Inside in Heart of the UPS Worldport
SY: Hello, I'm Stephanie Sy in New York. We'll have more QUEST MEANS BUSINESS in a moment when Richard takes us to the heart of the global shipping industry, the UPS Worldport in Kentucky. But first the headlines this hour. British police say a former Russian spy and woman about half his age were found unconscious at as Saulsberry shopping center. They're being treated for exposure to an unknown substance and apparently knew each other. The ex-spy Sergei Skripal was granted refuge in the U.K. following a spy swap between the U.S. and Russia eight years ago. China is revealing a hefty new defense budget at its annual National People's Congress. Beijing plans to increase military spending by more than 8 percent to $175 billion. That's the biggest rise in three years as China modernizes its military. Britain's most decorated Olympian cyclist Bradley Wiggins is fighting accusations he abused anti-doping rules to enhance his performance during the tour de France. A British government committee claims Wiggins and Team Sky crossed an ethical line by abusing his medical need for a banned drug to enhance his performance. Wiggins and Team Sky deny the allegation. Those are your news headlines this hour. Up next, Richard takes us inside the UPS Worldport in Louisville, Kentucky.</s>RICHARD QUEST, CNNMONEY, EDITOR-AT-LARGE: One of the hundreds of wide- bodied planes that come to the UPS Worldport in Louisville, Kentucky, every day. It's here that 2 million packages are sent across the world. And over the next half hour, we're going to show you the UPS system and discuss where the man in brown is headed next. First, we need to understand the backbone of UPS.</s>QUEST: How do you go forward fast with a company this big?</s>ABNEY: You cannot act like an incumbent. You've got to feel like if someone is going to try to disrupt the industry then we have to have that mentality. So, we talk about, do we have to make decisions much quicker. We have to not have to try to protect the past and we can be proud of the past. We have to embrace the future and the future is all about technology. It's our smart logistics network and how we interconnect with our customers.</s>QUEST: On the question of the global economy, you are very big here. You've got a major center in Cologne. You have a major center in Shenzhen. Are you worried at the level of protectionism that is now coming into the world? A level where -- I mean, you know, we've seen it in rhetoric and we're starting to see it in action. We're starting to see the scintilla that global trade could be threatened.</s>ABNEY: You know, at the same time that you do here all the rhetoric, global trade is expanding right now, and we see it as much more optimistic than what we're hearing in the news. Now we are big believers in free trade. Everywhere we've seen the U.S. sign of free trade agreement, our business which is reflective of our customers has increased 20 percent.</s>QUEST: So, I assume it was a disappointment that the U.S. backed out of TPP and you would urge the U.S. not to back out of NAFTA?</s>ABNEY: We are strongly urging the U.S., Canada and Mexico to find ways to have a win-win-win situation. It's a 25-year-old agreement. It needs to be modernized and it does not need to be eliminated. Supply chains are just so interconnected between the three countries. And yes, we would have liked to see TPP passed. There's no doubt about that. We still believe there's opportunities for additional agreements.</s>QUEST: I want to finish, since you've been very kind to give us a good dose of time. This -- I kind of keep coming back, David, to this idea of the disruptor.</s>ABNEY: All right.</s>QUEST: The company that is this big. The man in brown. How do you do it? What do you envisage disruption looks like so that you don't find your core business just eaten away by everybody else?</s>ABNEY: Well, you have to embrace the future. You have to embrace the technology that did not exist in years past. We just formed an advanced technology group that is focused on not what's going to happen the next two to three years, but much further down the road. We capture now 21 terabytes of information that we have stored. How to take that information, integrate it with our customers' needs and be predictive in our analysis. Help them to be more effective in their supply chains which we will get the benefit of that and that's what we're investing in.</s>QUEST: This is the calm before the storm inside at the Worldport. Do not be deceived. It all looks quiet, relaxed, but what you're looking at is a machine waiting to be fired up in the middle of the night.</s>QUEST (voice-over): Hairspray your Houston, dog food for Dallas. Samples to Sydney. A contract for Kansas. Sorting parcels seem so simple. The goods come in, they're sorted, and then they leave. But when your warehouse is bigger than 90 football fields and you're handling 20 million packages a day, there's no room for a snooze at the UPS Worldport hub in Kentucky. In charge of it all is Jason Foote.</s>JASON FOOTE, UPS WORLDPORT OPERATIONS MANAGER: This facility on a normal day may only process 2 million packages, during peak season we'll handle more than double that.</s>QUEST (on camera): Well, only, that's an enormous number.</s>FOOTE: It is but it's only every day.</s>QUEST (voice-over): Cameras and conveyers everywhere, 155 miles of moving belts. While automation is key, humans remain part and parcel of this operation. Many of them working here are local students and the pace is relentless. (on camera): This is never ending. Hour after hour, these small packages flow into this tidal wave of sorting that now has to take place. To ensure these little packages end up in the right destinations. How do you keep track of all these parcels?</s>FOOTE: All these parcels have a unique label and mark all them. And the machine does it, automation does scanning and all the sortation of the facility. And that's how we only handle the packages twice. One here and once unloaded and once again in the load.</s>QUEST (voice-over): That's where the humans came in. They're needed to fill freight containers to the brim. Kyle: What you want to do is build up as high as you can.</s>QUEST: Kyle is the supervisor and showed me how. Think of playing Tetris.</s>KYLE: You want to start in this back-left corner.</s>QUEST: Why?</s>KYLE: Why, because that's where you're going to build your entire load off of.</s>QUEST: Right.</s>KYLE: The way you want to do this is you want to build left to right, as high --</s>QUEST: Why?</s>KYLE: Because that your cornerstone package and that's going to be the hardest package. That's what you're building your entire load off of.</s>QUEST: Right. (voice-over): Suddenly a song came into my mind, "little boxes on the hillside. Little boxes made with ticky tape. Little boxes on the hillside and they all look just the same." (on camera): Live crickets. (voice-over): Crickets in the cargo? And Amazon logos grinning down on me everywhere. (on camera): All very complicated. (voice-over): E-commerce is what's filling these containers. (on camera): I'm just standing here and I'm just seeing Amazon after Amazon after Amazon just going through.</s>FOOTE: Correct.</s>QUEST: I mean, the e-commerce volume must be tremendous. Foote: Well, it's be quite significant. And we have added opportunities in our network to handle that.</s>QUEST: It's about half past 1:00 in the morning and the tempo has increased. Roughly 380,000 packages an hour are now flowing into the Worldport. (voice-over): My parcels depart as quickly as they arrived. As those metal containers slide toward the planes. (on camera): Amid all this high-technology movement of commerce, there's a delicious simplicity about the way these containers are dragged around by hand. (voice-over): The fact is, as the network grows with demand, so does the risk of problems and challenges. It's a fine balancing act for those in control.</s>FOOTE: We have 120 aircraft coming in, so it's bound to happen, but we do it every night. We make that balance every single night.</s>QUEST (on camera): And that's when you're called. When they say, all right?</s>FOOTE: No, we have about 10,000 people who work here a night. They do a great job. They don't even need me.</s>QUEST (voice-over): Kentucky is UPS's biggest facility. And it's not big enough. Future expansion means the place will handle half a million packages an hour. As our love of e-commerce grows exponentially, so does this logistics powerhouse.</s>QUEST: After all these parcels are sorted and packed, some will go off to their final destinations in iconic style. We'll climb aboard a Boeing 747- 8. The passenger plane with a new lease on life as a freighter.