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UPS quarterly profit up 3pc to US$1.27 billion as revenue rises 4pc

ATLANTA's United Parcel Service's (UPS) second quarter profit increased three per cent year on year to US$1.27 billion, drawn on revenues of $14.6 billion, which rose four per cent.

CEO David Abney told Reuters UPS is adding capacity to its network and will work more closely with retailers ahead of this year's crucial holiday season.

"We think it's going to be a repeat of last year," Mr Abney said. "We just have more tools in our toolbox this year."

Core domestic package delivery revenue rose 2.4 per cent to $9 billion helped by lower fuel costs and technology cut costs 0.2 per cent.

UPS has gained from ecommerce, but has also struggled to bring down the extra costs associated with making stops at individual residential addresses rather than at businesses.

Bloomberg reports the company is delivering packages to neighbourhood convenience stores and pharmacies, instead of doorsteps.

It also plans to install lockers outside 7-Eleven locations and other convenience stores so people can pick up items 24 hours a day.

UPS, a long-standing proponent of free trade, reiterated concerns over anti-trade rhetoric in this year's US presidential election, arguing that US businesses benefit from trade deals.

"It's not big companies that benefit; small and medium-sized enterprises need to compete and trade deals can make all the difference in the world to them," said Mr Abney.

UPS said second-quarter margins at its more lucrative international package business were boosted by volume growth, strong pricing and improved network efficiency gains.

UPS has taken several steps to improve the profit made on each package delivered to a home, which led to a better profit margin in the first quarter.

Analysts are eager to ask UPS how it handled a midyear surge in packages on July 12, when Amazon offered discounts as part of its Prime Day promotion for select customers, said Bloomberg Intelligence analyst Lee Klaskow.