UPS expects “excellent” peak season this year

While shipments are rising for International Air Freight, market pricing on the Asia to US lane continues to put pressure on rates.


ORION Scott Davis United Parcel Service UPS


Calling 2014 “the year of investing for the customer,” UPS’s CEO, Scott Davis announced plans to invest nearly US$175 million in its US network earlier in the year to develop technology to improve communications and forecasting – the ORION project – and open 50 new hub source locations in existing buildings to expand sorting capacity. 

Meanwhile in Europe, because of the strong quarterly shipment growth and changing volume distribution patterns, UPS had to pay a premium for short-term capacity. As a result, this contributed to higher delivery and network expenses, driving in-country costs up by 8.9 per cent.

Overall for the second quarter, the company reported total revenue of US$14.3 billion up 5.6 per cent from Q2 2013. Total operating expenses were up 14.9 per cent for the same period and as a result an adjusted operating profit increased 4.1 per cent.

By division, improving signs are emerging from the Supply Chain group. In particular, double-digit operating profit growth was noted for the Freight Forwarding group. This growth was due to improvements within its North American Air Freight, Brokerage and Ocean Freight groups. However, while shipments are rising for International Air Freight, market pricing on the Asia to US lane continues to put pressure on rates.

The International Package group’s revenue increased 6.2 per cent with export shipments up 9.1 per cent. Europe led the way with this sharp increase with daily shipment gains of more than 13 per cent. This was followed by Asia up more than six per cent.

“Clearly, 2014 is a year that we are investing for the customer but we expect an excellent peak season and in the future, these investments will clearly benefit not just the customer but also our employees and our share owners,” Davis said.