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The United Parcel Service purchased more space at the Kansas City International airport to increase its package sorting capacity, the Kansas City Aviation Department announced Thursday.

Along with the space expansion, UPS also signed a lease that will keep the company’s production at KCI for another 30 years.

The facility will undergo renovations and will receive new state-of-the-art sorting equipment, the department said. That new equipment will “increase package handling capacity from 1,500 to 5,000 packages per hour.”

Dive Brief:

• A combination of tight capacity and rising volume means logistics costs will continue to “improve” in UPS’ favor, according to a research note from UBS, penned after a meeting between analysts at the bank and UPS’ investor relations team.
• “UPS is transitioning to a slower pace of capacity addition in 2021 and we believe broader package industry capacity expansion is also likely to be modest,” the research note reads. “Assuming a backdrop of economic growth in 2021, we believe the package market is likely to remain tight and support a path of pricing gains for UPS.”
• UBS expects UPS’ revenue from surcharges to be “significant,” but the carrier didn’t provide any guidance on the expected size of its peak surcharge revenue.

UPS said it plans to create 451 full-time jobs with an average annual salary of $65,147.