UPS bulks up for holiday rush
The conveyor belts, nearly 22 miles of them, merge into a single thrumming blur. And the pace of overnight package movement during the 5-to-11 p.m. Twilight Sort, which already was at a frantic pace, shifts to another level entirely.
This is the yearly triathlon of the holiday shipping season at places such as United Parcel Service Inc.’s Ontario International Airport hub, the Atlanta-based company’s second-largest U.S. facility and its West Coast gateway to trade with Asia.
Altogether, about 1,700 seasonal Southern California hires have swelled the ranks at the facility to 6,200 workers, sorting through, loading and delivering packages to more than 40,000 ZIP codes at a pace that rises to 85,000 packages an hour from the facility’s usual 70,000.
On Dec. 20, this year’s expected peak delivery day, UPS estimates its worldwide network will handle a record 21 million boxes filled with pineapple cilantro votive candles, limited edition Santa ornaments and the like. In all, the big three in the overnight delivery world -- UPS, FedEx Corp. and DHL, a unit of Deutsche Post -- will move nearly 33 million packages on their peak days.
“While the rest of the country is settling for the night, we’re just starting to roll,” said Bob Benavidez, UPS ramp training manager.
The race to the holidays has become even more challenging as more and more business customers give up their own warehouses and use hubs operated by UPS, the world’s busiest delivery service, as staging areas for their products.
“This is the fastest-growing part of the overnight shipping business, especially during peak season,” said John Husing, an Inland Empire-based economist who focuses on the warehouse and distribution industry. “It’s a major corporate shift. They are becoming the logistics arms for their customers.
“The future of American capitalism is doing the things you are good at and contracting out the rest,” Husing said. “Why run a distribution operation when what you are really good at is making scented candles?”
It’s a twist on the flurry of activity during the peak retail shipping season for overnight delivery companies. In years past, companies such as UPS would ramp up with thousands of temporary workers who would help sort packages, make deliveries or assist drivers. That still happens. Worldwide, UPS will add 60,000 seasonal workers as it expands its business by more than one-third from the 15 million packages a day it handles during non-peak times.
But now UPS needs even more workers because it is assembling customers’ products and orders as well as labeling and packaging them for shipment, a business it calls Supply Chain Solutions. Launched in 2002, the warehousing operation was expanded to Southern California last year.
The change has meant massive growth at UPS’ Southern California operation, which includes the 48-acre Ontario airport hub and support facilities.
“We had another building that was about 400,000 square feet and we have blown out of that space completely and needed a bigger footprint,” James Tagnozzini, director of UPS’ Southern California Supply Chain Solutions, said at a new 765,000-square-foot Mira Loma complex that has encroached so deeply into farm country that its offices are lined with indoor bug zappers to thin out the flies. “Now, we’ll add another 605,000-square-foot warehouse by July that will give us about 1.8 million square feet altogether.”
The downside of this set of relationships for a company such as Illuminations of Petaluma, Calif., is that there is no warehouse next door that they can walk into at any time. Still, it is finding that a fairly painless concession given the results.
“It makes things quite a bit easier for us,” said Sue Brown, director of logistics and inventory control for Illuminations, which sells scented candles and a variety of household decorations through retail stores, catalogs and online. “We don’t have to manage extra labor for the holidays. UPS does that for us. We don’t have to manage a warehouse. UPS does that for us. The outsourcing was a very good decision for us. We needed the expertise in this area.”
Brown said that Illuminations would ship in one day during peak season what it would normally sell every five days.
To pull off such a shipping surge, warehouses have had to shed the traditional image of workers riding around in old-style forklifts, armed with clipboards to help with manual searches of the shelves. Instead, the jobs have gone high-tech.
Now, the forklifts carry wireless computer terminals. And workers, who earn as much as $15 an hour plus benefits, assemble orders with hand-held radio-frequency devices that precisely guide “order pickers” along the shortest routes among the shelves to every item on each order.
“We call it a cluster pick,” Tagnozzini said. “It’s almost mistake proof.”
On one recent day, for example, 19-year-old warehouse worker Evaristo Salgado had a daunting task. He needed to accomplish in less than one hour what used to amount to nearly four hours of work: assembling products for 15 separate customer orders, including replenishing a retail store’s stock.
“I make one pass through the warehouse and get everything for all of those orders,” Salgado said. “It makes my job much easier.”
Some who are hired for the seasonal work wind up staying with UPS, which touts itself as a place where employees can start at the bottom and spend their entire careers with the company.
One of those who joined during the holiday rush 10 years ago was Michelle Page Dossey, who remembers that “I did it for two years and it just about killed me. I lost 15 pounds doing it. I lost all the baby fat.”
Dossey was a waitress and student who needed more money and health benefits for her 9-month-old baby. Now, Dossey works as a communications supervisor for UPS in Southern California.
“It taught me things I needed to know about life,” she said. “It really toughens you up.”
Simon Wolf, the fifth-generation owner of a 172-year-old business, decided this holiday season to find out what UPS could do for him.
Wolf previously had used a third-party warehouse to assemble orders for Wolf Designs Inc., which sells leather goods, watch rotators, jewelry boxes and other items for high-end department stores and jewelry stores. But the warehouse operator needed three days to put the orders together and too often shipped out the wrong items, he said.
UPS has been shipping orders the same day -- without errors, Wolf said. And Wolf’s company is getting paid days earlier.
“My customers expect a high level of service and now I have raised my bar a little,” said Wolf, whose Malibu-based company sells about 60% of its products during the holiday rush. “My brand looks better because of my relationship with UPS.”
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Santa’s helpers
Number of packages each provider expects to deliver on its busiest day of 2006
(In millions)
U.S. Postal Service: 25
UPS: 21
FedEx: 10
DHL: 2
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Sources: The companies
