UPS, America’s largest trucking company, recently reported a significant decline in revenue and operating profit in the first quarter of the year. The company attributed this slowdown to a deceleration in US retail sales and ongoing demand weakness in Asia. UPS CEO Carole Tome expressed concerns about the current macroeconomic conditions, stating that they expect volume to remain under pressure due to the challenging environment.
The company’s stock plunged more than 6% in early trading following the news of the revenue decline. UPS had previously forecasted a tighter profit margin for 2023 due to changing consumer behavior and challenging macro conditions. They now expect full-year earnings to be at the lower end of their outlook. Additionally, UPS is facing contract negotiations with the Teamsters union, which could potentially lead to a strike if an agreement is not reached by the August 1 expiration date. Tome remains optimistic about reaching a win-win contract but acknowledges that there may be obstacles along the way.
Despite Tome’s positive outlook on the negotiations, the comments coming from the Teamsters union have not been as optimistic. Teamsters General President Sean O’Brien expressed disappointment in UPS’s behavior and emphasized that the union is prepared to go on strike if necessary to secure the contract members desire. As UPS navigates through these challenges, they are actively working to prevent package diversions to other carriers and reassure customers about the state of negotiations.