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United Parcel Service Inc UPS

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UPS’ Q1 Yields Surge on Strong Pricing Power and Mix Benefits; 2021 Volume Outlook Remains Favorable

Matthew Young, CFA Equity Analyst

Analyst Note

| Matthew Young, CFA |

Wide-moat UPS posted solid first-quarter top-line growth near 27% year over year, ahead of our forecast due to better-than-anticipated mix benefits to yields. Continuing the theme of previous quarters, the pandemic has driven a surge in residential package-delivery demand across most segments. Additionally, domestic and international B2B activity is improving sequentially on gradual industrial end-market recovery. Also, international package business continues to enjoy tailwinds from limited airlift capacity and healthy export demand. Total package yield surged 11% on rising (and sticking) surcharges, constrained last-mile network capacity (greater pricing power), and accelerating demand from higher-yielding small and midsized customers. Domestic yields rose 10% (8% last quarter), while international yields gained 12%.

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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%.

55 Glenlake Parkway, N.E. Atlanta
Atlanta, GA, 30328
T +1 404 828-6000
Sector Industrials
Industry Integrated Freight & Logistics
Most Recent Earnings Mar 31, 2021
Fiscal Year End Dec 31, 2020
Stock Type Cyclical
Employees 543,000