UPS revenues up despite package volume decline

Carol Tomé, chief executive, UPS. Image source: UPS

UPS saw its second-quarter revenues and profits improve on a year earlier despite volume declines as shoppers return to retail outlets.

The US express firm achieved revenues of $23.4bn, a 14.5% increase on the same period of 2020. The company also noted a 47.3% increase in operating profit to $3.3bn.

But its average daily volume (ADV) was down by 0.8% as a result of a decline US domestic demand.

UPS’ US Domestic Segment achieved a 10.2% year-on-year increase in revenues to $14.4bn, “driven by a 13.4% increase in revenue per piece from strong improvement in all products”.

The improvement in revenue per piece was driven by cargo mix, surcharges, and base rates. Ground and next-day air products performed particularly strongly.

However, the division’s ADV slipped by 2.9% compared with a year earlier. Business-to-consumer ADV was down 15.8% while there was a 25.7% improvement in business-to-business.

Operating profit for the segment increased by 10.9% year on year to $1.6bn.

Reports suggest the decline in ADV has led to investor concerns that the re-opening of brick-and-mortar retail will impact the Covid fuelled e-commerce boom.

Meanwhile, the company’s International Segment achieved a 30% year-on-year increase in revenues in the second quarter of 20201 to $4.8bn. Operating profit also increased — by 24.6% — to $1.2bn. 

Its average daily volume for the period improved by 12.7% year on year and revenue per piece improved by 15.5%.

UPS said its International Segment results were “led by [its operations in] Europe”.

The company’s Supply Chain Solutions Segment recorded a 14.3% increase in revenues in Q2 2021 to $4.2bn, “driven by strong demand in nearly all businesses”.

UPS said its ocean freight forwarding business more than doubled its operating profit. In healthcare, clinical trials, along with cell and gene solutions, delivered record top- and bottom-line results. And the sale of UPS Freight closed in April.

At $507m, the segment’s operating profit was 12.1% higher than the second quarter of 2020. UPS’ global healthcare revenues in Q2 2021 were up on last year by 19%.

Carol Tomé, chief executive at UPS, commented: “Through our better not bigger framework, we are moving our world forward by delivering what matters.”

UPS said its “better not bigger framework” includes: the launch of a daily flight from Osaka to Shenzhen to speed up goods’ time spent in transit, as well as “expanded global healthcare capabilities; expanded ground delivery operations at weekends; and deploying new claims processes in the US for [its] small- and medium- business customers”.

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