Winter Storm Fern swarmed much of the continental U.S. Sunday, with heavy snowfall and freezing temperatures leaving hundreds of thousands without power and throwing a wrench in freight and delivery operations across the Midwestern, Southern and Northeastern parts of the country.
Major logistics operators including UPS, FedEx and the U.S. Postal Service (USPS) all issued delivery delay warnings ahead of the snowfall, with UPS forced to suspend operations at its Worldport air hub in Louisville, Ky. Sunday.
Related Stories
Additional delays in UPS’ air network may occur due to continued severe weather conditions affecting the Louisville hub, which reopened for operations Monday. More than 3,000 ZIP codes across Kentucky, Indiana, Ohio, Oklahoma and Texas will not receive pickup or delivery services on Monday because of the storm.
“Although your location may not be impacted by adverse weather, the movement of packages in the network may be delayed by conditions in other areas,” said a company spokesperson.
Both UPS and FedEx say contingency plans are in place to help ensure that shipments arrive at their final destinations as quickly as possible. For FedEx, the plans have been activated to mitigate impacts at its FedEx World Hub in Memphis, Tenn. and FedEx Express World Hub in Indianapolis.
FedEx issued a national service disruption indicating that shipments with a delivery commitment for Monday may be delayed, with potential delays continuing throughout the week.
As for USPS, the agency suspended its service guarantee for Priority Mail Express and halted its acceptance until Tuesday due to the weather, according to alerts issued Saturday.
As late as 8 a.m. Monday morning, more than 4,300 flights have been canceled, according to FlightAware.com, many of them were flights coming out of Boston Logan and New York’s three major airports: John F. Kennedy, Newark Liberty and LaGuardia.
Dallas-Fort Worth and Charlotte Douglas have also canceled more than 100 flights each as of Monday morning.
At the peak of the storm, more than 13,000 flights were canceled. Transportation Secretary Sean Duffy told CNBC that Sunday was the largest cancellation day since March 2020, when state governments issued stay-at-home orders as the Covid-19 pandemic spread across the U.S.
On Friday evening, the Federal Motor Carrier Safety Administration (FMCSA) issued a regional emergency declaration across 40 states in anticipation of the storm. The declaration suspended hours of service regulations to give drivers more flexibility to move essential supplies and restore services in regions affected by the cold temperatures.
“Over the next week, we expect localized capacity tightness rather than a broad, sustained squeeze across the South,” said Mazen Danaf, principal economist at Uber Freight on Friday, ahead of the storm’s arrival. “As winter weather approaches, the biggest impact is usually short-term disruption (i.e., drivers sitting out, equipment repositioning delays, and temporary lane imbalances) rather than a structural capacity shortage.”
According to AccuWeather, the storm is expected to cost the U.S. an estimated $105 billion to $115 billion in economic losses.
The storm’s presence was so impactful that it is expected to temporarily slow U.S. economic activity, Bank of America says. The company projects the snowfall could bring down first quarter GDP growth by 0.5 to 1.5 percentage points.
In a client note, BofA analyst Aditya Bhave said the bank is drawing lessons from Winter Storm Viola in 2021. At the time, the bank said the storm was a 0.5-percentage-point drag on first quarter 2021 GDP.
Bhave said this week’s setback is “unlikely to be long-lasting,” adding that “there is as much upside to second quarter GDP growth as there is downside to the first quarter.”
FedEx set to expand Memphis sorting, restructure France operation
As the country and logistics providers reel from Fern’s effects, FedEx continues to realign its delivery network in the U.S. as part of its Network 2.0 transformation plan.
The company is aiming to expand its sorting operations at the Memphis World Hub, debuting a plan for a five-story, 1.6-million-square-foot e-commerce small package sorting facility dubbed “Hercules.”
FedEx submitted an application to the Memphis and Shelby County Division of Planning and Development, citing California-based construction company GFT Infrastructure Inc. as the project engineer.
No indication of the expected project cost for Hercules is given in the application.
The facility’s final design will be submitted to the local planning board for review in June.
Construction is also underway on a new $220 million, 1.3-million-square-foot sorting site called FedEx Secondary 26 Sort Facility at the complex. FedEx expects Secondary 26 to open by peak season of 2027.
Recently, FedEx unveiled it was shuttering a Dallas-area warehouse, which would result in the elimination of 856 employees. That nearly 280,000-square-foot facility in Coppell, Texas, will be closed due to an undisclosed client changing its third-party logistics provider (3PL). Layoffs will be staggered through the site’s closure on April 29.
FedEx is also doing some restructuring overseas, which could result in the layoffs of as many as 500 employees in France.
The proposal includes a restructuring of the company’s ground facility footprint and an investment of up to 78 million euros ($92.7 million) in new infrastructure and technology. With the reorganization, the company’s ground station footprint will be scaled down from 103 to 86 stations.
The restructuring would change working locations and schedules for up to 800 operational team members. Additionally, a potential more than 770 new full-time and part-time operations positions may be created because of the network redesign and technological enhancements. Affected employees would be given priority for these roles.
There are no proposed changes to the FedEx international air network, including the Charles De Gaulle air hub in Paris, as part of this program.
The France restructuring follows an announcement earlier this month in which it would close its domestic operation in Brazil, instead focusing on its more profitable international express services into and out of the country.
