UPS United Parcel Service

By Paul Ziobro 

United Parcel Service Inc. posted a 30% quarterly surge in next-day air shipping volumes, as online shippers used the delivery giant's planes to get packages to homes faster.

The sharp increase in fast air shipments boosted UPS's second quarter revenue nearly 8% in its domestic unit and 3.4% overall to $18 billion. Profit rose 13.5% from last year, beating Wall Street expectations.

UPS shares climbed 4% in early trading Wednesday.

Online retailers from Amazon.com Inc. to Walmart Inc. have reset customer expectations for orders to reach doorsteps faster, boosting demand for next-day delivery options.

UPS Chief Executive David Abney said changes the company is making to speed up its network, add air capacity and process packages with automated facilities are winning over shippers from competitors' two-day air service.

"This structural change is creating opportunities for UPS," Mr. Abney said on Wednesday's earnings call.

UPS's air-shipment growth comes as its main rival, FedEx Corp., ended a major air shipping contract in the U.S. with Amazon at the end of June. That leaves more of the online retailer's packages up for grabs, with analysts expecting many to move to UPS as a result.

UPS is taking other steps to woo customers, speed up shipping and lower costs. It is moving to seven-day-a-week service next year, adding up to 12,000 new retail locations with CVS Health Corp., Advance Auto Parts Inc. and Michaels Cos., and it also is offering a later pickup time for orders.

Such changes match some of the plans outlined by FedEx in recent months, setting up a showdown as the two rivals fight for a larger slice of the online delivery market. FedEx expects the volume of e-commerce packages to double over the next few years.

"We are always encouraged when we see others following our actions," a FedEx spokeswoman said.

Growth in the U.S. comes as UPS encounters a more-muted environment overseas amid weakness in Europe and trade disputes causing uncertainty in trade patterns. Mr. Abney said that while he is encouraged by talks between U.S. and China trade representatives, "we need to see more measurable progress toward a comprehensive agreement."

UPS's international-package revenue for the quarter ended June 30 declined to $3.51 billion from $3.6 billion. Domestic-package revenue climbed to $11.15 billion from $10.35 billion a year earlier.

For the quarter, UPS reported a profit of $1.69 billion. Per-share earnings rose to $1.94 from $1.71 last year. Analysts polled by FactSet were expecting $1.93 a share.

The company backed its outlook for adjusted earnings per share for the year of $7.45 to $7.75.

--Dave Sebastian contributed to this article.

Write to Paul Ziobro at Paul.Ziobro@wsj.com

(END) Dow Jones Newswires

July 24, 2019 10:13 ET (14:13 GMT)

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