UPS Reports 41% Earnings Drop During Q1

Average Daily Volume Decline Cited as Key Reason
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(Andrew Harrer/Bloomberg News)

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UPS Inc. experienced a 41.3% drop in earnings during the first quarter of 2024, the company reported April 23.

The Atlanta-based shipping and logistics company posted net income of $1.11 billion, or $1.30 a diluted share, for the three months ending March 31. That compared with $1.9 billion, $2.19, during the year-ago period. Consolidated revenue for Q1 decreased 5.3% to $21.7 billion from $22.9 billion.

UPS ranks No. 1 on the Transport Topics Top 100 list of the largest for-hire carriers in North America, and UPS Supply Chain Solutions is No. 4 on the TT Top 100 list of the largest logistics companies.

“The first quarter turned out as we expected, starting with a decline in average daily volume,” CEO Carol Tomé said during a call with investors. “U.S. average daily volume, or ADV, declined year-over-year, but the rate of decline slowed as the quarter progressed, ending with March down less than 1%. On a sequential basis, the ADV decline rate in the first quarter showed marked improvement compared to the fourth quarter of 2023.”


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Tomé credited this improving performance primarily to the UPS sales team’s efforts to pull new volume into the network. She also noted that outside the U.S., ADV decline rates improved sequentially compared with Q4 of last year. Tomé also said there were pockets of export growth in certain markets and lanes.

Operating profit for Q1 decreased 31.5% to $1.7 billion, which Tomé attributed primarily to higher labor costs associated with the first year of an updated contract with the Teamsters union.

Tomé during the call discussed some of the company’s growth initiatives, including its recently announced plan to become the primary air cargo provider for the U.S. Postal Service. The company will move most USPS air cargo within the U.S. under the agreement.

“The USPS air cargo business fits beautifully with our strategy to grow our B2B business,” Tomé said. “To win, we put together an innovative and differentiated solution that leverages our integrated network and existing assets. The USPS air cargo business will contribute to top line growth and be accretive to consolidated and U.S. domestic operating margins.”

She also discussed the company’s acquisition of Happy Returns from PayPal. The U.S.-based software and reverse logistics company provides no-box, no-label returns for merchants and consumers. UPS announced the deal in October.

“Through our on-demand network, we are expanding our addressable market with capabilities like no-box, no-label returns, Happy Returns and the convenience of our more than 5,200 UPS store locations,” Tomé said. “During the first quarter, our overall returns volume in the U.S. increased 1.4%.”

Tomé also discussed the company’s “big and bulky deliveries” efforts through its Roadie platform.


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“In the first quarter, we launched Roadie XD, which adds cross-dock capabilities to Roadie XL,” she said. “Our cross-dock solution brings the digital and physical together for long zone deliveries of bulky items such as grills and furniture that do not fit in the UPS small package network. This is enabling us to unlock additional revenue opportunities in the highly fragmented $60 billion big-and-bulky markets in the U.S.”

For Q1, UPS said U.S. domestic segment revenue decreased 5% to $14.2 billion from $15 billion during the same time last year. The decline was driven by a 3.2% drop in average daily volume, UPS said. Operating profit fell 43.7% to $825 million from $1.47 billion.

International segment revenue decreased 6.3% to $4.26 billion compared with $4.54 billion during the 2023 period. The decline was driven by a 5.8% drop-off in average daily volume. Operating profit decreased 20.8% to $656 million from $828 million.

Supply chain solutions segment revenue slipped 5.3% to $3.22 billion from $3.4 billion. That primarily was due to market rate declines in forwarding operations. Operating profit decreased 46.6% to $132 million from $247 million.

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