United Parcel Service, Inc. (UPS) faced challenges in the first quarter of 2023 due to a substantial slowdown in the shipping industry. Revenue decreased by 5.3% compared to the same period last year, while operating profit saw a 31.5% decline after adjusting for inflation. These setbacks stemmed from recent salary negotiations with the Teamsters union, which resulted in a guaranteed salary of $170,000 for delivery truck drivers over the next five years. Despite the overall decline, UPS shares rose by 2.4% on Tuesday as quarterly profit surpassed analyst expectations. The company has also secured a new contract with the United States Postal Service (USPS) to provide air cargo services, expected to boost revenue and align with UPS’s strategy to grow its B2B business. However, UPS CEO Carol Tomé has acknowledged 2023 as a challenging year, with declines in volume, revenue, and operating profit across all three business segments. The company is navigating these challenges by implementing cost-cutting measures, including plans to reduce its managerial workforce by 12,000 positions, potentially saving $1 billion in 2024. The USPS deal is anticipated to partially offset the revenue losses experienced due to volume decline, contributing to top-line growth for UPS.
UPS Delivers Lackluster Q1 Results Amidst Shipping Slowdown
