UPS doubles down on automation ahead of peak season

Dive Brief:

UPS is doubling down on automation to boost efficiency as it prepares for a busy peak season, executives said on a call with investors Wednesday.
The logistics provider broke ground last weekend on a "super hub" in Atlanta, which sorts 100,000 packages per hour. In total, UPS is opening 22 automated facilities around the world, either new or retrofitted, that have up to 35% higher efficiency than traditional buildings.
"We're well on our way in building our smart logistics network," Juan Perez, chief information and engineering officer for UPS, said on the call. UPS expects 70% of its ground volumes will be processed through automated facilities by the end of this year.

Dive Insight:

"Our service is strong. We intend to carry that momentum into the peak season period," Perez told investors.

From Black Friday through New Year's Day, UPS is forecasting record demand, and it expects to deliver 800 million packages during this peak season — with 37 million delivered on peak day.

The projection for record parcel delivery correlates to strong expected retail sales this season. The National Retail Federation expects consumers to spend 4.1% more during the winter holidays than they did last year, and holiday retail sales could rise up to 4.8% over 2017.

Automation is one way UPS is planning to handle soaring volumes. "We are bringing online 400,000 pieces per hour of additional sort capacity before the holiday season," COO James Jay Barber said on the call. "This greatly improves our flexibility to manage peak demand."

In addition to technology within facilities, UPS is deploying mobile tools and delivery apps to boost productivity on the road.

Even with significant technology investments and automation in place, "the wave of volume we will manage requires about 100,000 seasonal employees," Barber said.

The company hosted a one-day hiring blitz last week, known as "Brown Friday," to recruit seasonal employees. Barber said the number of applicants went up fivefold that day, and UPS is 60% to 70% of the way to its goal of 100,000 hires.