For UPS, a golden opportunity at Golden State sorting hub

As part of a $500 million capacity expansion and hub modernization program unveiled in January 2014, UPS late last year installed automated sorting technology at its North Bay distribution facility in Richmond, Calif.

The world’s largest package delivery company and railroads’ biggest intermodal customer chose the North Bay hub as one of the program’s early candidates — which also included a distribution center in Memphis, Tenn. — in part because of rail. Served by BNSF Railway Co., the San Francisco Bay-area facility features an on-site intermodal ramp and relies on rail to handle a large chunk of parcel volume transported throughout California and to many points east of the Rocky Mountains, including Chicago.

The modernization work in Richmond began in early March 2014 and was completed in early November 2014, prior to the peak parcel-shipping season. The hub now features UPS’ next-generation sorting and scanning equipment, which is designed to increase the efficiency of package processing by reducing human error and minimizing the number of times a parcel is handled.

A UPS employee unloads a package at the start of the sorting process and the facility’s automated system then scans and reads data on a label affixed to a package, and moves it automatically throughout the sorting cycle. A parcel then is carried to a dock area, where another worker loads it onto a truck for final delivery. Other packages are loaded into containers for rail shipments.

An outbound train moved by BNSF each Tuesday from UPS’ North Bay hub in Northern California to Chicago must cover 2,500 miles in 54 hours. BNSF Railway Co.

Built 25 years ago, the North Bay hub was located on the Richmond site because it’s near a BNSF line, says Sal Mignano, the facility’s director of operations.

“The proximity to rail allows us flexibility,” he says. “We can sort any volume at any time.”

BNSF’s intermodal ramp at the hub is situated on UPS property — which is unusual — and is the Class I’s only ramp that’s dedicated to one customer, says BNSF Director of Equipment Utilization David Longsworth, who handles the UPS account.

Busy UPS hub

The North Bay facility handles 200,000 to 300,000 packages per day, with about 30 percent of inbound and outbound volume handled by rail. Typically, two inbound trains and one outbound train serve the facility daily, with an outbound train carrying about 70,000 packages in 50 to 70 containers. During the peak season, outbound rail volume exceeds 100 containers.

One outbound train heads to the Southwest, including Texas and other points, and is partially moved by Union Pacific Railroad. Another that departs each Tuesday morning for Chicago is an all-BNSF move and an all-important transportation link both for the hub and UPS. The high-priority train — which must arrive Thursday in time for a 5 p.m. sort at the Chicago Area Consolidation Hub adjacent to BNSF’s Willow Springs, Ill., terminal — factors into tight sort schedules and high volume, says Ken Buenker, UPS’ vice president of corporate transportation services.

“We plan sorts based on our integrated plan. We try to keep the flow to outbound [moves] without any disruptions,” says Buenker, who’s responsible for the package delivery giant’s rail transportation. “If there are disruptions, we have to manage volume later in a sort, and work around lateness.”

The North Bay hub modernization provides more opportunities to manage contingencies and more flexibility for recovery, says Buenker. For example, the automation enables UPS to seamlessly design and implement new sort flows for outbound volume if a train is late.

“Both our package visibility and our facility technology allow us to create sort-specific recovery plans that consider all aspects of the network impact and allow us to maximize service, minimize operational impact and ensure we consider all available options,” says Buenker. “We can change sort design far more quickly and effectively with the [new] technology in the building.”

During the modernization project, BNSF “strategically positioned” extra rail cars and locomotives to ensure the railroad could provide the service UPS required at the hub, says Longsworth.

“There was also heightened communication around any potential delay anywhere along the route between Chicago and North Bay,” he says.

BNSF seeks service tweaks

Since the project was completed, BNSF has been seeking ways to tweak the North Bay-to-Chicago move, already its “hottest, highest priority and most premium train” based on total miles and transit time, says Fritz Draper, BNSF’s vice president for business unit operations.

The outbound train covers 2,500 miles and must adhere to a 54-hour schedule. It’s the railroad’s tightest, most challenging and most important schedule, and has held that title “since intermodal was invented,” says Draper. In a sense, BNSF is trying to turn its No. 1 train into “No. 1A” train, he says.

Slight planning adjustments and better communication between the railroad and UPS — especially about any weather or network problems — have helped spur the No. 1A mission.

“We run as on time and exact as we can, but there are bumps in the road, like floods or the Polar Vortex,” says Draper. “UPS came to us about their modernization plans at North Bay. It was up to us to up our game.”

The outbound train needs to be perfect each time, he says.

“It’s like the starting pitcher who needs to go nine innings every start with no relief in sight,” says Draper.

To meet the transit-time requirement, the train must average about 45 mph, including crew changes, refueling stops and inspections. The tight schedule is challenging because BNSF each day manages 100 trains in its network, and some commodities move at slower speeds and have different protocols, says Draper.

The North Bay facility has noted a “tremendous difference” in BNSF’s service over the past two years, says Andrew Kearns, the hub’s transportation coordinator.

“We have better connectivity now with BNSF. If there are issues, we communicate better and collaborate,” he says. “Before, we had [service] struggles maybe twice a week.”

BNSF’s on-time performance at the North Bay facility stands at about 95 percent, says Buenker.

“BNSF has provided us the flexibility we needed. We have had the same schedules for decades, the difference now is in how it’s supported and runs according to the transportation service plan,” he says.

BNSF: Performance is paramount

BNSF’s overall on-time performance percentage for UPS is in the low to mid 80s — not where it needs to be, but better than its performance over the past two years, says Buenker.

“We are like the auto industry. It needs to be ‘just in time,’” he says.

BNSF will make any necessary adjustments to provide the performance UPS needs throughout its distribution network, says Draper. UPS manages 1,600 hubs and many of the facilities incorporate rail into their transportation planning.

At the North Bay facility, BNSF and other railroads were very accommodating before, during and after the modernization project, says Buenker. And he expects those efforts to continue.

“They made significant modifications to several trains and ran well, allowing us to focus on our adjusted operating plan and to continue to serve the markets the North Bay transportation operation supports,” says Buenker.


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