Home » 3PL/4PL, Breaking News » UPS cuts Asia air capacity on slow exports to the U.S.

United Parcel Service (UPS) reduced its air capacity from Asia in the third quarter of 2011 amid a significant demand downturn from the U.S., but added it can bring capacity back again should demand suddenly rise during the holidays.

The most dramatic slowdown in UPS’ business was in shipments from China to the U.S. as Americans curbed spending amid growing fears of another recession. The company said its international package operations posted single-digit declines out of Asia as volume fell in the third quarter after rising 47 percent a year ago.

Responding to slow exports from Asia to the United States, UPS said it had reduced capacity there by 10 percent. But it expects volume to pick up in the fourth quarter, boosted by shipments of new technology-product launches.

Overall revenue grew by 8 percent to $13.17 billion and operating profit rose 0.2 percent to $1.61 billion. At $1.06 per share, earnings saw a 14 percent increase in the third quarter to $1.04 billion, from $991 million, or 99 cents per share, a year earlier. The increase was driven largely by improved domestic supply chain and freight business in the U.S. and partly from a “fairly stable” business in Europe.

To offset the slow Asia-U.S. trade, UPS said it used fewer planes to reduce costs and will be ready to divert the planes to other parts of the globe should business cool down further.

The company kept its revenue forecast for the year, hinged on expectations of a crawling growth in the U.S. economy.


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