UPS revenue rose 3.4 per cent to $18 billion in the second quarter, while operating profit was up 21 per cent, the company said in its quarterly results.
Revenue growth was driven by gains in average daily volume in the US and higher-quality, currency-neutral revenue in the International segment.
“Our Transformation initiatives are generating greater efficiencies across the network and, when combined with our growth strategies, UPS achieved profit growth in all segments,” said David Abney, UPS chairman and CEO. “We also announced a very extensive roll-out of new products and services such as UPS My Choice for Business, expanded UPS Access Points, and UPS Worldwide Economy, among others, for small- and medium-sized businesses, all designed to generate additional profitable growth.”
The US domestic business saw significant volume growth in all products, led by a more than 30 per cent surge in UPS Next Day Air volume. The sharp increase in demand for the company’s next-day services was driven by accelerated delivery requirements from e-commerce shippers.
“Demand for faster delivery is a structural change in our industry,” said Abney. “Anticipating this change, our additional air capacity and modernized network enabled this growth to have a positive impact on profitability and positions UPS well to serve the growing needs of the market.”
Both B2B and B2C shipments grew within the period. In addition, the company added more than 2 million square feet of new, automated sorting capabilities, increasing efficiency benefits and contributing to positive operating leverage.
The International parcels business generated its best second-quarter profit in history and expanded adjusted operating margins while navigating areas of trade uncertainty.
Volume declined slightly due to global macroeconomic pressure and tough year-over-year comparisons. Operating profit increased more than 7 per cent, or by 1.7 per cent on an adjusted basis.
Supply Chain and Freight grew operating profit to more than $270 million, a double-digit increase for the quarter. Successful cost management enabled by the company’s asset-light strategies delivered strong financial results while revenue was pressured by softer trade, the group said.