Next-day demand drives improved revenues at UPS

By Damian Brett

UPS saw both revenues and net profits increase during the third quarter of the year as air volumes continued to grow.

The package firm reported third-quarter revenues improve by 5% year on year to $18.3bn, while net income was up 16% to $1.7bn.

The US domestic and international segments performed “exceptionally well year-over-year, with volume gains across all products”.

UPS chairman and chief executive David Abney said: “Our results reflect significant progress from our transformation initiatives, and our ability to generate growth and deliver increased efficiencies in a dynamic economic environment.

“As we recently announced, we continue to forge new partnerships and create innovative solutions to accelerate growth in the most attractive opportunities.”

The US domestic segment saw third-quarter revenue increase 9.7% to $11.4bn and operating profits improved by 28.1% to $1.2bn.

The segment saw total volume across all products grew more than 9%, with next day air up nearly 24%; deferred air improved more than 17% and ground volume rose nearly 7%. 

Growth came from both B2C and B2B shippers, led by the retail, healthcare and high-tech sectors.

The international business saw third-quarter revenues improve by 0.5% on a year earlier to $3.5bn and operating profit was up 26% to $667m.

International saw export volume growth on intra-European trade lanes and virtually all Asia trade lanes except Asia-US.

“The International segment reported strong operating profit and expanded operating margin,” UPS said. “The company’s performance is the result of a number of items in the quarter, including strong cost control, good execution and targeted domestic and export growth.”

Finally, its supply chain and freight segment saw revenues decline by 4.5% – due to trade uncertainties – to $3.4m and operating profit was down 1.2% year on year to $245m.

The Supply Chain and Freight segment’s performance was driven by small and medium-sized customers that generate higher-quality revenue, as well as cost management actions throughout the network.

Meanwhile, the company also announced that Jim Barber, UPS chief operating officer (COO), will retire at the end of December 2019.

As UPS COO, Barber is responsible for the company’s global small package, freight, supply chain and freight forwarding units and global engineering.

Serving UPS for nearly 35 years, he joined the company as a delivery driver in 1985 and rose through positions of increasing responsibility.

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