UPS Rides a Surge in Overnight Air Shipments -- 2nd Update
24 Juillet 2019 - 11:13PM
Dow Jones News
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 closed up 8.7% at $114.39, its largest single day
percentage increase since 2008. The stock is up more than 17% so
far this year.
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. Inc., 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.
Amazon is also building out its own delivery network with
planes, trucks and delivery vans, which it intends to use to handle
more of its own packages.
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 16:58 ET (20:58 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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