UPS is showing signs of a turnaround after more than a year of struggles

The declines continued this year, exacerbated by economic uncertainty as customers increasingly chose budget shipping options.

UPS has been cutting costs by laying off employees, closing some of its buildings and reducing staffing by moving toward more automation in areas like the dispatch of drivers. So far this year, UPS has closed nine buildings and eliminated 45 operations as it consolidates, according to Tomé.

In June, the company announced the sale of its Coyote Logistics freight brokerage unit for $1 billion.

For the third quarter, UPS had $22.2 billion of total revenue, up 5.6% from $21.1 billion a year ago.

Its net income was $1.5 billion, up 36.6% from $1.1 billion a year ago.

“In the third quarter, we faced a macro environment that was slightly worse than we expected. In the U.S., online sales slowed and manufacturing activity was lower than we anticipated,” Tomé said during an investor conference call. “This slowdown in manufacturing activity was also true outside of the U.S., as we continue to see lower industrial production weigh on volume in certain geographies. But the macro environment didn’t prevent us from growing revenue and profit.”

The results drove up UPS’ stock price in early morning trading.

Tomé said the company is increasing its focus on higher-revenue business, which she calls “Better not bigger.” Selling Coyote eliminated what she called “a highly-volatile truckload brokerage business,” while a new contract with the U.S. Postal Service that fully launched this month adds air cargo volume that is profitable and predictable.

One area where UPS is seeing a decline in volume is from its largest customer, Amazon, which is handling more of its own packages. “I think it’s fair to say that we have seen them drive a lot of the reduction,” Tomé said. “But we’re fine with that, because it creates opportunities for us to grow in other areas.”

Separately, UPS is negotiating with the Postal Service on terms for discount SurePost deliveries, as the Postal Service looks to end discounts for shipping consolidators such as UPS. UPS transfers most SurePost packages to the Postal Service for final delivery.

“We’re confident we can work through this,” Tomé said.

The company still cut its revenue outlook for the full year, saying it now expects to bring in $91.1 billion in consolidated revenue for 2024, down from its most recent forecast of $93 billion for the year.

The new outlook would put this year roughly on par with last year’s revenue of $91 billion, which was down from 2022 revenue of $100.3 billion.

According to UPS, its updated target reflects the impact of the completed Coyote sale, its outlook for the fourth quarter and actual third quarter results.

The turnaround in the third quarter comes as UPS prepares for the busy peak holiday shipping season, the most important period of the year for the company. UPS is hiring more than 125,000 seasonal workers, including 6,500 in the Atlanta area. That’s up from the roughly 100,000 seasonal workers the company has hired each peak season in recent years.

Tomé said there will be a compressed holiday shipping season this year, because of a shorter period of time between a later-in-November Black Friday and Christmas Eve. UPS has put in place broad peak demand surcharges for the holiday period.

“Recently, shippers have tempered their volume expectations,” she said. “What forecasters and some of our customers are saying is because of the tightness of the shipping season, that many customers will go into a store to complete their holiday purchases. The consumer actually is in pretty good shape, but we think there’ll be some dynamics in how the consumer shops during the peak season.”

With seasonal hiring, the company can quickly offer jobs, “or we can rescind a job. So we can flex up or flex down the way we need to.”