Shipping companies’ revenue in the third quarter was $ 23.2 billion, up 9.2% from the previous year, due to a 13% increase in average revenue per piece shipped by UPS. The number of goods shipped daily decreased by 2%, indicating that shipments have decreased for the second consecutive quarter after an increase of about 10 years.
This trend reflects UPS’s strategy under CEO Carol Tome. Shipment of packages and courtship to customers Generate more income and profits. Earlier this year, UPS said consumers returning to in-store shopping slowed shipments.
UPS will continue to push prices up. Tome said Tuesday that the company’s rate hike will average 5.9% next year.
It was announced last month. This is the highest annual growth rate in eight years for both companies. Increase pressure on online merchants To raise the price or find other ways to offset the higher costs.
The company has also raised its margin outlook this year to show that it can operate more profitably as costs increase towards the peak season of holiday shipments. Equities rose 7% in early trading as earnings and profits exceeded analysts’ expectations.
Shipping companies, like other industries, are trying to cope with rising labor costs and strengthen their workforce ahead of the busy last month of the year.
UPS employs up to 100,000 seasonal workers to handle the expected surge in cargo volume. Tome said the company has a better understanding of the wage structure, as about 75% of its 458,000 American employees work under union contracts.
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“We have a good idea of what the compensation for those employees is and we manage it,” Tome told analysts in a conference call.
FedEx, with its barely unionized workforce, suffers from labor constraints throughout the year and recently. Reduce revenue forecasts Due to cost pressure.
UPS also plans to tightly control the shipments it processes during this holiday season so as not to overwhelm the network. Last year, UPS temporarily blocked some shippers during the busiest shipping period, such as after Thanksgiving.
“These actions minimize the cost of disruption and enable higher service levels,” Tomé said.
While UPS is gaining more business from small and medium-sized shippers, Tome said
It represents a smaller portion of the total shipment volume than last year. Still, she said UPS will help Amazon grow.
“But we’re not in their supply chain,” Tome said. “We are part of their supply chain.”
UPS revenue for the period ended September 30 was $ 2.3 billion ($ 2.65 per share), compared with $ 1.96 billion ($ 2.24 per share) in the year-ago quarter. Excluding some restructuring costs, UPS adjusted earnings were $ 2.71 per share.
UPS also increased its annual capital investment plan by $ 200 million to $ 4.2 billion.
Write in Paul Ziobro at Paul.Ziobro@wsj.com
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The fewer packages you ship, the more revenue your UPS will make.
Source link The fewer packages you ship, the more revenue your UPS will make.