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The Honolulu Advertiser
Posted on: Saturday, December 2, 2006

Shippers are increasingly critical to businesses' success

By Ronald D. White
Los Angeles Times

ONTARIO, Calif. — The conveyor belts, nearly 22 miles of them, merge into a single thrumming blur. And the pace of overnight package movement during the 5 p.m.-to-11 p.m. Twilight Sort, which already was difficult to imagine, shifts to another level entirely.

This is the yearly triathlon of the holiday shipping season at places like United Parcel Service Inc.'s Ontario International Airport hub, the Atlanta-based company's second-largest U.S. facility and its West Coast Asian trade gateway.

Altogether, about 1,700 seasonal hires have swelled the ranks, sorting through, loading and delivering packages to more than 40,000 zip codes at a pace that rises from 70,000 packages per hour to 85,000.

On Dec. 20, this year's 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 and DHL — 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. It's a major corporate shift. They are becoming the logistics arms for their customers," said John Husing, an Inland Empire-based economist who focuses on the warehouse and distribution industry.

"The future of American capitalism is doing the things you are good at and contracting out the rest. 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 that is 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 normal 15 million packages a day during non-peak times.

But now UPS needs even more workers because it is assembling customers' products and orders, 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 the UPS Southern California hub, which includes the 48-acre Ontario site and other operations.

"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. Now, we'll add another 605,000-square-foot warehouse by July that will give us about 1.8 million square feet altogether," said James Tagnozzini, director of UPS' Southern California Supply Chain Solutions, from a new 765,000-square-foot complex.

The downside of this burgeoning set of relationships for a company like Illuminations of Petaluma is that there is no warehouse next door that they can walk into at any time. Still, it is finding that a fairly painless transition given the results.

"It makes things quite a bit easier for us. 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," 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. "The outsourcing was a very good decision for us. We needed the expertise in this area."

Brown said that Illuminations will ship in one day during peak season what it normally sells every five days.

To pull off such a shipping surge, warehouses have had to shed the traditional image of workers riding around in old forklifts, armed with clipboards to help with manual searches of the shelves. Instead, the jobs have gone high tech.

Simple forklifts and clipboards have been replaced. Now, the lifts carry wireless computer terminals. And workers, who are paid up to $15 an hour, plus benefits, assemble orders with handheld "RF guns," 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. It's almost mistake-proof," Tagnozzini said.

Simon Wolf, the fifth-generation owner of a 172-year-old business, decided this holiday season to find out what Brown could do for him.

Previously, Wolf had used a third-party warehouse to assemble orders for Wolf Designs, 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, so far, Wolf said. And Wolf's company is getting paid days earlier.