Shipper Reports Fourth Quarter Loss

Shipper reports loss

Shipping companies are seen as a gauge for consumer confidence in the economy. When the economy is strong, shipping company earnings are typically higher as consumers order and ship more products. When the economy is weak, the opposite is true. If economic projections by a major shipper are any indication, 2013 is in for an uncertain outcome.

On January 31, 2013, United Parcel Service released its fourth quarter earnings statement for 2012. For the year, UPS realized an operating loss in its U.S. Domestic Package business of $1.8 billion. That number is skewed somewhat by a non-cash charge for pension and post-retirement benefit plans. Excluding that charge, UPS would have seen a profit of $1.2 billion in this business segment.

The holiday season yielded lower than expected results for UPS as shoppers spent less than the company anticipated. UPS shipped a total of 500 million packages, or 12.5 percent of their yearly total, during the holidays, including 28 million packages on their peak day. Even with lower than expected outcomes, both single day and total holiday shipping figures set new records for the company.

As far as economic projections going forward into 2013, UPS expects growth to be below long-term trends. Despite this potentially negative implication for operations, UPS anticipates earnings growth of 6 to 12 percent in all its business segments.

What do you think about the  economic outlook for 2013?

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