UPS, FedEx and Amazon hustle parcels amid holiday bustle
Shipping companies expected to deliver more than 2 billion packages this season
Steven Hennigan zips around the airport cargo ramp in his white Chevy Tahoe, surveying freight planes from FedEx, DHL and Atlas Air waiting to be loaded with thousands of packages.
The holidays are a busy time for the assistant general manager of operations at George Bush Intercontinental Airport, which serves as the primary hub for air freight in Houston. The Houston Airport System typically sees a 20 percent increase in cargo air traffic during the holidays, with some shipping companies tripling and quadrupling the number of flights during peak season.
“We’re here to make sure everyone gets their presents by Christmas,” Hennigan said.
The Monday before Christmas is typically the busiest day for couriers charged with delivering millions of packages sent by last-minute shoppers turning to e-commerce for gift-giving salvation. Americans spent a record $28.4 billion online during the five-day Thanksgiving shopping weekend, including $9.4 billion on Cyber Monday, a nearly 20 percent increase from last year, according to Adobe Analytics, a data firm tracking online holiday sales.
The holiday surge in online shopping translates to a deluge of package deliveries. Shipping companies are expected to deliver more than 2 billion packages this holiday season.
UPS, the Atlanta-based shipper, forecasts handling 1 billion packages this holiday season, up 10 percent from last year. Federal Express of Memphis, Tenn., projects approximately 510 million deliveries, up nearly 22 percent from last year. The U.S. Postal Service anticipates 800 million packages, down 11 percent from last year.
Amazon steps in
Amazon, which launched its own air freight service in 2016, has become a serious competitor to traditional couriers UPS
and FedEx as it builds out its distribution network. The e-commerce giant earlier this year announced plans to operate 70 planes in its Prime Air network by 2021, up from its current 50 aircraft. The Seattle company in October opened a regional facility at Fort Worth Alliance Airport to support one-day and two-day package delivery in Texas.
On a recent Friday morning, a blue, black and white-colored Prime Air plane could be seen on the Bush Airport cargo ramp, unloading packages from freight containers onto dollies, which were then transported to an on-site sorting facility and loaded onto Amazon-branded delivery trucks bound for the Houston area and beyond.
Although Amazon ships fewer packages than UPS and FedEx, its parcel volume is expected to surpass the shipping giants by 2022, according to a Morgan Stanley analysis. Nearly half of the purchases made on Amazon today are shipped by the company’s logistics network.
Competition has become heated, especially between longtime partners Amazon and FedEx.
FedEx in June announced it would not renew a contract with Amazon to provide express delivery, and earlier this month, Amazon banned third-party sellers from shipping Prime orders with FedEx Ground and Home.
The impact has already been felt — the shipping giant lowered its forecast for its 2020 earnings, citing the loss of Amazon as a “large customer,” and in the quarter ended Nov. 30 reported net income of $560 million on revenue of $17.3 billion. Net income fell 40 percent while revenue fell by nearly 3 percent year over year.
Expansion discussed
As many as three dozen cargo planes are landing daily at Bush Intercontinental Airport this week as shipping companies rush to deliver packages before Christmas.
Bush Intercontinental Airport has two cargo ramps that can park 28 freight planes. At times, the cargo ramps are so packed with planes, some aircraft have to be parked on the taxiway next to the ramps, said Elizabeth Knouse, an airside operation supervisor. The airport is talking about adding a third cargo ramp, although no definitive plans have been made yet.
“We get a major increase in traffic this time of year,” Knouse said, adding peak season lasts from mid-October through the end of January, after all the returns are shipped back to retailers.
The Houston Airport System last year handled 540,000 metric tons of cargo, an 18 percent increase from the previous year. The increase in air freight was led by e-commerce, followed by industrial equipment for oil and gas companies and medical equipment.
Hennigan, Bush airport’s assistant general manager, said he’s seen everything from helicopters to horses being loaded onto planes.
“It’s kind of like Forrest Gump’s box of chocolates,” Hennigan said. “You never know what you’re going to get.”