UPS reported a 6% y-o-y drop in revenues for the first quarter of 2023, taking $22,925m, down from $24,378m in Q1, 2022. Operating profit fell by 21.8% y-o-y to $2,541m for the quarter.
A number of factors impacted revenues and profit. UPS CFO Brian Newman explained, “We saw lower volume across all industry sectors, with the largest declines from retail and high-tech,” he said. “B2C average daily volume declined 5.5% compared to last year, and B2B average daily volume fell 5.4%.
Other factors included its unionised UPS workforce demanding and getting higher rates of pay through a threatened national strike at the beginning of 2023. This further impacted costs throughout the business.
Impacting revenues further was an overall drop in revenues per parcel in UPS’s international export operations, falling to $33.00 per piece from $34.10 in Q1, 2022. According to UPS CEO Carol Tomé, “Outside of the U.S. export activity out of Asia remained weak, which negatively impacted revenue in both International and Supply Chain solutions.”
This is combined with drops in consumer confidence that has hit the global e-commerce market hard in recent times. Tomé continued, “In the first quarter, deceleration in U.S. retail sales resulted in lower volume than we anticipated, and we faced ongoing demand weakness in Asia. In response, we focused on controlling what we could control and delivered first-quarter consolidated operating profit and operating margin in line with our base case targets.”
Looking ahead, the CEO isn’t confident of any significant growth in revenues or profits for the full financial year. She said, “Given current macro conditions, we expect volume to remain under pressure. We will remain focused on driving productivity while investing in efficiency and growth initiatives, enabling us to come out of this demand cycle even stronger.”
Macroeconomic conditions are affecting many of the major consumer markets of Europe and North America. This in turn has impacted logistics operators that are most exposed to e-commerce, of which UPS is no exception.
Author: Richard Shrubb
Source: UPS
