UPS Sparks Outrage: Shocking Closure of 200 Sort Centers Over the Next Five Years

UPS has unveiled plans to shutter 200 sort facilities over the next five years in a bold leap toward automation, bigger profits and fewer workers

According to an in-depth report from Freight Waves

  • The optimization plan, code-named Network of the Future, is expected to save $3 billion per year by 2028 through better productivity, according to a new strategic framework outlined by management on Tuesday. 
  • UPS estimates modest growth in 2024 to 88 million packages, rising to a daily volume of 98 million in two years, on a compound annual growth rate of 5.5%. International small package growth will be nearly flat this year but grow at a 3.5% annual rate to 30 million units in 2026.
  • UPS has 63 automation projects targeted between now and 2028 that will more than triple the number of buildings with automation to 400. In the U.S., the vast majority of the automation projects will be completed in existing buildings. Ten of those automation projects are new builds. Overall, UPS is investing $9 billion in network upgrades.
  • “Every single work area is being scrutinized for automation opportunities, not just our sortation hubs,” said Cesarone. Technologies being introduced include automated address correction and delivery redirection, automated dispatch for package car drivers and feeder operations, and affixing pre-load assist labels to packages. Automated loading and unloading of trailers is being pilot tested.
  • Also acting as a potential revenue drag is a capacity surplus equivalent to average daily volume of 12 million packages across the industry after e-commerce and delivery companies ramped up infrastructure to meet shelter-at-home demand during the pandemic. The company is doing its part to bring supply into equilibrium by closing 70 conventional sorting facilities in 2023 and 2024 and flowing more volume into automated facilities, said Nando Cesarone, president U.S. operations. By 2028, UPS will close 200 facilities and consolidate operations in high-capacity spaces.
  • In Worcester, Massachusetts, UPS is replacing a facility built in 1969 with a larger one that will allow work from four regional facilities to be consolidated in one place, reduce network touches and improve utilization. Another example of network simplification is in Albany, New York, where the integrator is modernizing a facility to increase capacity, which will allow it to close another site.
  • In Harrisburg, Pennsylvania, UPS has closed 15 sort centers and reduced staffing, resulting in 60,000 fewer packages being physically handled per day. The less a parcel is dumped out, shuttled through a conveyor system and swept into bins, the less chance of damage. Together, area savings amount to $80 million.

In conclusion, UPS's decision to close 200 sort centers as part of its automation drive reflects a broader trend towards increased efficiency and profitability in the industry. This situation epitomizes typical Wall Street behavior, where corporate decisions aimed at maximizing profits often come at the expense of employees and community stakeholders. As UPS and other companies continue to prioritize automation and cost-cutting measures, it remains essential to consider the broader implications on job security, economic stability, and societal well-being.

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