Next-day delivery pays off for UPS
Next-day delivery is becoming standard at Amazon and Walmart. That’s paying off for UPS.
The company reported strong second-quarter earnings on the back of growth in online shopping. In the United States, UPS said that volume for its Next Day Air unit surged 30%. The increase in demand is because of “accelerated delivery requirements from e-commerce shippers.”
Amazon recently expanded its next-day delivery for millions of its Prime customers. In response, Walmart now offers next-day delivery on a large number of items too.
UPS said it plans grow its airplane fleet and modernize its delivery network to have a “have a positive impact on profitability.”
For the quarter, revenue rose more than 3% to $18 billion compared to the same period a year ago. Income and earnings per share were also higher and topped analysts’ expectations. UPS also reaffirmed its full-year outlook.
The stock is up more than 2.5% in premarket trading.
UPS is also rapidly expanding its network of package-drop-off points, its drone delivery unit and its delivery week.
On Tuesday, the company added more than 12,000 UPS Access Points with the addition of CVS, Michaels craft stores and Advance Auto Parts locations. UPS will soon have 21,000 drop off and pick-up portals in the United States.
It’s also seeking a certification from the Federal Aviation Administration for a new subsidiary called “UPS Flight Forward” for its drone operations. A certification would allow it to have FAA-approved flight operations “beyond line of sight, at night, and with an unlimited number of drones and operators in command.”
Beginning early next year, UPS will add new Sunday pick-up and delivery options. That will bring its delivery operations to seven days a week.