UPS DRIVES HIGHER PROFIT IN 3Q16

 

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UPS today reported higher profits for the third quarter of 2016.  The figures clearly indicate strong growth for UPS in several key areas of their business.  Please find the highlights of the report and a link to the full report below.

Some of the key points we would like to make regarding this report are as follows:

  1. The number of daily deliveries for UPS is up by almost 6% confirming what everyone already knows; e-commerce business is here to stay and remains on a continual strong upward spiral. Every business, whether a retailer or consumer products company continues to grow their on-line business which is a boon certainly for UPS as well as their rivals FedEx and Amazon.  Having said that, as this service continues to grow by leaps and bounds, shippers must ensure their on-line business strategies are sound and effective to not only serve their customer’s needs, but more importantly to make sure they continue to grow corporate profits at the same time.
  1. The large growth in both deferred air services by 10%, as well as Next Day Air services by 5.9%, is also a very revealing statistic. It shows significant growth in a “higher cost” service provided by UPS that shippers are obviously willing to pay for because consumers are clearly demanding faster delivery when they order goods on line.  A caution to shippers however is the need to monitor these costs within their parcel contract agreements.  As these “higher cost” services are utilized by more and more shippers, it is incumbent upon them to make sure the discounts and incentives their parcel carriers have published in their contracts for these services, are at a level that provides savings incentives to the shipper as they spend more money for these expedited services.
  1. Also of importance is the fact that UPS, as well as FedEx are getting ready to implement their annual General Rate Increase, (as they do every year as a holiday gift to shippers), so there is no better time for shippers to take the time to review their parcel carrier pricing agreements to make sure they have not left any money on the table in their contract negotiation efforts.  More importantly, they should certainly entertain having an independent third party perform a benchmark analysis to ensure that the rates they are paying are in fact, the best rates for the services they utilize.  Have a question?  Need help identifying cost savings opportunities within your parcel shipping operations?  ICC Logistics is here to assist you to make sure your company takes full advantage of all of the pricing incentives available based on your unique shipping characteristics.  Give us a call, your partner in profit is standing by.
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