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How UPS, Fed Ex Move 25 Million Packages a Day

Friday, 20 Jan 2012 | 11:48 AM ET

Fed Ex and UPS deliver nearly 6.5 billion packages a year. For perspective, that's about one package for every person on the planet. What's more incredible is that an unbelievably high percentage of them are delivered on time, regardless of weather, distance or size of package.

"Our customers don't care that it's sleeting and snowing," said Fed Ex's Dan Allen, who works on the airline side of the business. "They want their package, and they want it delivered on time tomorrow."

When you first look at the two companies, it's reminiscent of some other high-profile duopolies. Coke and Pepsi. McDonalds and Burger King. Boxers and briefs. They're in similar spaces, and from afar, they might look the same, but they're not.

UPS is more than a century old and has been synonymous with package delivery as America has navigated itself from the industrial revolution to the technology revolution.

AP

Then, there's Fed Ex . Fred Smith founded what was then known as Federal Express decades later in the 1970s.

The company quickly transformed the concept of the overnight delivery. On its first night in business, Federal Express delivered 186 packages. By the late 1990s, Federal Express became Fed Ex, and volume hit 8 million.

In 2012, Fed Ex and UPS have combined revenue of more than $90 billion and process about 25 million packages A DAY.

They do it through a network of hundreds of airplanes, thousands of trucks and hundreds of thousands of employees.

Understanding the scale of execution actually begins at the airport. For Fed Ex, it's an 832-acre complex in Memphis dubbed the "Superhub."

FedEx's Super Scanners
FedEx relies on many types of barcode scanners. We show the most advanced ways of capturing data from and about packages as they make their way through the FedEx network.

The hub is so busy that Memphis International Airport is now the busiest cargo airport in the United States.

UPS' central location is in Louisville, Ky., and is called Worldport. Every night, 125 planes land, unload, re-fuel, re-load, depart ... all within a matter of hours.

Worldport can sort up to 416,000 packages per hour. In a night: 1 million. During peak season, like Christmas, UPS processes 1.6 million packages at the Louisville facility alone.

UPS truck & driver
Getty Images
UPS truck & driver

In case you were wondering, both Louisville and Memphis were chosen because they are about a two-hour plane trip from most of the U.S. and rarely do the cities experience severe weather.

Every night, the planes land and huge containers are unloaded and taken into the sorting center. The packages are scanned and then travel miles on automated conveyor belts. They are mechanically diverted into several directions until finally landing in a bag. That bag finds itself in another container and then back on another plane, headed for it's final destination.

The whole process takes just a few hours, and what's even more impressive: sometimes only two sets of hands touch them the entire time.

UPS Airlines Cuts Fuel Costs
UPS saves millions of dollars each year in fuel costs using technologies to make their fleet more efficient.

And when you watch the packages stream by at one in the morning, it's easy to see where the growth is: Online retail.

Boxes branded with Wal-Mart, Dell, Hewlett Packard ... Amazon.

"They comprise a lot of our business," said Mike Nepaul, who runs Worldport for UPS. "We'll probably do about 20-40 percent of their volume here, depending on the day."

And during peak times like the holidays, the nightly sort brings added pressure. Mistakes mean presents don't get delivered.

"It's about twice the freight, so I'll say it's about twice the stress," said Chuck Bryson who uses remote controls and more than 250 cameras to route packages throughout the Fed Ex facility in Memphis.

No matter the stress level surrounding the 25 million combined packages delivered by the two shipping giants, the goal is to make customers notice one thing: an on-time and un-damaged delivery. And more than 99 percent of the time, that is the case.

Follow Brian Shactman on Twitter: @bshactman

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  • Shactman joined CNBC in 2007 as a general assignment reporter and fill-in anchor for CNBC's business day programming.