UPS breaks ground on Centennial Hub expansion

Transportation and logistics titan UPS last week announced it has broken ground on the expansion of its Louisville, Ky.-based Centennial Hub.

This facility was established in 2007. It provides pickup and delivery operations for shippers in Louisville and surrounding counties and also serves as a transfer point for trailers moving to locales outside of Kentucky, according to UPS, with the company adding that with the facility close to the UPS Worldport air hub at the Louisville International Airport it also supports “end of runway” express service by allowing packages to be inserted into Worldport air operations up to 1:30 AM.

And this $300 million expansion will triple the Hub’s size to 838,000 square-feet and almost double its current sorting capacity to 85,000 packages per hour, coupled with the creations of 300 new full- and part-time jobs.

“We are excited to have construction underway,” said Lou Rivieccio, president of UPS’s Ohio Valley District, in a statement. “This project is a win for everyone involved. It will benefit our customers, generate jobs, and enhance economic development in Louisville and the surrounding region. “Centennial offers UPS customers the advantage of being at the center of the world’s largest package delivery company. It is one of UPS’s most important facilities.”

UPS said that the expansion will occur in three separate phases through 2020. Other facets of the expansion include modernizing its conveyor technology, enhancing the flow of packages through the building and increasing accuracy during sorting, with automated conveyors moving packages through the sorting process and capturing data used to route packages to the proper location for loading on outbound vehicles. UPS said it is not speaking specifically to the phases, but noted it plans to have the building fully and running by 2020, with incremental improvements along the way.

The hub’s sorting capacity when it first opened was 40,000 packages per hour, and with this expansion’s enhanced technology, UPS said capacity will more than double to 85,000 packages per hour. The technology upgrades include six-sided decode tunnels replacing traditional scanning technology to capture package information from address labels, and label applicators placing “smart labels” on packages for local delivery that provide UPS loaders with faster instruction of a package’s proper staging location in a UPS vehicle prior to transport. UPS said this improves accuracy and package integrity and also cuts down on transit time for customers.

UPS Air Public Relations Manager Mike Mangeot told LM that given Centennial’s location in Louisville and proximity to Worldport, the facility is at the center of UPS’s global transportation network.

“To be at the heart of our system, more than 150 customers have moved their business or a major distribution center to the Louisville region,” he said. “This represents about 12,000 jobs and $300 million in annual payroll.”

Centennial allows those customers’ air express shipments to enter the UPS network, with UPS running several truckloads between the two facilities per day. What’s more, Mangeot said UPS’s regional customers also have shipments that travel via its ground services, with Centennial the touch point for those shipments, too.

Being based in Louisville offers up myriad benefits as a transportation hub, including: proximity to U.S. population centers; reaching 75% of the US population with a two-hour flight; 95% within four hours’ of flying; and about 2/3 of the US population within a two-day drive.

“The continued growth of Louisville as a logistics and distribution center necessitated tripling Centennial Hub’s footprint and doubling its sort capacity,” he said. “It’s also worth noting that Centennial is part of a broader effort to expand and automate UPS facilities around the world. For example, we’re investing $2 billion to increase capacity in Europe from 2014-2019. Our customers will benefit from greater access into the UPS network. The expansion and automation will double our sort capacity at Centennial. It will also improve sort accuracy and help improve package integrity.”