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UPS Announces Service Expansion on Next Day Air Volume Surge

Zacks Equity Research

United Parcel Service Inc UPS is expanding its express air network to Gary/Chicago International Airport, well ahead of the peak holiday shipping season.

UPS Airlines Airbus A300, which will be utilized to serve the airport, has a capacity to carry more than 14,000 Next Day Air packages. Moreover, the wide body cargo jet has a maximum payload of more than 120,000 lbs.

This expansion initiative will help the company meet the surge in Next Day Air volumes. Notably, Next Day Air average daily volumes rose 20.5% in the first quarter of 2020, marking the fourth straight quarter of a double-digit rise.

United Parcel Service Inc Price


United Parcel Service Inc Price

United Parcel Service Inc price | United Parcel Service Inc Quote

From the Chicago airport, UPS’ cargo aircraft will carry packages to UPS Worldport, the company’s global air hub in Louisville, KY. The aircraft will return the next day after sorting at Worldport, with thousands of express shipments to be delivered later that very day. The services are set to begin on Nov 2, during the peak holiday shipping season.

To facilitate operations at the airport, UPS will hire some new employees, while transferring some to the airport in Gary. In total, the company expects 60 people to work at the airport, including ground handlers, administrative positions, aircraft maintenance technicians and management employees.

Earnings Overview

Last month, UPS reported first-quarter 2020 earnings numbers. The Zacks Rank #4 (Sell) company’s earnings (excluding 4 cents from non-recurring items) per share of $1.15 lagged the Zacks Consensus Estimate of $1.21. The bottom line also declined 17.3% year over year. Results were hurt by the coronavirus-induced supply-chain disruptions. Despite the coronavirus crisis, performance on the top-line front was encouraging. UPS generated revenues worth $18,035 million in the quarter, surpassing the Zacks Consensus Estimate of $17,420.3 million. Moreover, the top line improved 5.1% on a year-over-year basis backed by higher average daily volumes. (Read more: UPS Misses on Q1 Earnings, Scraps 2020 EPS & Revenue View)

Within the broader Transportation sector CSX Corporation CSX, Union Pacific UNP and Canadian Pacific CP also reported earnings numbers last month. Each of these Zacks Rank #3 (Hold) companies surpassed earnings estimates in the first quarter. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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