UPS Expects Return to Pre-Pandemic 'Shopping Behaviors' for Holidays
Shipping volume will peak later in December vs. 2021 as consumers return more to pre-COVID-19 pandemic “shopping behaviors,” said UPS CEO Carol Tome on a Tuesday earnings call. Q3 revenue grew 4.2% to $24.2 billion: U.S. revenue grew 8.2% on a 9.8% increase in revenue per piece.
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Overall Q4 volume is expected to decline vs. last year due to “contractual agreements,” Tome said. Responding to a question in Q&A about the Amazon run rate expected by year-end, Tome said, “We reached an agreement with our largest customer about the volume that we will take into our network and the volume that they will deliver.”
Last year, between Q3 and Q4, UPS volume grew 25% and was higher during the peak period from Thanksgiving to Christmas. UPS expects a “similar surge” this year during the peak period “but maybe more in the 24% area,” she said. That gives UPS the chance to “invite additional customers into our network,” she said.
On expectations for late holiday quarter shipping volume, Tome referred to 2021 "supply chain jams" and low inventories, saying customers were being encouraged to shop early. “We just believe that inventory levels are in much better shape than they were a year ago, so we’re going to return to a more normal shopping pattern for peak.”
UPS plans to bring on over 100,000 seasonal hires for the holiday period, Tome said. The company cut down the time from “hire to dispatch” to streamline the hiring process. Newly hired drivers can complete training on their phone using a QR code, she said: “You can apply for a job and get a job offer in less than 30 minutes.” The company condensed the time it takes to onboard a driver from eight weeks to 11 days, the executive said.
Tome highlighted UPS’ smart package and facility initiative, active in 101 buildings, that’s designed to improve productivity via RFID labeling. On average, one out of every 400 packages is misloaded onto a package car and has to come back to the distribution center, be re-sorted and reloaded the next day for delivery, she said. RFID labeling has cut misloads to one in 800, she said, giving a target of one in 1,000.
Chief Financial Officer Brian Newman reaffirmed the company’s 2022 revenue target of $102 billion. Last week, UPS announced a 6.9% price increase, “reflecting the value of the services we offer and cost inflation in the market,” Newman said.