UPS' 2023 Guidance Looks Favorable, but Upcoming Labor Negotiations a Wild Card

UPS' fourth-quarter top line swung to a 1% decline year over year (removing foreign exchange), slightly below our forecast because of weaker-than-expected international package activity. Relative to fourth-quarter 2021, the revenue decline stems from falling package volumes, along with rate and demand normalization for the truck brokerage and global forwarding operations, partly offset by higher fuel surcharges and continued core pricing gains in the package segments (adjusted package yield rose 6.5%).