tnkrdrvr

UPS Prepares for Slowdown in Global Delivery Volumes

Company expects annual revenue to fall after drop in fourth-quarter sales

United Parcel Service Inc. is girding its business against a slowdown in global delivery volumes as it advised that annual revenue could decline for the first time in years.

The Atlanta-based delivery company said Tuesday that it expects revenue of between $97 billion and $99.4 billion in 2023, down from $100.3 billion last year.

The outlook comes after the company posted a surprise decline in fourth-quarter revenue after delivering fewer items during the holidays than a year earlier. Softness in China trade lanes hurt the top line from UPS UPS 4.95%increase; green up pointing triangle‘s international segment, the company said. Average daily package volume fell 4.5% in the December quarter, although revenue earned per package rose 5.2%.

UPS executives said the company’s outlook reflects an expectation for the U.S. to face a mild recession in the first half of the year before a recovery in the second half. Trade growth worldwide is expected to slow this year as import demand weakens across major economies and several developing countries face debt shocks and food insecurity, according to the World Trade Organization’s forecast in October.

“We expect 2023 to be a bumpy year,” said Brian Newman, chief financial officer at UPS, citing rising interest rates, high inflation, Russia’s war in Ukraine, Covid-19 disruptions in China and labor negotiations in the U.S.


UPS rival FedEx Corp. said last month that revenue slipped 3% and earnings fell by nearly a quarter in the three months ended Nov. 30. FedEx said the average number of packages it handled daily in the quarter fell 10.2%.

UPS is betting that productivity gains and stronger business from small and midsize shippers can help it make up for an overall decline in package volumes.

Misloads in some 50 UPS facilities are now 1 in 1,000, said Chief Executive Carol Tomé, and the technology used to achieve that will be introduced to the company’s remaining 900-plus buildings.

For years the delivery company has been weaning itself from Amazon.com Inc., its largest single customer, to focus on other customers. Revenue from Amazon made up 11.3% of its total revenue in 2022, down from 11.7% and 13% in 2021 and 2020, respectively.

UPS shares rose 3.4% in recent trading. The company on Tuesday raised its quarterly dividend by 10 cents to $1.62 a share and approved a new $5 billion share-buyback program.

Both delivery companies have been raising prices to offset the global slowdown. The carriers said they would raise shipping rates an average of 6.9% across most of their services this year, following an increase of 5.9% in 2022 and 4.9% in preceding years.

UPS is also facing potentially contentious labor negotiations this year with the International Brotherhood of Teamsters, a union that represents around 350,000 UPS employees. Some UPS customers have already reached out to other carriers for business-continuity discussions in the event of labor disruptions.

Ms. Tomé said that she is confident of delivering a labor deal before the end of July, when the current labor contract ends.

“This is not our first rodeo,” said Ms. Tomé, adding that UPS has more than 100 years of negotiations with the Teamsters. “We are not far apart on the issues,” she added, referring to pressures on the workforce regarding working hours and the problem of heat in summer months.

Ms. Tomé pointed out UPS is rolling out more hydration and cooling systems and that while offering weekend delivery will become table stakes for UPS, “I don’t want people working six days a week unless they want to.”


In the latest period, revenue slipped 2.7% to $27.03 billion, missing analyst expectations by more than a billion dollars, according to FactSet.

Earnings came in at $3.45 billion, or $3.96 a share, up from $3.15 billion, or $3.52 a share, a year earlier. Stripping out one-time items, adjusted earnings were $3.62 a share, above analyst expectations of $3.59 a share.

tnkrdrvr

Long story short, things will likely be slow until peak 2023. My guess is minimal hiring until the second half of the year.

flyguy23

The plan is zero hiring after next weeks class until the 2nd half and then it’s fluid. Currently a June class scheduled with a TBD next to it.

C2078

The info that is most eye opening is the net profit number. $3.15B, same as 2021 4Q, but with $1B less revenue. Meaning pricing power is sticking. BTW, that is about 4.5 times the profit at Fedex with slightly more revenue. Better/bolder not bigger seems to be working.

Unfortunately those margins are gonna come down after the Teamsters new contract. Amazing that UPS is heavily unionized, pays the package cart drivers much better that FDX, light years in benefits, yet makes almost 5X profit. That tells you how inefficient, wasteful FDX is.

FTv3

VLOA and RDG being offered is very telling.

To the hopefuls: this is voluntary leave of absence / reduced guarantee option being offered for the next bid period to a “limited # of FOs” on fleets that were being displaced in the last bid. They never offer this! Definitely confirms current staffing level suspicions.

Section Eight

VLOA and RDG have been “offered” for the last 10 plus years, what had been “granted”; well…none.(if you pay attention) Nothing new here that they are offered…The VLOA/RDG “offerings” have been around since after the furlough…you JUST noticed this….?

And the quorum says I’m gloom and doom..,pfffttt,,,,that’s rich.

we will see a very long period of stagnation, very limited hiring as we park MD’s, and slowly replace with 76. Economy slows further and we will continue to park MD’s but, at some point, the new air frames will stop, Then, it will just be parking airplanes and attrition.

carry on….,

C2078

What are you talking about? This has been offered every bid period since I’ve been here (2017). It is a contractual item that always sent out before the bid. It is lip service, they have not awarded RDG since I have been here, and know multiple people who have opted for it.

C2078

Parking good airlines is a stretch. But going net negative if all MDs go and we only take the 27 76s, that is a real possibility, unless we place a new order for something. Maybe the way the company counteracts the looming retirement wave is by doing this exact thing, net negative 15 planes.

FTv3

Read your IPNN!

flyguy23

Youre making a negative forecast??? Shocking I tell ya…