Tuesday, April 26, 2011

United Parcel Service Volume Down in First Quarter

United Parcel Service reported that it earned $885 million its first quarter of 2011.  Its earnings were up 66 percent from a year earlier when it earned $533 million.   UPS projected earnings are stronger than previously forecast. It now projects that its earnings will be between 17 to 24% higher in 2011 than 2010.

UPS's earnings growth came in all three of its operating segments, U.S. domestic package, international package, and supply chain and freight.  UPS's increases in revenue reflects both rate increases and increased fuel surcharges.  Its increases in profits reflect margin improvements in its U.S. domestic package and Supply chain and freight businesses.

UPS's parcel volume as illustrated in the following chart was down on a year to year basis.   UPS reported that "Premium product growth outpaced ground as UPS Next Day Air® package volume grew at a mid-single digit rate."  The overall decline in volume most likely reflects a decline in UPS ground volume.  It is unclear how much of the decline was due to weather, which held down total parcel shipping volume and may have shifted some volume to UPS Next Day Air®, how much was due to the continuing shift from domestic to global supply chains, how much was a shift in marketing and pricing strategies to expand sales of sales of higher margin next-day air services, and how much was due to loss of market share due to competition from FedEx Ground, Postal Service joint-line services (including UPS SurePost), and regional carriers.


Anonymous said...

UPS passes on it's fuel costs to its customers; the USPS does NOT. Yet, most folks favor the "private sector" who ALWAYS passes on additional operating costs to the consumer... and somehow comes out smelling like a rose! The USPS maintains the price of its first class postage, yet gets blamed for increasing prices of other "lower-classed-priced" postal services. UPS' package volume is DOWN; USPS' parcel volume is UP! If you didn't already know, the USPS is delivering the"las mile" for most all UPS small packages---thus saving UPS delivery time and giving USPS additional money. So, when you ask for UPS delivery, you may be getting the advantage of USPS delivery. The only problem is that you paid WAAAAAY toooo much for your UPS charge, when you could have received the lesser charge from USPS from the beginning. Some people just will never learn who to ask for their shipping needs. ;-(

Mailman4 said...

It isn't due to the co-operative parcel agreement with the USPS...The USPS picks up where UPS falls way short in delivering the "last mile," especially in "unprofitable rural delivery areas" of the US. The USPS saves not only the UPS's ass in rural areas of the country, but also in city delivery. The Postal Service has the delivery infrastructure in place and delivers to each household. UPS doesn't wish to hire enough employees to service the entire country, so they wimp-out. and pay the USPS to do the work they can't afford to produce. That's the big difference between UPS & USPS. UPS ONLY exists for PROFIT; USPS ONLY exists for SERVICE!

Anonymous said...

I prefer FedEx to both UPS & USPS. They are very fast in service and cheaper. Maybe it is because the other two delivery networks are unionized? But it gives people a choice of the best bang for heir buck.

Anonymous said...

Fed Ex and UPS are not cheaper than USPS. Do your homework!

Alan Robinson said...

FedEx and UPS is cheaper for most commercial shippers shipping parcels over 4 pounds once disounts that UPS and FedEx give are included. Also FedEx and UPS often give larger customers, including many law and consulting firms, discounts to their overnight express rates that put them below USPS priority mail rates.

UPS and FedEx Ground may even be cheaper than USPS Priority mail for shipments under a couple hundred miles and provide equal or better service. Surprising I know but check it out.