Will Feuer of The Wall Street Journal tells readers how the new contract with the International Brotherhood of Teamsters and a slowdown in global shipping demands caused a shipping giant to cut its outlook. He writes:
United Parcel Service (UPS) cut its sales outlook after revenue slipped in the third quarter because of a slowdown in global demand for shipping.
The package-delivery company’s stock dropped more than 5% to around $139. Shares were already down more than 15% this year through Wednesday’s market close.
Chief Executive Carol Tomé said macroeconomic factors weighed on demand for UPS’s services in the quarter. Shipping between China and the U.S. hasn’t improved as fast as UPS executives had anticipated, and online retail sales have been subdued. Average U.S. daily package volume for UPS fell 11.5% to 17.3 million.
“We’ve seen, clearly a shift from goods to services,” said Tomé, noting that people are returning to work, taking vacations, going to restaurants and amusement parks. “It’s not that the consumer is not healthy. They’re spending their dollars differently.”
UPS’s shipping volumes were hurt earlier this year as the company negotiated a new contract with the International Brotherhood of Teamsters and customers shifted their business amid concerns about a prospective work stoppage. During labor talks and even after a deal was reached, customers diverted an average of 1.5 million packages a day – a steeper decline than it previously had forecast – to competitors, UPS executives said. […]
The company cut its full-year revenue guidance to $91.3 billion-$92.3 billion, down from guidance of about $93 billion issued in August.
Fourth-quarter daily average U.S. volumes are projected to be 22 million to 23 million, down by a single-digit percentage from a year earlier, said chief financial officer Brian Newman.
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