UPS Profits Jump 26% — What Does That Mean For You?

Spend Matters welcomes another guest post from NPI, a spend management consultancy, focused on delivering savings in the areas of IT, telecom, transportation and energy.

Yesterday, the Journal of Commerce reported that UPS's profits rose 26 percent in the second quarter. That's pretty impressive, especially as shipping volumes here in the U.S. haven't grown proportionately and, for most companies, have remained flat. Here is a look at the numbers:

  • 26 percent profit increase to $1.7 billion in the second quarter
  • 8.1 percent increase in revenue to $13.9 billion
  • 13.3 percent increase in international revenue, with a 6.3 percent increase in revenue per package (international)
  • UPS Freight (LTL arm) increased profits by 77 percent in the second quarter

For some these numbers may come as a surprise. But, should they really be unexpected?

In 2011, shippers have encountered historically high surcharges (especially for fuel), dimensional weight factor changes that make it much more expensive to ship low-weight/large-size packages, and painfully high rate increases. Many also encountered questionable carrier pushback that prevented them from bringing in 3rd party consulting experts to help them lower these costs.

The good news, as I've said on this blog many times before, is that many of these surcharges and rate increases can be reduced or mitigated by optimizing modes, rates, terms, service selection and other non-disruptive operational tuning.

UPS and FedEx's annual rate increases are just around the corner. Be prepared. While our economy needs more success stories like UPS to keep it thriving, many shippers' profits are suffering due to unnecessary overspending on transportation services.

-- John Haber, EVP of Transportation, NPI

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