UPS beats expectations across the board in Q1 earnings
A commitment to “delivering what matters” during the first quarter of 2021 has lifted consolidated revenue at UPS by 27% compared with the same period last year, rising to $22.9bn.
On the back of growth across all segments the business posted group operating profit of $2.8bn, a 158% increase. In its domestic US market, revenue increased by 22.3% to just over $14bn, with an operating profit of 9.7% ($1.36bn).
UPS' Supply Chain and Freight segment performed particularly well, posting record quarterly revenue of $4.29bn, an increase of more than a third (34.4%). Operating profit for the divison reached $321m, or 7.5%. UPS confirmed its divestment of UPS Freight to TFI remains on track and is expected to complete “by the end of this month”.
Chief executive Carol Tomé, who was appointed amid the pandemic’s first wave in 2020, was emphatic that UPS’ role in the vaccination effort and strategic support of SMEs were behind the uplift.
“I want to thank all UPSers for delivering what matters, including COVID-19 vaccines,” she said. “During the quarter, we continued to execute our strategy under the better not bigger framework, which enabled us to win the best opportunities in the market and drove record financial results.”
CEO Tomé: investment in supply chain digitisation continues
In a conference call with investors and media, Tomé said UPS has ambitions to “provide the best digital experience powered by our smart global logistics network”. Using SaaS to simplify the billing system for customers is one example of the ways in which the business is already investing in sweeping changes to reach that goal, Tomé said.
“Another is the digitisation that's occurring within our Supply Chain and Freight segment. We are moving from telephone based quotes to online quoting. This new digital experience is driving simplification across the entire value chain.”
Pressed to offer specifics, the chief executive said further investments in capabilities, rather than just CapEx, would be revealed in greater detail at this year’s investor conference in June.
UPS did not issue a revenue guidance, citing the prevailing uncertainty and volatility in the marketplace.
Pictured: UPS-branded eVTOLs are expected to join the fleet in 2024 / UPS
Suez Canal expansion plans greenlit by Egyptian president
The Suez Canal is to undergo a two-year expansion project, following the weeklong closure of the channel by the stranded Ever Given container ship in March.
Plans set forth to expand narrow sections of the Suez Canal have been greenlit by the Egyptian president to safeguard against future blockages.
Dredgers will widen and deepen the single-lane stretch close to the southern mouth of the canal, near where the 400m container ship got wedged earlier this year, while a second lane opened in 2015 will be extended to promote two-way traffic and alleviate the impact of bottlenecks.
President Abdel Fattah al-Sisi gave the order to “immediately start implementing the proposed development plan and put in place a timetable for completion as soon as possible”, according to reports. It is understood he expects the work to be fully completed within two years.
Ever Given negotiations rage on
The Ever Given left hundreds of ships stranded and disrupted an estimated $9.5bn in goods each day when it became wedged across a narrow passage of the trade route in March. After a week of dredging, towing and manoeuvring, it was eventually freed from the banks of the Suez Canal in the early hours of 29 March and set course of the Bitter Lakes holding area.
There the vessel, its crew and its cargo have remained ever since, while legal action between Egyptian authorities and the ship’s owners rages on, though SCA chairman and Managing Director, Admiral Osama Rabie, refutes allegations that crew have been detained.
“[There] is no truth in the allegations of detaining the ship crew, pointing to that the SCA does not mind the departure or recrew operations provided the presence of the sufficient number of sailors to secure the vessel and in the light of the presence of the ship captain as he stands as the juridical guardian of the ship and the cargo aboard,” Rabie said in a statement.
The SCA initially sought $916m in compensation to cover refloatation costs, including repairs where the channel was damaged to move the vessel, bonuses for the rescue crews who worked throughout the jam, and a package for “loss of reputation”.
Now the SCA and its chairman and Managing Director, Admiral Osama Rabie, have agreed to reduce the bill by a third. The authority has reportedly offered payment terms for the $600m to the Ever Given’s owner Shoei Kisen. Shoei Kisen has also declared a general average on the goods on board, with shippers liable to shoulder a significant outlay to get the 18,000-plus containers aboard to their final destination in the Nertherlands.