Package delivery giant UPS said its net income rose 8.9 percent to $1.04 billion in the Sept. 30 quarter, as surging international package volume helped offset slow U.S. air growth and as per-package yield grew solidly.
One weak spot was the Supply Chain and Freight division that includes the former Menlo Forwarding and Overnite's less-than-truckload ground freight operations. That grouping saw revenue jump nearly 26 percent to $2 billion, but operating profit plummeted 127 percent to a $19-million loss.
Chairman and CEO Mike Eskew said, "Our small package business continues to show strength across all segments, and we are taking the steps necessary to put our supply chain business on the right track after a disappointing performance."
Overall UPS operating profit rose 5.2 percent to $1.6 billion. Profit in its largest business line, domestic packages, grew 8.8 percent to $1.2 billion. International package profit soared by 22 percent to $387 million.
Within the domestic package segments, next-day air volume grew just one percent from a year earlier to 1.23 million pieces, ground volume rose 3.6 percent to 11.2 million and deferred delivery picked up 3.4 percent to 889,000. On the international lanes, volume grew by 19.9 percent to 1.765 million pieces.
Domestic yields increased an average 3.4 percent per piece, while international yields rose 4.3 on the international business.
In the fourth quarter, UPS will cut 1,200 jobs at its freight forwarding unit Menlo Worldwide Forwarding, which it acquired in 2004. This will result in savings of $100 million in 2007.
-- John D. Boyd, Traffic World