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.
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