Tag: UPS

UPS releases 2nd quarter results 2008

Posted by | Jul 22, 2008 | |

UPS reported a 6.7 pct revenue increase in the second quarter but an 18.3 pct decline in diluted earnings per share to USD 0.85 compared to USD 1.04 the prior year. Increasing fuel costs and a stagnant U.S. economy caused the earnings decline in both the U.S. Domestic and International Package segments.

In contrast, the Supply Chain and Freight segment posted a substantial improvement in profitability.
“Although operating conditions in the second quarter were challenging, UPS firmly believes the long-term growth fundamentals for our company and for our industry are very favorable,” said Scott Davis, UPS chairman and CEO. “We are helping our customers manage through this difficult period while doing everything we can inside UPS to adapt to current conditions.”

For the three months ended June 30, 2008, UPS delivered consolidated volume of 959 million packages, essentially unchanged from the second quarter last year. Revenue rose to USD 13.0 billion and revenue per piece increased 5.9 pct. Results were negatively affected by a 67 pct increase in fuel expense, a reduction in premium product volumes and weakness in U.S. imports.

The slow U.S. economy caused average daily volume in the United States to decline 1.3 pct in the quarter and also contributed to a more pronounced reduction in premium products than in the previous quarter. Volumes per day declined 6.1 pct for Next Day Air, 2.3 pct for deferred air and 0.7 pct for ground. Consolidated revenue per piece rose 3.1 pct, increasing for all services.

These factors, along with the rapid increase in fuel cost and the impact of the two-month lag in the application of the fuel surcharge, were responsible for the declines in second quarter operating results.
During the quarter, UPS and DHL announced they were working on a 10-year agreement through which UPS would provide air lift for DHL’s express, deferred and international volume within the U.S. and between the U.S., Canada and Mexico.

International results were negatively impacted by higher fuel costs, declining U.S. import volume and slower growth in premium services in the major regions of the world.

Export volume increased an industry-leading 10.2 pct, aided by the calendar effect of an early Easter, which boosted growth rates by approximately 2 pct. However, volume growth slowed significantly through the quarter.

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UPS and Staples open co-branded store in China

Posted by | Jul 21, 2008 | |

UPS and Staples have opened another co-branded store in Shanghai expanding their strategic partnership in China, according to the business information provider SinoCast.

Following the opening of the two “Staples UPS Express” locations in Beijing in 2007, the additional location has been opened in the business centre Xintiandi in the Luwan District, Shanghai. The new store has an operational area of 330 sqm, engaged in providing easier and more convenient services for office supply and files buyers as well as UPS’ parcel and international transportation services.

The UPS and Staples co-branded store format combines a broad range of core offices supplies and document processing services from Staples with packaging and international shipping services for business customers and consumers from UPS.

China has become the most important international market of UPS and is creating huge demands for the company. UPS already opened its first two UPS Express retail centres in Shanghai in August 2006 as part of its planned wider expansion of UPS-branded retail outlets in the Asia-Pacific region.

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Earnings Preview: Economy weighs on UPS profits

Posted by | Jul 21, 2008 | |

Slowing U.S. economic growth and high fuel costs are expected to put a damper on United Parcel Service’s results for the April-June quarter. The Atlanta-based company lowered its earnings expectations for the quarter on June 23.

UPS predicted earnings per share for the second quarter, which ended June 30, would be within a range of 83 cents to 88 cents, compared with the 97 cents to USD 1.04 the company originally anticipated.

UPS is able to pass higher fuel costs on to customers in the form of a fuel surcharge on shipments. However, the surcharge increases have not kept pace with rapidly rising fuel prices. Meanwhile, UPS’ business has suffered amid the economic downturn in the U.S. The result has been lower-than-expected domestic package volume and customers making less use of premium air products.

UPS last month did not say what impact its lower expectations for the second quarter might have on its full-year results. But analysts have lowered their projections for UPS’ full-year results.

Wachovia Capital Markets analyst Justin Yagerman said in a research note last week that the U.S. economy will continue to be shaky for the rest of 2008, which will likely affect UPS’ results.

He also said that UPS’ international results going forward could be affected by slowing economic growth in Europe. Long-term, however, he said he remains bullish about UPS’ overall business prospects.

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U.S. express traffic slows

Posted by | Jul 18, 2008 | |

Air Cargo Management Group reports that revenues for the U.S. domestic air freight and express industry totaled USD 32.81 billion in 2007, a slim 1.0 pct increase over 2006, but nonetheless a new record for the industry. “Gains in 2007 must have come from fuel surcharges, as total market revenue-ton-mile (RTM) traffic and the daily shipment counts of the express carriers both declined,” noted Robert Dahl, ACMG Proj¬ect Director.
Traffic volume for the industry was 14.924 billion RTMs, down 1.5 pct year-over-year, and the number of shipments moving through the major express networks was 6.644 million per day, down 1.8 pct versus 2006. “The industry remains at or near 1999 levels based on both these performance metrics; in other words, this industry has gone through eight years with no net growth,” Dahl said. “Furthermore, part-year data for 2008 gives little hope of any major increase this year. In fact, there are numerous challenges facing the industry, including re¬cord-high fuel prices, a weak U.S. economy and a perceived shift of air shipments to trucks, which could lead to further traffic declines in 2008 and 2009.”

ACMG finds that the US domestic air freight and express industry continues to undergo significant structural changes in both the express and general freight sectors. The players in the express side remain unchanged, consisting of FedEx, UPS, DHL and BAX Global; however, DHL is changing its business model in the domestic U.S. market to eliminate its own contracted air network, instead buying space starting this year from UPS to move its shipments on an airport-to-airport basis within North America. When the DHL shift to UPS is complete in 2009, there will be just three express freighter networks operating within the U.S. (UPS, FedEx and BAX/Schenker), down from eight in the mid-1990s.

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Amazon, others to suck up holiday shipping costs

Posted by | Jul 17, 2008 | |

Online retailers cannot afford to raise shipping prices. The high cost of fuel is hurting the wallets of American consumers and businesses alike, but online retailer Amazon.com Inc and others will likely forgo shipping price increases on its discount programs this upcoming holiday shopping season for fear of alienating hard-pressed shoppers in the weak economy.

Long-term contracts with shippers may insulate Amazon and some others, even as companies small and large scramble to find other costs to cut. Margins could suffer more as time goes on, but the biggest companies could watch smaller rivals fade away as the move to online shopping continues to accelerate.

Avoiding shipping price hikes may appear foolhardy — after all, the cost of diesel fuel has risen 154 percent in the last year. But companies such as Amazon and Overstock.com Inc rely on low or free shipping to stoke business in good times — so any rise in bad times could be a major problem.

Free shipping is a major competitive advantage for Amazon, which has already been lowering prices to stave off rivals, said Forrester analyst Sucharita Mulpuru.

U.S. carriers like United Parcel Service Inc, FedEx Corp and the U.S. Postal Service have been raising prices due to higher fuel costs.

But Amazon and some brick-and-mortar companies with major online businesses say they’ve largely been able to insulate themselves by being more efficient elsewhere in their businesses, whether through better distribution or less waste.

Overstock will not raise its blanket USD 2.95 shipping price on a full order, and fuel increases have not affected the company’s profit margins, Chief Executive Patrick Byrne said.

Large online shippers have bargaining leverage over transport carriers when it comes to contracts, Amazon and Overstock said.

However, smaller online retailers that aren’t as nimble as Amazon will be struggling this holiday with higher fuel costs and be forced to raise shipping prices.

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