Wednesday, July 24, 2013

UPS Second Quarter Earnings 2013

Yesterday, UPS released their second quarter earnings.

For additional information:

  • UPS' press release, click here.
  • To read Ti's analysis please click here.
  • Transcript of the earnings call, click here.

As time permits, thoughts will be posted. Until then, let me know what you think.

A few tidbits from UPS' earnings call regarding its freight forwarding group:

For second quarter, double-digit declines in revenue were noted due to lower demand for air freight forwarding from Asia. Revenue is heavily concentrated from "large, high tech shippers whose business is down from last year". UPS also mentioned large declines in the military sector.

Volume-wise, air freight tonnage was down "a little over 10%" with military a big piece of the decline.

The company is reportedly working towards diversifying its revenue base - An excellent idea - How is the pharmaceutical/cold chain air transport doing? The company offers a nice solution for this. However, growing competition in this market may make it difficult for UPS.

Perhaps it will be good to diversify tradelanes as well. It appears the company may be too dependent on the transpacific lane, much like Expeditors. It seems there may be too much competition on this lane as well. How is the transatlantic lane doing? It would be interesting to find out.

Overall, a bump along the road for UPS. Executives noted they were already working on improvements and such. It's likely some of these initiatives will show up in the company's third quarter earnings and the company should finish 2013 on a positive note.