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United Parcel Service Inc Class B UPS

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Morningstar’s Analysis

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UPS’ B2B Volumes Anemic, but B2C Package Spike a Nice Offset, and Margins Stabilizing

Matthew Young, CFA Equity Analyst

Analyst Note

| Matthew Young, CFA |

Small-package delivery giant UPS' second-quarter revenue increased 13% year over year, surprisingly better than the 5% growth posted last quarter and ahead of our forecast. The pandemic has materially accelerated the broader shift to e-commerce sales for large retailers, driving another spike in residential deliveries across the U.S. and Europe. Also, strong airfreight demand out of Asia benefited the international package and global forwarding units. Overall, solid Asia outbound demand and robust B2C package growth more than offset depressed B2B package activity and a pullback in demand for the truckload brokerage and less-than-truckload trucking divisions.

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Company Profile

Business Description

As the world's largest parcel delivery company, UPS manages a massive fleet of more than 500 planes and 100,000 vehicles, along with many hundreds of sorting facilities, to deliver an average of about 22 million packages per day to residences and businesses across the globe. UPS' domestic U.S. package operations generate 61% of total revenue while international package makes up 20%. Less-than-truckload shipping, air and ocean freight forwarding, truckload brokerage, and contract logistics make up the remaining 19%.

Contact
55 Glenlake Parkway, N.E. Atlanta
Atlanta, GA, 30328
T +1 404 828-6000
Sector Industrials
Industry Integrated Freight & Logistics
Most Recent Earnings Jun 30, 2020
Fiscal Year End Dec 31, 2020
Stock Type High Yield
Employees 495,000

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