What the Recent UPS Earnings May Mean for Your Shipping

T Nguyen

May 17, 2012


For all businesses that ships a constant amount of items, it’s important to note the changing fluctuations of the shipping world, whether it be the updates in new competitors, as we previously noted in our Amazon blog post, or the quarterly earnings calls.  These changes are important because they can help to prepare for and predict certain trends within future pricing and possible action the carrier or competitors might take and in turn, affect your shipping. Recently, UPS announced their first quarter earnings, which we’ll go over in more details below.

UPS earnings rose 6% but didn’t quite reach the higher expectations of investors on Wall Street and sent the UPS stock down at the time of the announcement by 3.4%.  The culprit of not being able to reach these expectations seemed to lie in a lack of heavier demand in Asian and growth in e-commerce which brings in a slower amount of profits.  Demand went down for Asian exports due to the European debt crisis and some slower recovery from some of the harder hit disaster areas of the Asian regions.  However, UPS expects this weakness to stabilize throughout the next quarter as Asia continues to increase trade within itself and the international communities start to improve in their respective economies.  This recovery expectation also extended to the U.S., in which UPS was very positive about the economic recovery as deliveries had increased for the first time in year domestically.  Finally, there was a strong growth in e-commerce with much more orders being made online.  However, many of these packages are lightweight and small, which equates to smaller profits.

So what do all these results mean to you as a shipper?  One practical piece of advice is in current global shipping trends, at least within UPS.  As you saw, there has been an international decrease in demand for goods to Asia while Europe is still dealing with economic issues.  The US, on the other hand, is on a positive outlook for the next quarter.  This knowledge can help you within carrier negotiations in being able to discuss the practicalities of both your shipping patterns and the flexibility in the expectations of the carrier representative as well as where shipments are currently strong.  Another practical point can come in predicting possible future rate increases to your shipping contracts and readying your own shipping practices to compensate.

Source Consulting continues to closely watch and evaluate the impact of different news in the shipping arena.  Stay updated with us on our social media channels such as Facebook and Twitter for continued, up-to-the-minute coverage of all shipping news as well as contacting us for a free analysis of your own shipping contracts to see if there are any opportunities for you to reduce shipping costs.  Through knowledge and a close eye, you and your company can be sure to save money and stay on top of the carrier competition.

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