UPS' "better, not bigger" approach pays off in quarterly results

UPS’ fourth-quarter results for 2021 showed a year-on-year increase of 11.5% in consolidated revenue, despite delivering fewer parcels.

The company also reported an increase in consolidated operating profits of 37.7% on an adjusted basis.

Under CEO Carol B. Tomé, who took on the role in June 2020, UPS has been pursuing a “better, not bigger” corporate strategy, focusing on high-margin shipments rather than sheer volume of parcels, in order to increase profits and improve the quality of service.

This was in response to the costly rise of residential deliveries as a result of the pandemic-accelerated e-commerce boom, with narrower margins than business-to-business shipments, a sea change that’s been difficult for companies to navigate across the industry.

The company has also pivoted away from large customers granted discounts to small and medium sized businesses.

In addition, UPS dealt with the early surge of seasonal shipments, which meant lower than expected volumes before Christmas, by ending vehicle rentals and seasonal staff requirements sooner than originally planned, thus saving further costs.

Looking ahead, UPS now expects to achieve its 2023 targets for consolidated revenue and operating margins one year early.

Source: UPS, Bloomberg, Parcel and Postal Technology International