For decades, Memphis was known mostly as a sleepy mid-South city that had good barbecue, Beale Street and Elvis Presley’s home, Graceland. But today, it’s quickly becoming the primary beneficiary of the rise of web-based retailing.
In the latest round of good news for the western Tennessee city, United Parcel Service announced that it will nearly double the size of its sorting facility at Memphis International Airport, which already is the primary hub for FedEx and is the second busiest air cargo hub in the world after Hong Kong.
UPS, which is headquartered in Atlanta, will spend more than $70 million and hire more than 100 new employees as part of the expansion, which will serve part of the parcel carrier’s ground delivery fleets. It will add about 140,000 square feet of building space, bringing its total in Memphis to 430,000.
High Tech Facility
When it is completed in early 2016, the facility will improve processing rates and increase capacity thanks to its expanded use of next generation sorting technology.
UPS spokesman Dan Cardillo said the primary driver behind the expansion was the increase in the number of packages the carrier handles as a result of the rise in online shopping.
“The increase in volume in the Memphis area drove this expansion,” Cardillo told Logistics Management. “This is largely a produce of e-commerce in the form of more business-to-consumer shipments. Memphis attracts major shippers because its infrastructure facilitates the easy movement of goods in and out of the area. We continuously monitor the growing needs of our customers and make projections to meet that demand. This planning process started well over five years ago.”
Some Enhancements by the Holidays
While the total expansion won’t be completed for another two years, some improvements will be in place as early as November as the carrier prepares for the peak holiday shipping season.
“UPSers at this facility can sort and load more volume than before,” Cardillo said. “The facility can also process more packages destined for other UPS distribution locations. This enhances thoughput in the broader UPS network.”
Compensates for Fewer Commercial Flights
The news comes not a moment too soon for airport officials, who have been scrambling to find ways to make up for the erosion in passenger service. Memphis International handled about 300 passenger flights per day in 2000, but has less than 100 per day now. Last September, Delta Air Lines dropped 64 flights on peak days and stopped calling Memphis a hub.
Larry Cox, the airport’s CEO, said UPS expansion is not just good news for the airport, but for the city as well.
“Competition is always good, and they’re fierce competitors,” Cox told the Minneapolis Star-Tribune. “Memphis is such an important logistics hub, they have to be as strong as they possibly can here.”
Even with the expansion, FedEx still remains the biggest player at the Memphis airport. Its FedEx Express world hub there handles 99% of the air freight moving through the airport.
The UPS Memphis hub handles package volume for most of the Deep South. It currently has 1,300 employees and is located on 83 acres adjacent to the airport.