Supply Chain & Freight segment drives Q3 growth for UPS

Today, in UPS’ earnings call for its third-quarter 2018, the company reported consolidated net income of US$1.5 billion – a 19.8 percent increase from the same period last year, driven by growth in its Supply Chain and Freight segment.

Operating profit (EBIT) specific to Supply Chain and Freight was up 24.1 percent to $242 million, while its U.S. Domestic Package and International Package segments were both in the red for the quarter, declining 2.3 percent and 5.0 percent, respectively, compared to Q3 2017.

U.S. Domestic Package is still recovering from additional costs incurred last quarter, namely “higher pension expense and project related costs,” which had caused a 25 percent decline in operating profit in the segment. For the most recent quarter, the segment reported a smaller year-over-year decline in net profit of 6.1 percent, with the help of growth in volume and revenue. UPS reported a 3.3 percent increase in daily shipments for the segment, led by its Next Day Air and Ground products.

The company has also invested in its international express business, and firming options for 14 additional 747-8 freighters, as well as opening two new “super hubs” in Paris and London. Its International Package segment, however, saw an overall decline in volume of 0.2 percent and an 11.6 percent decline in operating profit. UPS cited “headwinds primarily from currency and fuel, as well as some economic softening related to changing trade policies.”