During this holiday season, UPS already is showing signs that it will have an increase in sales from this time last year. Internet Retailer reported that end-of-the-year sales are forecasted to increase for UPS between Thanksgiving and December 31. Kathleen Gutmann, senior vice president of worldwide sales and solutions, said during a call on UPS’s third quarter earnings, “The dramatic growth of online shopping and subsequent returns is expected to lift UPS package levels to a record high during this upcoming holiday period. Between Thanksgiving and New Year's Eve 2016, there are two additional operating days and we expect to complete over 700 million deliveries worldwide, about 100 million more than last year.”
For this year's third quarter, the carrier's US average daily package volume increased 5.7% to 15.364 million packages from 14.540 million during the same time in 2015. International package volume also went up by 7.5% to 2.788 million from 2.593 million in 2015. Some other third quarter numbers for UPS included:
- Total revenue rose 4.9% to $14.928 billion from $14.237 billion in the third quarter of 2015.
- U.S. domestic revenue increased 4.8% to $9.289 billion from $8.860 billion.
- U.S. ground shipment revenue grew 4.8% to $6.616 billion from $6.315 billion.
- Next Day Air revenue was up 2.6% to $1.706 billion from $1.662 billion.
- International revenue increased 2.2% to $3.024 billion from $2.959 billion.
- Net income increased 1.0% to $1.270 billion from $1.257 billion.
Also, UPS' My Choice program will be used to help manage the expected holiday volume surges. My Choice gives consumers who sign up the option to choose the delivery location of their package, whether to their home or an alternate delivery site, including a UPS Access Point location. The program currently has 30 million members worldwide, compared with 20 million last year. The growth shows that customers like options, and UPS has about 8,000 Access Point locations in the US, including UPS stores, Access Point “smart" lockers, in addition to sites like convenience stores and dry cleaners.
Chief financial officer Richard Peretz commented on UPS business-to-business sales. He stated, “It's the best growth we've had there in five quarters. Returns growth in e-commerce is also very strong. It's growing in the mid-teens.” Despite lower industrial production, business-to-business grew roughly 2% primarily due to online retail returns. The question will be will UPS be able to keep pace with deliveries and returns in a timely manner.
Returns are not something that shoppers enjoy, nor do retailers like it either. However, with the evolving of warehousing being sourced from actual physical stores instead of traditional warehousing, correcting error shipments can be easily done with Same-Day Delivery. This is just one advantage of the service, which retailers are partnering with a Same-Day Courier like A-1 Express that can quickly pick up and deliver product from nearby stores. The Miami Courier supplies same-day delivery to hundreds of well-known retailers and companies nationwide.
Online retail is not only driving package increases for UPS, but also same-day delivery. During the holiday season, retailers like Amazon, Google, Macy's, Best Buy, Whole Foods, and more are all gearing up to provide a convenient delivery option that shoppers feel is convenient and at low cost.
Reference: 10.27.16, Internet Retailer, Tracy Maple, UPS expects holiday package volume to grow more than 16%