UPS expects to hire 50,000 for usual holiday rush

CHICAGO – A telling gauge of the economy’s strength will be the number of packages to zip along the 65 miles of rollers and conveyer belts at the UPS hub in Hodgkins, Ill., this holiday season.

Early indications are traffic will be busy.

Around this time last year, UPS expected to hire 50,000 additional workers nationwide to collect, sort and deliver more than 300 million packages between Thanksgiving and Christmas 2003. Earlier this week, the Atlanta-based company said it expects to hire 70,000 workers to ensure delivery of more than 340 million packages for this holiday season.

UPS gets 50 percent

Package delivery used to be a leading indictor of the prospects for an upcoming holiday season. Yet, with companies having more efficient ordering systems and consumers buying last-minute gifts online, the flow of packages is now more a mirror than a forecaster of the economy.

UPS handles about half of the more than six billion packages shipped annually by air and ground in the United States. Federal Express has 21 percent of the market, followed by the U.S. Postal Service with 19 percent and DHL with 6.5 percent, according to the research firm Colography Group Inc.

In recent years, more packages have been shipped using ground transportation and less by air as companies have tried to slash expenses and package delivery using trucks and trains has become more efficient. While UPS still controls nearly 70 percent of ground package deliveries, FedEx has boosted its standing to 15.7 percent in the first half of this year, from 10.6 percent of the market in 1999, Colography found.

Online spending up 25%

The increasing popularity of e-commerce has boosted package shipments.

“It’s a nice growth component, but it’s still a relatively small piece of UPS and FedEx’s business,” said James Valentine, a freight transportation analyst at Morgan Stanley.

The shipping companies do not estimate how many packages result from consumers completing online orders, but Valentine put the number at “well below 5 percent of their volume.” Those in the industry said business-to-business shipping accounts for roughly 80 percent of the volume.

Holiday spending online is expected to exceed $15 billion this year, up by about 25 percent compared to last year, according to the Internet tracking service ComScore Networks Inc.

At the Hodgkins UPS facility, which covers the area of three dozen football fields, packages from Amazon.com share space on the conveyer belts with the likes of computer equipment, carpets, and Goodyear radial tires .

More than 1.3 million packages pass through the facility every day.

That figure will get closer to 1.7 million as the holidays approach.

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(c) 2004, Chicago Tribune.

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AP-NY-11-11-04 2008EST