Mon, 27 Sep 2021

E-commerce expected to fall, driving down value of UPS shares

Robert Besser
01 Aug 2021, 13:06 GMT+10

NEW YORK CITY, New York: Shares of United Parcel Service (UPS) fell to its lowest in three months on July 27 due to concerns that e-commerce growth might be slowing.

In recently released figures, UPS saw a 2.9 percent decline in domestic package volume during Q2, with ground deliveries, comprising chiefly electronic commerce deliveries, falling 4 percent, compared to 2020.

"Investors are likely reading this as an indication that the pandemic-driven demand trend is slowing," according to Cowen's Helane Becker, as quoted by Reuters.

During mid-day trade, UPS shares dropped 9.3 percent to $190.32.

UPS benefitted from consumer preferences to shop online during the COVID-19 crisis. Similar to its competitor FedEx Corp, UPS' response to the surge in home deliveries was through the inclusion of surcharges to drive up its profits.

Total income generated at UPS soared 14.5 percent to reach $23.42 billion, beating the projected $23.24 billion.

With Carol Tom taking on the role of UPS chief executive officer in June last year, the company has worked to curb expenses and has channeled attention to delivering packages offering higher margins, as part of her approach, termed "better not bigger."

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