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UPS Q4 And Full-year 2022 Earnings Are Mixed

UPS Q4 and full-year 2022 earnings are mixed

UPS Q4 and full-year 2022 earnings are mixed

House T&I hearing continues to raise the profile of the supply chain, logistics, and goods movement UPS Q4 and full-year 2022 earnings are mixed 2M ocean alliance is winding down, reports MSC and Maersk SMC3 panel takes a look at nearshoring and reshoring, as China goes through some shifts Operate More Sustainably and Improve Logistics Performance by Moving to “The Edge” More Logistics News Fourth quarter and calendar year 2022 earnings results issued today by Atlanta-based global transportation and logistics services provider UPS were mixed. Quarterly revenue—at $27.0 billion—was down 2.7% annually, and adjusted earnings per share—at $3.62—up 0.8% annually, topping Wall Street expectations of $3.59 per share. Quarterly operating profit came in at $3.2 billion, which was off 17.9% annually. Calendar year 2022 revenue headed up 3.1%, to $100.3 billion. Operating profit was $13.1 billion, and adjusted operating profit headed up 5.4%, to $13.9 billion. “I want to thank all UPSers for delivering what matters throughout the holiday season, including industry-leading service to our customers for the fifth consecutive year,” said Carol Tomé, UPS chief executive officer, in a statement. “For the year, we reached our targeted consolidated operating margin and return on invested capital goals one year earlier than originally anticipated. Our results in 2022 demonstrate our strategy is working.” Individual segment results for UPS in Q4 2021: U.S. domestic package revenue increased 3.1%, to $18.252 billion, and average daily package volume was down 3.8% annually, to 24.238 million, with UPS attributing the revenue uptick to a 7.2% increase in pricing, total average revenue per package at $11.95; International Package revenue, at $4.950 billion—was down 8.3% annually, with average daily volume down 8.6%, to 3.735 million, and total average revenue per package down 0.2%, to $20.06; and Supply Chain Solutions revenue—at $3.831 billion—fell 18.1% annually, with Forwarding revenue down 37.1%, to $1.803 billion, and Logistics revenue—at $1.508 billion—up 12.3% In its 2023 outlook, UPS said it expects full-year revenue to come in between $97.0 billion-to-$99.4 billion, with consolidated adjusted operating margin to be between 12.8%-to-13.6% and capital expenditures around $5.3 billion. Jerry Hempstead, president of Hempstead Consulting, told LM that despite widespread annual volume declines for average daily package volumes across UPS’s U.S. Domestic Package and International Package offerings, pricing continues to remain strong and serve as a major driver. “The road has been easy for the last three years for UPS [and other large parcel carriers],” he said. “Changes in shipping behavior as a result of Covid has lifted all ships. The extraordinary volumes emboldened the carriers to raise transportation prices, accessorial charges and tinkered with formulas like the fuel surcharge to create ever improving profits. But in today’s UPS announcement, we see that volumes in every class of service for both domestic and international have declined. The coal that makes the steam that drives the engine is packages. My expectation is that the economy is rapidly decelerating and that package volume will decline as a result. That will put UPS in a difficult position when entering negotiations with the bargaining units shortly. The Teamsters will want tremendous improvements in pay, as well as attempting to get UPS to air condition its truck fleet. So, UPS, no matter how you slice it, is going to have increased labor costs that its competitors will not have.” And he added that if UPS desires to maintain margins, it will have to pass some of these costs onto the shipping community. “There is only so much carriers can do with the pricing power they have been wielding the last few years,” he said. “The package count is the measure by which you can get a flavor for the health of a shipping business. The available number of packages in the marketplace is in decline if you look at the numbers from UPS, FedEx, DHL and UPS. The second half of the year may be a little bumpy for UPS.” About the Author Jeff Berman, Group News Editor Jeff Berman is Group News Editor for Logistics Management , Modern Materials Handling , and Supply Chain Management Review . Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. Contact Jeff Berman Subscribe to Supply Chain Management Review Magazine! Subscribe today. Don’t Miss Out! Get in-depth coverage from industry experts with proven techniques for cutting supply chain costs and case studies in supply chain best practices. Start Your Subscription Today! Time to calibrate […]

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Daisie Hobson

Daisie Hobson is a Director at the Reshoring Institute and an engineer with many years of experience in manufacturing and project management.

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