UPS makes Philadelphia a major airfreight crossroad

Freight moves across the globe in a carefully synchronized dance, and Philadelphia waltzes with the whole world.

Every day, United Parcel Service Inc. flies tens of thousands of packages through Philadelphia, its second largest air hub in the country. Usually, few people take great notice.

International attention did focus on UPS in October 2010, after authorities located bombs in toner cartridges on two cargo planes from Yemen, including a UPS jet, in a terrorism plot that unfolded from the United Arab Emirates to Germany to Britain - and on to Philadelphia.

During that daylong drama, a suspicious package left Yemen on a passenger plane to Dubai, and then was flown on a UPS cargo plane to Cologne, Germany, and switched to a UPS flight bound for East Midlands Airport in England, where on a stopover authorities intercepted the package. The plane continued on to Philadelphia, and ultimately Chicago.

For the 3,100 employees who work at UPS's air hub on the Delaware River, it was all in a day's - and night's - work.

Last week, UPS announced it had reached a deal to buy Dutch package-delivery company TNT Express for $6.77 billion. The acquisition, the largest in UPS's 105-year history, would make UPS the market leader in Europe and further widen the gap between UPS and FedEx, which has a 3 percent market stake in Europe.

Starting at 7 a.m. each day, UPS planes arrive in Philadelphia from Cologne, which is UPS's European hub, and from England and Paris. International flights from Louisville, Ky., stop in Philadelphia heading to Europe, and planes leave Europe, stopping in Philadelphia, bound for Louisville, which is UPS's air headquarters. Each afternoon, flights arrive here loaded with packages from Dallas and Southern California.

UPS is the world's largest transportation company, and the Philadelphia facility - second in size only to Louisville - handles 70,000 parcels and documents per hour. That number reaches 95,000 at peak times like Christmas, with parcels headed to and from 18 states, as far west as California.

UPS owns 212 acres on Hog Island Road, including a 681,000-square-foot sorting building and a 50-acre aircraft ramp, near the main east-west runways at Philadelphia International Airport.

The massive facility is where the City of Philadelphia and the airport want to build a controversial new runway. The city is talking with UPS about relocating to the airport's west side, on a smaller parcel, smack up to a residential neighborhood in Tinicum Township.

UPS says it wants to stay where it is because there is room for expansion. The isolated location does not present as many noise problems for airport neighbors. The proposed new location would have longer taxi times to runways, causing aircraft to burn more fuel. UPS has said that if forced to move, it would consider all options, including moving its airfreight hub out of Philadelphia.

Just before midnight, as passenger terminals and commercial flights are winding down, operations are heating up at UPS. Package sorting largely happens at night. More than 1,000 UPS workers report at 11 p.m. for the "night sort," which continues until about 3 a.m., or until all packages are unloaded and sorted and put back into trucks, trailers, and planes to leave again.

Cargo moves around the world in multiple stops, not one long journey.

At each stop, planes and trucks are emptied, and packages are sorted and scanned, and reloaded on other flights. The network tracks packages on each leg of the trip, in order to maximize the weight and loads, through constant sorting and resorting. While a lot of the work is automated, it requires an army of people, along with bar-code scanners and a city of conveyor belts that crisscross like freeways.

"When packages come in, they need to turn around and leave at a certain time to be delivered the next day," said Paul Angert, manager and industrial engineer. "When you work, you are working very intensely."

Here's what happens on a typical night:

At 10:13 and 10:40 p.m. two planes depart for Louisville and Rockford, Ill., filled with packages for delivery the next morning in the entire country. Later flights in Louisville and Rockford take those parcels on to their destinations.

Starting at 11 p.m., UPS planes arrive here from Connecticut; Pittsburgh; Richmond, Va.; Boston; Syracuse, N.Y.; Manchester, N.H.; Columbia, S.C.; Atlanta; Buffalo; Minneapolis-St. Paul; and Chicago. Packages from those flights are sorted between 11:30 p.m. and 3 a.m. The planes are then reloaded and return to their respective cities - with new packages.

Meanwhile, from 80 to 100 tractor trailers, carrying parcels from a 150-mile radius, drive into the sorting hub, pull into bays, and are unloaded.

A new shift arrives at 3 a.m. to load local packages into brown UPS delivery trucks that head out to area neighborhoods, starting at 8 a.m. The drivers, who wear the familiar brown uniform that gave UPS its slogan "What Can Brown Do for You," bring parcels they pick up during the day to the hub by 5 p.m. The packages are sorted by workers during a "twilight" shift from 6 to 9 p.m.

After a lull, the cycle starts all over again.

"This place at midnight is like a mall on a Saturday afternoon," said Thomas Ward, district sales and marketing supervisor. UPS also has ground delivery hubs in Willow Grove and West Chester; on Oregon Avenue in South Philadelphia; and in Lawnside, Camden County.

While the Internet and e-mail have hurt the U.S. Postal Service's first-class letter business, the package delivery industry is going strong. There is solid demand for shipping products - retail merchandise, car parts, building supplies, Christmas trees, fresh flowers, even live lobsters.

"We handle cheesesteaks, cheese, soda. You'd be amazed," said Jonathan Bonds, assistant chief pilot for flight operations.

UPS's growth is primarily international; deliveries of cargo from one U.S. city to another have not been a source of as much growth for the industry in recent years, analysts said.

"UPS is the bellwether for transportation companies globally," said Jason Seidl, transportation analyst with Dahlman Rose & Co. in New York. "Any time you ship a package, FedEx or UPS, you rarely have concerns about it getting there on time. I have always viewed UPS as a transportation company run by a bunch of engineers, obsessed with constantly tweaking their network to make it more efficient."

The TNT Express deal will give UPS access to TNT's strong networks in Asia and Latin America, boost UPS's global revenues to more than $60 billion, from $53 billion in 2011, and give it 475,000 employees. The transaction will expand UPS's revenue outside the United States to 36 percent of its total, from 26 percent today, and allow it to enter new markets such as Brazil and Australia, Seidl wrote in a client note.

UPS is a company where people often spend their entire careers.

"UPS employees live, eat and breathe UPS, and do it for a long time, do it for their lifetime," said David Campbell, an analyst at Thompson, Davis & Co. in Richmond.

"You start as a truck driver and might end up the CEO. Along the way, you get a lot of shares," he said. "You are a share owner and have the same stake in the company as the investors. It's a long-term commitment by its personnel. The people are expected to join and stay."

Contact Linda Loyd at 215-854-2831 or lloyd@phillynews.com.