UPS to spend $216M on expansion at Memphis airport

Dive Brief:

UPS is set to expand its facilities at the Memphis International Airport in Tennessee, a $216 million project the Airport Authority greenlighted late last week, according to multiple reports.
The expansion, which marks the sixth amendment in the 23-year-old lease agreement, adds 1.1 million square feet of land to the 5.9 million square feet it already leases from the airport. UPS will reportedly use the space for facility support and trailer parking.
The Memphis expansion follows UPS' announcement of a nearly $1.4 billion investment in Pennsylvania, including a new "super hub" in Harrisburg, and FedEx's announcement of its additional $450 million Memphis investment.

Dive Insight:

UPS saw a 22% surge in next-day air shipments in the fourth quarter, despite 2019 being a "difficult year for air freight," according to the International Air Transport Association (IATA). UPS' results show e-commerce has not slowed, emphasizing the importance of developing more synchronized operations, and closer relationships, between ground and air logistics.

UPS cited growth in next day air volume as the reason it plans to add 50 new, converted and leased aircraft to its fleet by 2022. The significant investments in Memphis and Pennsylvania show UPS' commitment to modernization and response to its customers' desires for fast fulfillment and delivery. The Harrisburg, Pennsylvania super hub is meant to speed up the network in the Midwest and Northeast.

Amazon continues to build its fleet, which will help execute one-day shipping, expecting to have a network of 70 aircraft by 2021. FedEx Express' fleet is 678-strong. In March 2018, FedEx announced plans for a large investment to modernize and expand the World Hub in Memphis. After adding $450 million to that investment in August 2019, total investment topped $1.5 billion. The first move FedEx made with that investment came the following October when it filed a $212 million building permit according to news reports,

"Customers are looking to get their product quicker, so the distance between consumers and the product needs to continue to shrink," Scott Sureddin, CEO of DHL Supply Chain North America, told Supply Chain Dive in a recent interview.

FedEx, UPS and Amazon have identified the same part of the U.S. as the right place for a hub. Memphis' central location is a big reason FedEx World Hub is located at the airport (its headquarters has been there since the company launched in 1973). UPS' Worldport is located in neighboring Kentucky at the Louisville International Airport. Amazon aims to open its main air hub at the Cincinnati/Northern Kentucky International Airport in 2021.

UPS declined to share details about its Memphis expansion. "Building permits, leases and other approvals are part of the many initial steps in the feasibility and planning process for any potential facility project," a spokesperson told Supply Chain Dive in an email. The carrier said more details will be available in the next month.