The Inner Workings of Overnight Shipping
Overnight shipping has transformed the consumer experience and logistics train. BlueGrace Logistics investigates how it works.
E-commerce has radically changed the way we look at shipping. When Amazon first got off the ground back in 1997, waiting a week or two for a book was par for the course, and that was assuming that the item was being shipped domestically.
Now, waiting a week or more is almost inconceivable. The modern consumer expects rapid deliveries that border on the level of impossible back in the inception of e-commerce. Even now, the two-day delivery is breaking way for the next or even the same-day delivery.
Warehouses and order selection are being automated. Deliveries are being made by ride-sharing companies, drones, and delivery robots. Parcels are moving through the stream from start to finish at break-neck speeds, and all the while e-commerce continues to push the envelope for delivery times.
While this means that there has been considerable growth and evolution of the supply chain, there are certain aspects of the old school methodology which are still in play even now.
How Overnight Shipping Actually Works
Package delivery is kind of like a race. When a customer places the order, the starting gun is fired and the clock starts ticking. But rather than a marathon or a cross-country run (even though most packages are, in fact, going cross country), it’s more like a relay race.
As it stands, most major packaging companies use what’s known as the hub-and-spoke method for deliveries. A package gets dropped off at a drop point (Post office, FedEx or UPS locations, etc.) and is transported to the nearest cargo-shipping airport. From there, the package is flown to the nearest hub where it is unloaded, sorted, and reloaded back onto the next plane to continue its journey. Once the package reaches the target airport (sometimes requiring a third and final flight for truly rural locales) it’s loaded onto a truck and either sent to a sorting facility, or straight on to the last mile of the delivery.
While it all seems fairly standard practice at this point, we have to consider that this hub-and-spoke method really only came about in the 1970’s when FedEx founder, Frederick W. Smith proved the efficiency behind the concept.
Memphis: The Super Hub
Interestingly enough, the biggest hub in the United States is Memphis, Tennessee. So much so that Memphis is home to the second busiest airport in the world, second only to Hong Kong. This is due largely to the fact that FedEx has set up shop for their super hub in Memphis. With 30,000 employees, the super hub is able to process and ship about 3 million packages a day with an average air traffic flow of 150 planes taxiing and departing nightly.
Cargo departing Memphis can reach just about anybody in the United States in the optimal shortest amount of time — making it the perfect sorting site for overnight shipments.
So, why Memphis, with a population of 650,000? “Because it’s just a short jaunt from what’s called the mean center of the United States population (located in eastern Missouri). In other words, cargo departing Memphis can reach just about anybody in the United States in the optimal shortest amount of time — making it the perfect sorting site for overnight shipments.
For packages making the trip across the pond, Anchorage, Alaska is the chosen hub of departure for packages going to and from Japan, making it the fourth busiest freight hub in the world.
What makes Overnight Shipping so Affordable?
As the idiom goes, a plane in the sky is worth two on the tarmac. Simply put, airlines make money from planes that are in use, but that actually only works for passenger flights. To that end, commercial planes are in constant use.
Domestic overnight cargo flights, on the other hand, don’t need to be in constant use. Why? Because carriers use much older planes.
“Many cargo planes fly just one dedicated route every night, basically like a bus in the air. Sometimes they spend just a couple hours in the air each day, and the rest of it they sit around at one end of the spoke or the other. It sounds inefficient, but in fact, the economics of this work out for cargo couriers because they haven’t shelled out huge investment in the first place. They’ve bought retired commercial aircraft—basically a fleet of used cars,” says Quartz.
The savings alone from repurposing retired aircraft is considerable. According to Avitas, an airline consulting firm, a brand new 767-300ER can run upwards of $200 million. The same model of the plane after 20 or so years of service? Around $9 million. That savings alone means that a cargo plane can be used as needed, waiting to be loaded with cargo to make the run back and forth, and causing considerable less wear and tear in the process versus a passenger plane that has to keep moving for the airline to recognize a return on investment.
Creating a Strong Foundation
The transition of point-to-point delivery systems into the hub-and-spoke have brought e-commerce a considerable distance, but much in the same way that we don’t want to reinvent the wheel, there’s no sense in getting rid of the things that do work. As the future of the supply chain continues to evolve through this new industrial revolution, we will see more advancements. 3D printing taking the place of manufacturing for on-site building and delivery. Drones that can make drops to your own personal location, be it a park or a parking lot.
The demanding future of shipping will be built on the scaffolding created in the past. As it continues to evolve, the elements that withstand the test of time will not only be evident, they will become foundational for your supply chain.