Western Railroad Discussion > UPS First Quarter Operating Results

UPS

Revenue 15,135 million 2017 14,418 million 2016
Profit 1,784 2017 1,813 2016

US DOMESTIC

Revenue 9,535 million 2017 9084 million 2016
Profit 1.076 million 1,102

Revenue per piece up 2.4%
Next Day Air and Deferred Air up 3.9% and 4.15
Construction of 17 major facilities to facilitate growth from e-commerce
Began Saturday delivery and pickup Ground in 15 major cities and will have Saturday service in 4700 cities by peak season 2017. This also in response to E-commerce

International

Revenue 3,058 million 2017 2,914 million 2016
Profit 648 million 574 million

Supply Chain which includes UPS Freight but it isnt broke out for reporting

Revenue 2,722 million 2017 2,420 million 2016
profit 179 million 147

Info from UPS Quarterly Report

Dale Smith

That's going to make for some more headaches for the railroads since they often rely on having those two non-"business days", ie the weekend, to pad their intermodal trains delivery times.

Either have to speed up (i.e. add capacity) or watch more traffic hit the highway. I predict BNSF will try and respond to UPS's new needs, but the rest of the railroads...

Amazon has seven days a week delivery for Prime customers, which requires restocks at the fulfillment centers on a continuous basis. That has to ripple back up the supply chain. for UPS, railroads, etc.

Listening to the UPS stockholders webcast--I got the impression that the Saturday delivery and pickup is to serve their E-commerce customers. The Saturday pickups were expectesd to deliver Monday so this would be air shipments and/or local delivery from full fillment centers. It would not effect the Ztrain schedules as setup--as most Ztrains run Tue thru Saturday

Dale Smith

mearsksealand Wrote:
-------------------------------------------------------
> Listening to the UPS stockholders webcast--I got
> the impression that the Saturday delivery and
> pickup is to serve their E-commerce customers. The
> Saturday pickups were expectesd to deliver Monday
> so this would be air shipments and/or local
> delivery from full fillment centers. It would not
> effect the Ztrain schedules as setup--as most
> Ztrains run Tue thru Saturday
>
> Dale Smith

My source who first disclosed UPS's plan for regular Saturday delivery few months ago said it was for residential delivery only, at least at the start. This implied UPS was working with Amazon instead of against them, when they got overwhelmed during the holiday season couple of years ago.

So I agree with you that UPS's railroad operations won't change much. Amazon has been building warehouses where they would be at most a day away from areas where they expect the most Prime customers to reside, so my guess is that the residential Saturday delivery traffic will not go on the trains.

As mentioned by Lackawanna484 in another thread, if Amazon's "predictive software" is functioning as it should, then the inventories that might go on a train for a distance more than a day away shouldn't be as time critical, as they would have moved ahead of time in anticipation of potential orders.

Amazon (and Amazon Prime) customers are only holding Amazon accountable for the time it takes to travel from the nearby warehouse to the front door, and I've noticed that they give themselves 1-2 days extra margin.