E-commerce orders in the United States and abroad pushed UPS small package delivery volume and revenue higher in the first quarter.
Average daily U.S. package volume increased 2.8% to 15.187 million from 14.768 million in Q1 2015, the delivery company reported Thursday. Average daily volume of ground packages, UPS’ largest segment and the way web retailers ship most orders, was 12.725 million packages in Q1, up 3.3% from 12.321 million a year ago. “High demand from e-commerce shippers contributed to fast growth in business-to-consumer (B2C) deliveries this quarter,” UPS said.
“Consumer spending remains the primary catalyst for growth in the economy and e-commerce sales have again exceeded the expectations,” CEO David Abney told analysts on a conference call, according to a transcript from Seeking Alpha.
U.S. domestic revenue increased 3.1% to $9.084 billion from $8.814 billion. Revenue growth was slowed by lower fuel surcharges and by fluctuations in currency exchange rates, UPS said. On a currency-neutral basis that excludes the impact of the strong dollar, revenue increased 3.7%.
The average daily volume in the Next Day Air category increased 3.0% to 1.266 million from 1.229 million packages in the year-ago quarter. Deferred Air products, which surged almost 15% in Q4 during the heavy holiday delivery season, declined 1.8% in Q1 to 1.196 million from 1.218 million Q1 2015. Deferred air freight is used for lower-priority packages that can ship on a space-available basis, and it costs less than standard air freight.
Next Day Air Early serves almost 30% more ZIP codes and Worldwide Express small package service is available in 23 new countries and territories, Abney said. “UPS now offers guaranteed noon delivery on the next possible business day to 88 countries around the world,” he said.
International average daily package volume declined 2.0% year over year to 2.647 million from 2.702 million. Total shipments, domestic and international, increased 2.1% to 17.834 million packages from an average daily volume of 17.470 million a year ago.
For the first quarter ended March 31, UPS also reported:
- Total revenue rose 3.2% to $14.418 billion from $13.977 billion in the first quarter of 2015.
- U.S. domestic revenue increased 3.1% to $9.084 billion from $8.814 billion.
- U.S. ground shipment revenue grew 3.7% to $6.594 billion from $6.361 billion.
- Deferred Air revenue increased 2.1% to $915 million from $896 million.
- Next Day Air revenue was up 1.2% to $1.575 billion from $1.557 billion.
- International revenue decreased 1.9% to $2.914 billion from $2.970 billion.
- U.S. revenue per package declined 1.3% to $9.35 from $9.47 as base rate hikes were offset by lower fuel surcharges and changes in product and customer mix, UPS said.
- Global operating profit increased 9.0% to $1.823 billion from $1.673 billion.
- Net income increased 10.2% to $1.131 billion from $1.026 billion.