UPS to expand in FedEx's home base in Memphis

United Parcel Service plans to grow in rival FedEx's back yard by nearly doubling sorting capacity at Memphis International Airport.

Airport officials who have been in negotiations with UPS expect the Atlanta-based company to spend more than $25 million and hire well in excess of 100 new employees for an expanded sorting facility. It serves part of UPS' Memphis ground delivery fleet and two flights a day connecting Memphis with Louisville, Ky., home of UPS Worldport.

UPS' expansion is a sign of continued strength in cargo traffic at Memphis despite woeful erosion of passenger service, which has dropped from about 300 daily flights in 2000 to about 100.

Cargo, nearly all of it carried by FedEx, is anchoring the Memphis airport's finances while officials campaign to attract new passenger service to fill a void left by Delta Air Lines. Delta dropped to 64 flights on peak days and stopped calling Memphis a hub on Sept. 3.

Earlier this year, Pinnacle Airlines, once headquartered in Memphis, moved to the Minneapolis-St. Paul International Airport after emerging from bankruptcy under new ownership by Delta and with a new name, Endeavor.

"Our success on the cargo side will help us as we continue our relentless quest for affordable, frequent passenger service," Memphis-Shelby County Airport Authority chairman Jack Sammons said.

Airport chief executive officer Larry Cox said a larger UPS presence "is good for Memphis companies. Competition is always good, and they're fierce competitors."

"Memphis is such an important logistics hub, they have to be as strong as they possibly can here," Cox added.

FedEx had nothing to say about the UPS move.

While it would substantially increase UPS' footprint, the project won't challenge FedEx's dominance at Memphis, the world's second-busiest air cargo hub behind Hong Kong.

The FedEx Express world hub handles more than 99 percent of airfreight moving through the airport. UPS is a far distant second.

The airport authority on Thursday approved leasing UPS an additional 1,171,586 square feet and an option to lease another million square feet.

Cargo remains a bright spot in airport finances as Delta ramps down, shops and restaurants close in the terminal building, and gates stand empty.

Airlines currently lease 41 of the airport's 78 gates.