UPS will be able to park more planes simultaneously and process parcels faster next year once it completes a major modernization at its Kansas City, Missouri, air gateway. The project is made possible by a new lease agreement.
A significant increase in e-commerce business is driving the UPS infrastructure investment in Kansas City, as it is throughout the company.
The express parcel hauler will expand its warehouse ramp at Kansas City International Airport to 534,000 square feet, with five aircraft parking positions — up from the current two — and a complete renovation of the 50,000-square-foot processing facility, according to the airport authority and UPS. New high-speed sorting equipment will increase sorting capacity to 5,000 packages per hour from 1,500 today.
The Kansas City Aviation Department last week finalized a 30-year lease extension with real estate developer Aeroterm, which subleases the property to UPS.
“In addition to the need for additional capacity in Kansas City, the project is also expected to improve service reliability” for northwest Missouri and northeast Kansas. “With packages sorted faster, they’re out for delivery a little sooner,” UPS Airlines spokesman Jim Mayer said.
UPS expects to hire about 60 new employees to help sort packages. The project is scheduled to begin in late October and be completed in the fall of 2021.
UPS launched air operations from Kansas City International in 1986 and now operates six flights per day.
“Expedited transportation in the Kansas City region dates back to the Pony Express days in the 1800s,” said Kansas City Director of Aviation Pat Klein in a statement. “Our central U.S. location continues to be key for air freight operations.”
Global e-commerce sales are projected to more than double to $6.5 trillion by 2023, according to Statista. The Boston Consulting Group estimates U.S. e-commerce sales will double too, to $1 trillion, growing at six times the rate of all retail transactions.
Those projections came before the coronavirus pandemic, which has prompted an explosion in online shopping by people avoiding brick-and-mortar stores because of stay-home orders or fear of being infected by the virus. Best Buy this week reported that e-commerce sales grew 242% from the year-ago quarter and now represent 53% of total sales.
Amazon (NASDAQ: AMZN), is UPS’ largest customer, accounting for almost 12% of UPS’ $74 billion in revenue last year.
UPS is enlarging its fleet of Boeing 767 aircraft, which are well suited for e-commerce shuttle operations, and opening an airport distribution center in Gary, Indiana, in November to keep up with package growth in the Chicagoland area.