UPS reports $11.55 billion profit for 2022 as it continues to hike rates
UPS reported an $11.55 billion profit for 2022 and reached $100.34 billion in revenue for the year, as it continues to hike shipping rates.
The 3.1% year-over-year increase in revenue came as the Sandy Springsbased shipping giant’s rate increases make it more expensive to get packages delivered.
UPS two weeks ago announced new “demand surcharges” and surcharges for large packages.
The company increased its average revenue per piece by 8.6% in 2022 — indicative of the increased cost to ship packages. At the same time, UPS saw a 3.4% decrease in volume for the year compared with 2021.
Volume in December during the peak holiday shipping season “fell short of our expectations,” reflecting cutbacks in consumer spending, said UPS chief financial officer
Brian Newman during a conference call on the company’s results.
Earlier in the COVID-19 pandemic, stay-at-home protocols drove huge increases in e-commerce volume from people getting packages delivered to their doorsteps. But that has abated as pandemic restrictions eased, and consumers have cut back on spending in some areas as they are squeezed by inflation.
Delivery companies also encountered weather challenges during the recent peak holiday shipping season, leading to some delivery delays — but UPS CEO Carol Tomé said the company still delivered “industry-leading service.”
In the fourth quarter,
UPS said it saw a decline in volume in China, along with declines in its freight forwarding business. It also reduced the number of packages it delivers for Amazon, its largest customer, per a contractual agreement.
Tomé has emphasized a “better not bigger” approach, focusing on the most profitable packages to deliver rather than just increasing volume. “Our results in 2022 demonstrate our strategy is working,” she said.
In 2022, UPS operating expenses increased to $87.24 billion, up 3.3%.
That includes a 56.4% increase in fuel expense, to $6 billion.
The company’s $11.55 billion in net income was down 10.4% compared with 2021, as it saw a decline in non-cash pension gains. Looking at just operating profit, it saw a 2.2% increase in 2022 compared with 2021.
The company will soon start labor negotiations with the International Brotherhood of Teamsters on a massive new contract. The Teamsters have threatened the possibility of a strike if they don’t reach agreement with management by a July 31 deadline.