UPS said holiday shipping struggles took a $125 million toll on its financial results after its system was overloaded with packages in the week after Thanksgiving.
The rush of packages led to some delayed shipments and frustrated consumers early in the crucial peak shipping season.
The Sandy Springs-based shipping giant handled 12 million more packages than it had planned during the holiday season.
“Volume accelerated beyond our projections,” said UPS President of U.S. operations Myron Gray. “The early surge pushed our U.S. network above its maximum capacity.”
UPS disclosed the additional expense as it reported a $4.9 billion profit for 2017, up from $3.4 billion the previous year.
The $125 million in costs during the holiday season went toward more contracted transportation and new hires in areas with low unemployment rates and few available workers, said CEO David Abney in an interview with The Atlanta Journal-Constitution.
The company had already started peak surcharges in an effort to temper volume during the busiest periods. Abney said the surcharges “did help us to some extent shape the volume” particularly in the week leading up to Christmas.
But during the week of Cyber Monday after Thanksgiving, “we didn’t have quite the success we thought we would… and we’re going to look at that and that will be an area of focus for this year.”
The company is working to expand its capacity to handle more packages, and announced Thursday it is ordering 14 additional Boeing 747-8 cargo jets and four Boeing 767s.
UPS also said it is investing $12 billion in expansion and increased pension funding, which Abney called "an outgrowth of the opportunity for tax savings created by the Tax and Jobs Act."
Abney said $7 billion will go toward new projects and the acceleration of already-planned projects, while $5 billion will go toward pensions to raise funding levels above 90 percent.
Among the expansion projects is a major Atlanta regional packing sorting facility located next to Fulton County's general aviation airport known as Charlie Brown Field. Portions of the building will begin operations in coming months and the full facility will be completed by the fall, Abney said. MYAJC.COM: REAL JOURNALISM. REAL LOCAL IMPACT.
AJC Business reporter Kelly Yamanouchi keeps you updated on the latest news about Hartsfield-Jackson International Airport, Delta Air Lines and the airline industry in metro Atlanta and beyond. You'll find more on myAJC.com, including these stories:
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