UPS posts strong gains as package volumes swell
FedEx & UPS are benefiting from pandemic lockdowns
United Parcel Service Inc. said revenue rose nearly 16% in the third quarter as its business continues to be boosted by the influx of packages moving domestically and internationally during the pandemic.
|UPS||UNITED PARCEL SERVICE INC.||171.57||+0.34||+0.20%|
The Atlanta-based delivery giant said that delivery volumes rose 13.8% in its large U.S. domestic business in the latest period as more people shopped online. Meanwhile, international shipments rose 12%, as a reduction in passenger flights that normally handle cargo has given shippers fewer options.
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Overall profit rose 11.8% due to the extra business, although its U.S. business posted a decline in profit due to the added costs and lower margins of delivering millions more packages to homes. Shippers are also using lower-priced options, while higher-priced services like next-day air decline in the U.S.
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UPS Chief Executive Carol Tomé said that the business was boosted primarily by strong demand from Asia and resurgent growth from small and medium-size businesses shipping through its network.
Both FedEx and UPS have been inundated with packages during the pandemic as fewer consumers head to stores and more people shop online. The boom in the number of packages has overwhelmed their delivery networks and stretched delivery times, but the demand has given the carriers leeway to impose fees and negotiate higher rates from shippers.
The shipping volume is expected to remain robust during the holiday season. Both FedEx and UPS have warned their largest customers that there is no extra capacity available during the busy shipping period, while other smaller carriers have stopped taking new customers until next year.
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In its earnings release, UPS Finance Chief Brian Newman said that the company is working closely with its customers and “using our proven tools to control volume and ensure the resiliency” of its network during the coming peak season.
The setup has endeared the carriers to investors. FedEx shares are up more than 80% this year, while UPS shares are up about 45%.
For the period ended Sept. 30, UPS posted earnings of nearly $2 billion, or $2.24 a share, compared with $18.3 billion, or $2.01 a share, in the prior-year period. Excluding some restructuring costs, UPS said per-share earnings were $2.28.
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Analysts polled by FactSet recently expected the company to post earnings of $1.90 a share on revenue of $20.2 billion.
Write to Paul Ziobro at Paul.Ziobro@wsj.com