UPS volume no longer seen as long-term gauge

UPS’s shipping volumes used to be a good indicator of how the economy would be doing down the road — but no longer thanks to changes in how its business customers operate, the package shipper’s top executive said Wednesday.

D. Scott Davis, who became CEO and chairman of the package shipper on Jan. 1, told attendees of a Metro Atlanta Chamber of Commerce breakfast that fluctuations in the company’s fortunes once foreshadowed the economy’s direction.

But its volume has become more of a real-time indicator in recent years as many retailers and other shippers have switched to so-called “just-in-time” operations to reduce their inventory levels, said Davis, who is also vice chairman of the Federal Reserve Bank of Atlanta.

Davis declined to disclose recent trends in UPS’ shipments, but said the risk of a recession has increased after retail sales growth over the Christmas shopping season dropped to its slowest rate since 2002. UPS will report its fourth-quarter financial results at the end of this month.

Separately, UPS said Wednesday it will repurchase up to USD 10 billion in company stock within the next two years, and it has decided it will take on greater debt to allow it to make more investments in its business.

UPS said its board of directors has authorized an immediate increase in the amount of funds available for stock repurchases from roughly USD 2 billion to USD 10 billion. It added that the repurchases may take the form of an accelerated share repurchase program, open market purchases or other unspecified methods.