UPS cuts annual revenue forecast on weak delivery demand
UNITED Parcel Service cut its 2023 revenue forecast due to lower e-commerce delivery demand as it fights to win back customers lost during its tumultuous labour talks.
The Atlanta company is caught in a profit squeeze in the wake of contract talks with its Teamsters-represented workforce.
It is absorbing 46 per cent of wage and benefit costs of the new five-year contract in the first year, even as it tries to win back 1.2 million daily packages that customers diverted to rivals when UPS workers threatened to strike.
The world’s biggest package delivery firm now expects full-year revenue between US$91.3 billion and US$92.3 billion, compared with a prior forecast of about US$93 billion.
Meanwhile, the entire industry is fighting for market share as e-commerce delivery demand continues to sag.
Reuters reported earlier this month that UPS and its rivals for the first time in years have been using discounts and other incentives to maintain and win market share since the pandemic’s e-commerce delivery bubble burst last year.
UPS, often seen as a bellwether for the US economy, and other logistics companies have been racing to match costs to global demand that has fallen back to pre-pandemic levels.
UPS has been cutting jobs and leaning on technology to help offset falling e-commerce demand, weak export and industrial production and the cost hit from its new labour contract.
It is offering early retirement to pilots and cutting its management ranks. It is also reducing flights and shifting package flows from smaller non-automated buildings to larger automated facilities. REUTERS
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