UPS Reports Record Breaking Quarterly Results

April 28, 2021


Another stunning quarter for UPS as it reported first quarter total revenue of $22.9 billion – an increase of 27% over last year. Plus, operating profit grew a whopping 164% to $2.9 billion.

“During the quarter, we continued to execute our strategy under the better not bigger framework, which enabled us to win the best opportunities in the market and drove record financial results,”  Carol Tomé, UPS chief executive officer said in the company’s financial announcement.

Record quarterly revenue reported in each segment

UPS quarterly results benefited from e-commerce trends, healthcare demand, and emerging signs of improvement in B2B. For the quarter, the International segment reported revenue of $4.6 billion, up 36.2%. And, within the Supply Chain & Freight segment, revenue increased 34.3% to $4.3 billion. The US Domestic segment increased revenue 22.3% to $14.0 billion. Average daily volume increased 12.8% year-over-year to a total of 20.4 million packages per day.

“Our success was due to a combination of our revenue quality initiatives and the impact of our productivity efforts running the network,” Brian Newman, UPS CFO, said in UPS financial statement.

Small businesses and residential deliveries lead the way in UPS quarterly results

Small and medium-sized business customers (SMBs) volume growth, including digital platforms, was up 36%, accelerated for the fourth consecutive quarter.This accounted for 63% of UPS’s total average daily volume increase. Continuing the recent trend, B2C shipments increased 23.8% year-over-year and represented 60% of total volumes for the quarter.

Meanwhile, B2B average daily volume declined 0.6% year-over-year for the quarter and represented 40% of total volumes. However, Newman noted that B2B volume strengthened later in the quarter and by March had turned positive.

US Domestic total revenue per piece grew 10.2% year-over-year with ground revenue per piece up 12.5%. Expenses were up 13.5%, while cost per piece rose 2.2%. The increases in expense and cost were due to the company’s rollout of its fastest-ever ground strategy, weekend initiatives, and planned benefit expense increases.

Weekends and e-commerce platforms provide revenue stream

Weekend coverage continues to expand with Saturday coverage expected to reach 90% of the U.S. population by October. Sunday deliveries are also expanding and SurePost is expected to play a role. Tomé noted that 41% of SurePost volumes were redirected back into the UPS network during the quarter which “allows us to get delivery density, so that’s a great way to think about how we can grow Sunday,” said Tomé.

UPS also continues to expand its Digital Access Program (DAP) with nearly 150,000 such accounts added during the first quarter. Through DAP, UPS’s services are natively integrated into e-commerce platforms such as Shopify and Stamps.com and provide competitive shipping rates to users. Not surprisingly, UPS plans to expand this program internationally.

Finally, a question concerning the new last-mile competition with companies like Uber and DoorDash was asked during the UPS quarterly results earnings call. In her fashion, Ms. Tomé responded,

Long gone are the days when we describe our competitive set as those headquartered in Memphis and those headquartered in Washington, D.C. or those headquartered on the West Coast. And there are lots of players that are coming into the supply chain. And everybody wants a little piece of the pie. And our job is to keep them out of the pie that we want to eat, and we are doing that by investing in the capabilities that the customers matter most.”

Trends here to stay

Typically, shippers have their best quarters at the end of the year due to the holiday shopping season. The fact that UPS had its best quarterly results ever is a sign of things to come and a shift in consumer spending habits that could be here to stay.

 


ABOUT SPEND MANAGEMENT EXPERTS

Spend Management Experts provides strategic guidance to optimize your supply chain. Using cost modeling technology and market intelligence, we help companies with their transportation, distribution, and fulfillment spend. Often large shippers can reduce their spend across the supply chain by 20% or more. We specialize in reducing distribution costs, increasing efficiencies, dynamic reporting, greater budgeting, and forecasting accuracy, and optimizing supply chain execution. We leverage our proprietary models to identify savings and build negotiation strategies based on data and business cases. As industry experts, our fresh approach provides clients with straightforward details on exactly how savings are derived. Spend Management Experts is your competitive edge, delivered.

Connect with Spend Management Experts on TwitterLinkedIn, and the Spend Management Experts blog.

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UPS Reports Record Breaking Quarterly Results

April 28, 2021


Another stunning quarter for UPS as it reported first quarter total revenue of $22.9 billion – an increase of 27% over last year. Plus, operating profit grew a whopping 164% to $2.9 billion. “During the quarter, we continued to execute our strategy under the better not bigger framework, which enabled us to win the best opportunities in the market and drove record financial results,”  Carol Tomé, UPS chief executive officer said in the company’s financial announcement.

Record quarterly revenue reported in each segment

UPS quarterly results benefited from e-commerce trends, healthcare demand, and emerging signs of improvement in B2B. For the quarter, the International segment reported revenue of $4.6 billion, up 36.2%. And, within the Supply Chain & Freight segment, revenue increased 34.3% to $4.3 billion. The US Domestic segment increased revenue 22.3% to $14.0 billion. Average daily volume increased 12.8% year-over-year to a total of 20.4 million packages per day. “Our success was due to a combination of our revenue quality initiatives and the impact of our productivity efforts running the network,” Brian Newman, UPS CFO, said in UPS financial statement.

Small businesses and residential deliveries lead the way in UPS quarterly results

Small and medium-sized business customers (SMBs) volume growth, including digital platforms, was up 36%, accelerated for the fourth consecutive quarter.This accounted for 63% of UPS’s total average daily volume increase. Continuing the recent trend, B2C shipments increased 23.8% year-over-year and represented 60% of total volumes for the quarter. Meanwhile, B2B average daily volume declined 0.6% year-over-year for the quarter and represented 40% of total volumes. However, Newman noted that B2B volume strengthened later in the quarter and by March had turned positive. US Domestic total revenue per piece grew 10.2% year-over-year with ground revenue per piece up 12.5%. Expenses were up 13.5%, while cost per piece rose 2.2%. The increases in expense and cost were due to the company’s rollout of its fastest-ever ground strategy, weekend initiatives, and planned benefit expense increases.

Weekends and e-commerce platforms provide revenue stream

Weekend coverage continues to expand with Saturday coverage expected to reach 90% of the U.S. population by October. Sunday deliveries are also expanding and SurePost is expected to play a role. Tomé noted that 41% of SurePost volumes were redirected back into the UPS network during the quarter which “allows us to get delivery density, so that’s a great way to think about how we can grow Sunday,” said Tomé. UPS also continues to expand its Digital Access Program (DAP) with nearly 150,000 such accounts added during the first quarter. Through DAP, UPS’s services are natively integrated into e-commerce platforms such as Shopify and Stamps.com and provide competitive shipping rates to users. Not surprisingly, UPS plans to expand this program internationally. Finally, a question concerning the new last-mile competition with companies like Uber and DoorDash was asked during the UPS quarterly results earnings call. In her fashion, Ms. Tomé responded,
Long gone are the days when we describe our competitive set as those headquartered in Memphis and those headquartered in Washington, D.C. or those headquartered on the West Coast. And there are lots of players that are coming into the supply chain. And everybody wants a little piece of the pie. And our job is to keep them out of the pie that we want to eat, and we are doing that by investing in the capabilities that the customers matter most.”

Trends here to stay

Typically, shippers have their best quarters at the end of the year due to the holiday shopping season. The fact that UPS had its best quarterly results ever is a sign of things to come and a shift in consumer spending habits that could be here to stay.  
ABOUT SPEND MANAGEMENT EXPERTS Spend Management Experts provides strategic guidance to optimize your supply chain. Using cost modeling technology and market intelligence, we help companies with their transportation, distribution, and fulfillment spend. Often large shippers can reduce their spend across the supply chain by 20% or more. We specialize in reducing distribution costs, increasing efficiencies, dynamic reporting, greater budgeting, and forecasting accuracy, and optimizing supply chain execution. We leverage our proprietary models to identify savings and build negotiation strategies based on data and business cases. As industry experts, our fresh approach provides clients with straightforward details on exactly how savings are derived. Spend Management Experts is your competitive edge, delivered. Connect with Spend Management Experts on TwitterLinkedIn, and the Spend Management Experts blog.

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