, a Dallas suburb.

UPS is also making other investments in anticipation of peak season, according to Wallace. The company plans to significantly increase the number of aircraft available to it during that period, Wallace said, although he would not further elaborate. UPS’s contract truckers that see a lot of action during peak will be equipped with more high-tech tools than ever before, he said. By the start of the peak season, twice as many company drivers as last year will possess UPS’s “On-Road Integrated Optimization and Navigation” (ORION) software designed to direct drivers along the most efficient delivery route, Wallace said.

AVOIDING ANOTHER HOLIDAY DISASTER

The moves will be the culmination of a year of intense planning—and a $500 million investment—following the much-publicized delivery failures that occurred during last year’s peak shipping season. At that time, a deluge of e-commerce shipments, many of which came from online orders placed as late as Dec. 21 and 22, unexpectedly hit UPS’s network, causing millions of holiday packages to be delivered after Christmas.

A number of parcel delivery experts cast the blame for the late shipments on merchants that overpromised on delivery commitments and blindsided UPS with unanticipated volumes. However, the problems gave UPS a reputational black eye and led company executives to vow that such a situation would never happen again.

UPS launches plans to avoid
repeat of 2013 peak-season
problems
go figure …

58%

The percentage of about 6,000 e-commerce shoppers in a recent survey who have spent more than originally planned on an online transaction so they could qualify for free shipping.