UPS has warned customers of shipping delays after a cargo plane crash at its global aviation hub in Kentucky on Tuesday that killed at least 12 people. The company said the incident would temporarily disrupt its supply chain, though it had contingency plans in place to mitigate the impact. Experts believe any disruption can be resolved before the peak holiday season.
The aircraft came down on Tuesday evening as it prepared to depart for Honolulu from UPS Worldport, the company's largest sorting facility, at Louisville Muhammad Ali International Airport. Package sorting at the centre was halted late Tuesday and remained suspended on Wednesday. The site is capable of processing approximately 416,000 packages an hour, according to UPS.
The company has not disclosed how many packages were aboard the flight. Ed Anderson, a professor of supply chain and operations management at the University of Texas, estimates that flights departing the Louisville hub typically carry between 10,000 and 13,000 packages. Customers awaiting deliveries have been advised to monitor tracking information online or wait for direct contact from UPS. The firm has a claims process for lost or damaged items, but it is unclear whether those with packages on the crashed plane will need to use it.
Tom Goldsby, a professor of supply chain management at the University of Tennessee, said UPS would likely increase flights to its regional hubs to compensate for the temporary closure of Worldport. "The hubs are going to take on a greater burden until that critical operation in Louisville gets back to full capacity," he said. He added that UPS would be under pressure to resolve any delays before the holiday shopping season, noting that he himself had received a notification that a package he was expecting had been rescheduled due to the incident.
The crash comes as UPS undertakes a broader restructuring, shifting focus away from Amazon deliveries towards business-to-business services. In its latest earnings report last week, the company said it had cut 48,000 jobs since the start of the year and closed several buildings as part of the turnaround. Its third-quarter results exceeded market expectations.
