Money, Money, Money

UPS 3Q Profit Rises 5 Percent, Keeps Year View




     The most dramatic slowdown in UPS’ business from last year was in shipments from China to the U.S. Americans pulled back on spending this summer amid debt talk uncertainty in Washington and growing fears of another recession. UPS said volume fell between Asia and U.S. in the third quarter; a year ago, it leaped by 47 percent.
     To counteract the slowdown there, UPS is using fewer planes to cut costs. But in a conference call with analysts, UPS Chief Financial Officer Kurt Kuehn said the cuts weren’t enough to account for the steep decline in demand. If American consumers pull back further, the company said it will make more adjustments, mostly by redeploying planes to parts of the world where business is better.
     Higher prices and fuel surcharges helped drive results in the third quarter. Operating profit in its international segment fell 2.4 percent. Operating profit also fell at the company’s core U.S. package business, but rose 10 percent for supply chain and freight. The supply chain unit provides a number of services for companies including help with warehouse and shipping efficiency. It’s growing as more companies look for ways to reduce costs.
     United Parcel Service Inc. made more money from its fuel surcharge plan in the quarter as oil prices fell rapidly. In times when prices are falling quickly, UPS — which charges customers a surcharge based on the price of oil — benefits because the charge lags actual prices by about two months.
     UPS shares fell $1.52, or 2.1 percent, to close at $69.35 Tuesday.