UPS Budgets $24M for Five New Airport Freight Hubs

ATLANTA-Planning to use more of its own planes to ship freight weighing more than 150 pounds, locally based UPS Inc. is expanding its freight delivery business. The expansions will take place at airports in Dallas; Philadelphia; Ontario, CA; Rockford, IL; and Columbia, SC. These airports already serve as regional hubs for UPS’ separate small package network.

The estimated 100,000-sf facilities are being developed for $24 million or an average $4.8 million per hub, according to company officials. The expansion will also allow UPS to offer guarantees on overnight heavy-freight shipments in North America as well as second-day and deferred-freight services. UPS has been delivering heavy freight for some time but without a definite time guarantee. The hubs are expected to be ready for business next year.

Although shipping heavy freight has been a small percentage of UPS’ overall business, the company now anticipates the heavy freight component will become a larger revenue contributor than it has in the past, the company says in a prepared statement.

Last year, UPS bought Menlo Worldwide Forwarding, an air freight business in Redwood City, CA that helped UPS expand into time-definite guarantees. At an investor conference in New York City last week, UPS officials said that through the Menlo acquisition, it expects $50 million to $100 million in cost savings in 2006 and at least $200 million in 2007.