UPS Announcement of Added Capacity Investments- How Much Online Fulfillment Capacity is Really Needed?
UPS announced plans to add an additional 5 million square feet of parcel logistics and shipping capacity in 2018, nearly five times more than what the carrier invested this year. The global carrier indicated that it will make such investments because of expected parcel shipping volume increases emanating from the online commerce area. However, with more capacity investments to support peaks, and with added financial incentives to train consumers to buy in more planned intervals, is there a risk of too much overall capacity at too high a cost?
According to a recent survey, warehouse space acquisition across the United States has reached its highest level in over 16 years, driven primarily by online fulfillment needs. Such space trending and building momentum should be viewed with a cautionary lens, with broader stakeholder involvement in decisions.