U.S. holiday deliveries are projected to reach a record 750 million packages during peak season for United Parcel Service Inc., the shipping carrier reported this week.
Volume between Black Friday (Nov. 24) and Dec. 31 will increase by more than 5% from the 712 million packaged delivered during the same period last year, said Kathleen Gutmann, senior vice president of worldwide sales and solutions for UPS. Of the 21 holiday season delivery days before Christmas, 17 are expected to generate volume of more than 30 million packages per day. The average daily volume for UPS is 19 million packages.
UPS also this week announced rate increases for 2018.
Arriving on Christmas Eve are new rates for UPS Ground, Air and International services, plus UPS Air Freight rates within and between the U.S., Canada and Puerto Rico. The average increase, effective Dec. 24, is 4.9%. Rival FedEx Corp. in September announced it will increase its rates an average of 4.9% starting Jan. 1.
In June, UPS announced peak season surcharges that will affect its retailer clients during the holidays. Most of the surcharges will take effect during the week before Christmas and range from 27-97 cents per package. UPS is the shipping carrier for 421 retailers in the Internet Retailer 2017 Top 1000.
As peak season approaches, UPS has focused on improved collaboration with retailer and other customers for better forecasts, Gutmann said Thursday when UPS reported its earnings for the third quarter ended Sept. 30. “More extensive collaboration this year will better align UPS solutions and capacity with seasonal promotions and fulfillment strategies. We work closely to obtain daily shipping estimates by location and even by product,” she says.
More and bigger UPS facilities also are expected to smooth peak season volume.
“Across the U.S. network, we’ve increased both package delivery and sorting capacity by about 6% over the past year. This represents the addition of more than 1 million square feet of added permanent and automated capacity available for peak,” Gutmann said. “The permanent facilities are located across the country in key locations like Los Angeles, Chicago and Kansas City. The deployment of Saturday operations with both pickup and delivery provides us with new and more efficient capabilities to serve customer growth. We will also take advantage of the flexible solutions from our partners at Coyote Logistics again this year.”
Saturday delivery gives the carrier five additional delivery days during peak season. “We’re planning to process 40% more volume on Saturdays, and 80% of the volume we plan to deliver over the weekends will be through the facilities where we’ve already established Saturday operations,” said Myron Gray, president of U.S. operations. UPS began Saturday delivery in 15 metropolitan markets in April after conducting tests in Atlanta, its headquarter city, in summer 2016.
UPS said Ground volume, which is its largest category, averaged 13.175 million packages daily in Q3, up 3.4% from 12.743 million packages in the year-ago period, UPS said.
Total U.S. package volume also increased 3.4%, to 15.885 million packages compared with 15.364 million in Q3 2016.
Average U.S. revenue per package was up 2.0% in the quarter, at $9.64 per package compared with $9.45 in the year-ago quarter.
International package volume increased 11.3% to 3.103 million from 2.788 million year over year.
“In Asia, our joint venture with SF Express was approved. We’re moving forward with plans to develop a co-branded, highly competitive export product for Chinese businesses shipping to the U.S., positioning us for more growth in the small and medium-size customer base,” CEO David Abney told analysts. SF Express Co. Ltd. is China’s biggest package-delivery company.
For the third quarter ended Sept. 30, UPS also reported:
- Total revenue rose 7.0% to $15.978 billion from $14.928 billion in the third quarter of 2016.
- U.S. domestic revenue increased 3.9% to $9.649 billion from $9.289 billion.
- U.S. ground shipment revenue grew 4.0% to $6.880 billion from $6.616 billion.
- Deferred Air revenue increased 3.6% to $1.002 billion from $967 million.
- Next Day Air revenue was up 3.6% to $1.767 billion from $1.706 billion.
- International revenue increased 11.2% to $3.364 billion from $3.024 billion.
- Net income of $1.264 billion compared with $1.270 billion.
For the nine months ended Sept. 30, UPS reported:
- Total revenue rose 7.0% to $47.043 billion from $43.975 billion in the third quarter of 2016.
- U.S. domestic revenue increased 5.6% to $28.929 billion from $27.388 billion.
- U.S. ground shipment revenue grew 5.4% to $20.754 billion from $19.689 billion.
- Deferred Air revenue increased 7.6% to $2.992 billion from $2.781 billion.
- Next Day Air revenue was up 5.4% to $5.183 billion from $4.918 billion.
- International revenue increased 6.3% to $9.585 billion from $9.015 billion.
- Net income of $3.806 billion compared with $3.670 billion.