How Overnight Shipping Works

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11:14   |   Feb 13, 2018


How Overnight Shipping Works
How Overnight Shipping Works thumb How Overnight Shipping Works thumb How Overnight Shipping Works thumb


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  • Overnight shipping is an absolute masterpiece of logistics that happens every single
  • night.
  • It may not be cheap, but you can get a package shipped from Miami, Florida on a Monday
  • night to Anchorage, Alaska, by 8:30 AM on Tuesday.
  • In fact, you can even ship a package, for example, from Edinburgh, Scotland on a Tuesday
  • and have the package arrive in Anchorage, Alaska by 9am on Wednesday.
  • The speed and efficiency of these worldwide delivery networks is
  • mind-blowing and it all happens while we sleep.
  • The three major consumer courier companies are FedEx, DHL, and UPS and each is as
  • impressive as the last.
  • FedEx has more planes than Emirates, Etihad, and Qatar Airways
  • combined; DHL delivers to every country in the world including North Korea; and UPS flies
  • to more than double as many destinations as the
  • largest passenger airline.
  • Each has a global network that allows for lightning fast shipping
  • at relatively low prices.
  • Behind all this speed are enormous air networks that connect the entire
  • world daily.
  • Each of these three operates hundreds of flights nightly, but FedEx is the best
  • example since their operations make them the largest
  • cargo airline in the world.
  • They have 650 planes flying to 400 destinations carrying 6 million
  • packages every single day and the vast majority of these flights operate to or from one of
  • their hub airports.
  • FedEx’s hub airports are spread out all across the world and serve as sorting points
  • where packages are transferred from one plane to
  • another.
  • They has hubs in Singapore, Guangzhou, Shanghai, Seoul, Osaka, Anchorage, Oakland,
  • Dallas, Indianapolis, Greensboro, Miami, Newark, Toronto, Paris, Cologne, Milan, and Dubai,
  • but the most important hub of all is the one in
  • Memphis, Tennessee because that’s their SuperHub.
  • Memphis is not a huge city—only about 650,000 people live there—but the reason FedEx
  • centers their worldwide operations in this city is because of it’s location.
  • Memphis is not actually in the geographic center of the US as might
  • make sense, but it is central.
  • You see, only about 200 miles away in Wright County, Missouri is the
  • mean population center of the US.
  • This is the average location of every resident in the
  • US meaning that the FedEx SuperHub in Memphis is
  • the best location to reach the most people in the shortest amount of time.
  • For similar reasons, UPS has their equivalent global hub, Worldport,
  • nearby in Louisville, Kentucky.
  • The scale of FedEx and UPS’ operations in these relatively
  • small cities is staggering.
  • This is the size of the commercial terminal at Memphis Airport while
  • this is the size of FedEx’s Superhub.
  • The difference at Louisville airport is even more
  • pronounced where this is the commercial terminal and this is UPS’ worldport.
  • You can’t even fly to the west coast non-stop on a commercial airline
  • from Louisville and yet UPS flies from this small city to five different continents.
  • FedEx’s operations in Memphis, meanwhile, make this
  • airport the second busiest cargo airport in the
  • world above those of enormous cities like Tokyo, Paris, Dubai, Shanghai, and falling
  • short only to Hong Kong.
  • How the FedEx superhub really works is that every night, about 150 planes fly in from
  • all around the world between the hours of 10pm
  • and 1am.
  • Immediately upon arrival, the planes are unloaded and their packages are put into the
  • hub’s automated sorting system.
  • Within only 15 minutes, each package arrives at a staging
  • area for its next flight where it’s loaded into
  • containers.
  • Planes therefore can start taking off again at 2am and continue to until 4am which
  • means that everywhere in the US can have a FedEx plane arriving by 6am, but there are
  • some destinations that don’t ship enough packages
  • to need a non-stop flight to Memphis.
  • To get to small towns fast, FedEx runs flights in small
  • propeller aircraft from the destinations of their
  • larger jets.
  • Presque Isle, Maine, for example, is far too small of a town at about 10,000 residents
  • to fill a full-size plane so, every morning, once the larger planes from Memphis arrive
  • in Manchester, New Hampshire and Portland, Maine,
  • packages bound for Presque Isle are sorted into smaller prop planes that continue north.
  • With this system, even small towns like Presque Isle
  • get their packages by 9am as every spoke in the system essentially functions as a mini-hub.
  • Packages are transferred from planes, to smaller planes, to trucks to reach their destination
  • as fast as possible.
  • Now, it’s important to note that not every FedEx package runs through Memphis.
  • That would be incredibly inefficient if a customer
  • wanted to, for example, ship a package from Phoenix, Arizona to Seattle, Washington.
  • While only 1,100 miles separate Seattle from Phoenix,
  • a routing through Memphis would total over 3,000 miles and six hours in flight.
  • The package would still make it overnight, but FedEx would
  • be wasting fuel carrying that package an extra 1,900 miles, so that’s why they have secondary
  • hubs.
  • In this case, FedEx’s Oakland hub has flights to both Phoenix and Seattle so the
  • package would take a relatively efficient 1,300 mile
  • routing.
  • Memphis essentially serves as the backup hub in case there’s not a more efficient
  • routing.
  • The secondary hubs, such as Oakland, in general have flights to destinations that are
  • already served by flights to Memphis, but the destinations from Oakland are high demand
  • destinations that will ship enough packages solely to the west coast to fill entire planes
  • to Oakland.
  • Some destinations, such as Albuquerque, New Mexico, ship enough packages to fill
  • entire planes to Memphis, but not enough to fill flights to Oakland with west coast bound
  • packages so a package shipped from here to the west coast would likely take a rather
  • inefficient routing backtracking to Memphis.
  • But FedEx’s most ingenious hub is here in Anchorage, Alaska.
  • Anchorage, with fewer than 300,000 residents, is home to the forth
  • busiest cargo airport in the world.
  • This is, once again, thanks to geography.
  • If you draw a straight line from FedEx’s Memphis hub to the one in
  • Osaka, taking into account earth’s curvature, it goes directly over Anchorage, Alaska.
  • This airport is just the perfect stop-over point
  • for flights from the US to Asia.
  • Now, dozens of cargo airlines operate in Anchorage but most of
  • them just use the airport as a refueling and crew swap
  • spot.
  • Modern airplanes can fly non-stop from the contiguous United States to Asia, but doing
  • so requires taking more fuel which requires taking
  • less cargo.
  • It’s just cheaper to stop in Anchorage, but FedEx and UPS use the stop for something
  • else—sorting.
  • If FedEx wanted to maintain current shipping times without the Anchorage
  • hub, they would likely have to run non-stop flights
  • from each of their Asian hubs to each of their American hubs, but they just don’t have
  • the demand to fill this many planes.
  • Instead, they run flights from their Asian hubs to Anchorage
  • then flights from Anchorage many of their American hubs.
  • While stopped in Anchorage, packages from Asia are processed through customs
  • and sorted to be put on the plane bound closest to their destination.
  • This helps cuts down on shipping time and cost.
  • Shipping is an incredibly price-sensitive business.
  • These courier companies rely on enormous contracts with retailers and, when
  • some of these retailers are shipping millions of
  • packages per day, every cent matters.
  • In a lot of ways, however, the express shipping model is
  • inherently expensive largely because of how couriers use their most expensive assets—planes.
  • So much is centered around those few sorting hours at the big hubs so FedEx’s planes
  • all have to wait around to arrive at the exact right moment.
  • Some FedEx hubs, such as Memphis, do sort packages during the day, but the overwhelming
  • majority of their business happens overnight.
  • FedEx’s flight from Memphis to Oklahoma City, for example, leaves at 4am and arrives
  • at 5:20am, but then the plane waits around until
  • 10:10pm to fly back to Memphis.
  • That’s over 17 hours sitting in Oklahoma City and, on that
  • route, the plane is only flying for about two hours per
  • day.
  • Meanwhile, commercial airlines regularly fly their planes for more than 12 hours per day
  • meaning they have six times higher aircraft utilization.
  • FedEx would never be profitable if they bought all new multi-hundred million dollar
  • aircraft to use for mere hours per day, so they don’t.
  • Overwhelmingly, FedEx and other cargo airlines use old aircraft at the end of their lives.
  • You’ll almost never see Airbus a300’s flying for
  • passenger airlines anymore, yet FedEx, UPS, and DHL
  • collectively own hundreds of them because they’re cheap.
  • They didn’t spend much purchasing these aircraft, so they don’t have to worry
  • about using them enough to offset their cost.
  • UPS does have some brand new 747-800 aircraft, which
  • are highly efficient, but they specifically schedule
  • these planes on their longest routes so that they can recuperate their high purchase price
  • through lower fuel costs.
  • With older aircraft, fuel costs might be higher since the planes are less efficient,
  • but overall it’s worth it since it allows FedEx to profitably leave their planes sitting
  • for all but a few hours each day.
  • Some passenger airlines, such as Allegiant Airlines in the US, uses the same
  • strategy purchasing cheaper planes to allow them to fly fewer hours per day profitably
  • and its now a tested and proven business strategy.
  • Express shipping is one of those businesses that requires enormous networks to make
  • work which is why you don’t see small shipping companies.
  • It’s almost impossible to get started in this business unless, of course, you can
  • make your own demand.
  • Amazon, which ships more than a million packages per day, is getting
  • into the delivery business.
  • They’ve established a fleet of 32 aircraft and are building out their
  • logistics network.
  • When shipping so many packages, Amazon is operating at a scale where they
  • can profit by taking the shipping companies out of the
  • equation.
  • FedEx, UPS, and DHL, meanwhile, are continuously focusing on further increasing the
  • efficiency of their networks since in this business more than any, time is money.
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