UPS Benefits From Online Ties -- WSJ
31 Janvier 2020 - 9:02AM
Dow Jones News
By Paul Ziobro
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (January 31, 2020).
United Parcel Service Inc. continues to cozy up to Amazon.com
Inc., even as its rival FedEx Corp. charts a path without the
largest online retailer in the U.S.
UPS on Thursday posted a 9% jump in shipments in the fourth
quarter, saying that Amazon provided the biggest lift to its growth
of any customer. The delivery giant also for the first time
quantified its exposure to Amazon, revealing that the retailer
spent $8.6 billion with UPS last year, accounting for 11.6% of
overall revenue.
That's nearly 10-times larger than the business that FedEx gave
up last year when it ended two U.S. shipping contracts with Amazon.
FedEx Chief Executive Fred Smith instead is committed to courting
Walmart Inc., Target Corp. and other retailers and helping them
compete against Amazon's e-commerce juggernaut.
UPS executives didn't express concerns about their ties with
Amazon, even as the Seattle-based retailer is building its own
delivery network that is poised to carry more of its own
orders.
"As long as there's a mutually beneficial relationship, then we
will continue and we will find ways to win together," UPS CEO David
Abney said Thursday.
The close relationship with Amazon isn't stopping UPS from
gaining business from other places. Mr. Abney said 90% of major
retailers use UPS and that chains such as Target, Gap Inc. and Best
Buy Inc. are all shipping more with UPS.
Mr. Abney said UPS was also able to capitalize on service
problems at other carriers, particularly in the week before
Christmas. "We had other people's customers coming to us asking us
to take their packages," he said in an interview.
Amazon temporarily banned merchants from using FedEx Ground for
Prime orders in the final weeks of December, citing poor service
levels. A FedEx spokeswoman said the carrier had "outstanding
service" in the period between Thanksgiving and Christmas.
"We experienced heavy demand from current and many new customers
that recognized our speed advantage," she said.
UPS's reliance on Amazon and the overall shift to e-commerce,
where packages tend to ship at lower rates, drove down the revenue
that UPS received per shipment, which fell 2.5% across its
business. But investments in automation and other steps to reduce
expenses lowered the average cost to process packages by 3.2% in
the U.S., boosting profits.
Due to accounting adjustments for the company's pension plan,
UPS reported a quarterly loss of $106 million, compared with a
profit of $453 million a year earlier. Adjusted for the pension
charges and a legal settlement, UPS reported earnings of $2.11 a
share, matching the estimate of analysts recently polled by
FactSet. Revenue rose 3.6% to $20.57 billion.
UPS also is trying to capture more shipments from smaller and
medium-size shippers. The company has moved up some of its planned
projects this year to speed up shipments, and added extra delivery
days, including Sundays, to cater to all online merchants, Mr.
Abney said.
The added spending will damp earnings growth for the year, with
UPS projecting adjusted earnings between $7.76 and $8.06 a share.
Analysts were projecting earnings of $8.03 a share. The forecast
assumed continued weakness overseas and in the U.S. industrial
economy.
UPS stock was down 6.1% to $108.65 as of Thursday afternoon.
The company is more than halfway through a three-year spending
spree on new facilities, upgrades to existing ones, and technology
to help the company handle more packages. The latest projects
include $1.4 billion to open a large sorting hub in Harrisburg,
Pa., and three other automated facilities in Pennsylvania to serve
the Northeast U.S.
It also continues to push into new technologies, including
expanding a drone delivery service to another medical campus and
investing in electric vehicle manufacturer Arrival. UPS has
committed to buying 10,000 of Arrival's vehicles to use in Europe
and the U.S.
Write to Paul Ziobro at Paul.Ziobro@wsj.com
(END) Dow Jones Newswires
January 31, 2020 02:47 ET (07:47 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
United Parcel Service (NYSE:UPS)
Graphique Historique de l'Action
De Sept 2024 à Oct 2024
United Parcel Service (NYSE:UPS)
Graphique Historique de l'Action
De Oct 2023 à Oct 2024