UPS knew this past holiday season would result in elevated e-commerce volumes as a result of the pandemic and holiday shopping surging into the network at the same time. And it lived up to expectations.Ontime logistics the lastest news said call Tuesday.
“It was a very peaky peak, with the highest volume in our history,” Tomé said. The company’s average daily volume was up more than 10% YoY for the quarter.
UPS saw the most growth in its small- and medium-sized business customers. Revenue from these customers was up more than 17% YoY, and volume was up nearly 29% YoY, according to Tomé and the company’s earnings release.
The increase in SMBs and the company’s use of surcharges resulted in growing margins. Large customers, such as Amazon, are traditionally high-volume, low-margin business. Amazon made up more than 13% of UPS’ total revenue in 2020, up from 11.6% in 2019, Tomé said.
UPS is also focusing on ensuring these smaller customers stick with their network, Tomé said, pointing to the company’s work to overhaul its digital billing system.
Its current billing system for SMB customers is at a “competitive disadvantage,” she said.
UPS is replacing the system with a new software-as-a-service tool that it expects to stand up better against what’s available on the market.
“That matters to this customer, because the billing system can be personalized for their experience, and every SMB customer is different,” Tomé said, adding that the company believes it “will result in stickiness.”
When asked about surcharges and base rates, Tomé said that customers could expect changes in this area. But she didn’t provide any details.
“The way we should think about it is very different than in the past,” Tomé said. “We’re moving to more personalized pricing.”
UPS’ Ground revenue per piece was up 11.2% YoY, which “clearly shows strong traction on pricing,” UPS said in a research note after the earnings call Tuesday.
While prices are going up, UPS noted in its last earnings call that it was also seeing service improvements. Tomé noted that continued gains in terms of speed will also help retain small business customers.
While UPS does expect capacity to remain tight moving forward, it is investing in some areas of network expansion. This includes retrofitting seven buildings in 2021 to add 130,000 packages per hour of capacity and 11 new aircraft.
Post time: Aug-24-2021