Christmas wish for UPS: A better holiday shipping season

DALLAS (AP) — UPS is adding automation, airplanes and package-handling capacity to handle an expected record volume of business during the key holiday shipping season.

The big delivery company aims to avoid the missteps that last year created bottlenecks in its network just as the holiday online-shopping season was heating up around Thanksgiving.

“There are a couple of key days that we have to get right. It’s cyber weekend, those first couple of days,” Chief Operating Officer Jim Barber said in an interview Wednesday. UPS, he said, must “make sure our capacity meets the demand.”

Barber said executives looked back over the last couple peak holiday seasons and were “constructively dissatisfied” with the company’s performance. Last year, UPS underestimated the volume of packages being shipped in the days right before so-called cyber Monday, the traditional late-November kickoff to the online-shopping surge.

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To adjust, United Parcel Service Inc. has added more capacity in sorting facilities. Last week, it opened a new highly automated “super hub” in Atlanta, one of several new or upgraded U.S. facilities that will let UPS sort about 350,000 pieces an hour more than it could last year.

UPS has also increased the size of its airplane fleet and plans to hire 100,000 seasonal workers — it is reviewing tens of thousands of applications received at coordinated job fairs around the country last Friday. And the company is working more closely with retail shippers to better anticipate when and where surges will hit its network.

Leaders of the Atlanta-based company discussed preparations for peak season as they released financial results for the third quarter. UPS earned $1.51 billion, up 20 percent from a year earlier.

The delivery company is getting a boost from economic growth in key markets around the world. Chairman and CEO David Abney said the U.S. economy has led the way, driven by higher consumer confidence, business investment and manufacturing output, all of which helps the delivery company’s business.

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In the third quarter, UPS handled more volume and charged 4 percent more per package on average — 5.1 percent more for U.S. ground deliveries.

“But, as has been the case in the last several quarters, cost growth overshadowed those effects,” said Dan Sherman, an analyst with Edward Jones.

Revenue rose nearly 8 percent, to $17.44 billion, but operating expenses jumped more than 9 percent, largely because of higher fuel prices.

The company’s income-tax bill was shaved by 44 percent, a savings of $297 million from a year earlier.

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UPS said earnings adjusted to exclude non-recurring costs were $1.82 per share, in line with expectations, according to a survey by Zacks Investment Research.

The shares fell $3.80, or 3.3 percent, to $110.44 in midday trading. They began the day down 4 percent this year.