Declining Revenue Per Package May Temper UPS’s Revenue Growth - Trefis
Lately there has been a shift in customer preference towards economical means of shipping packages, even if it means waiting a few extra days for their shipments to get delivered. For UPS, this leads to a cannibalization effect wherein package volumes of time-efficient-yet-pricy services decline and volumes for economical services increase. Volume for UPS SurePost, a low cost service which leverages the resources of the U.S. Postal service, increased more than 30% in the fourth quarter 2013 as shippers continued to choose lower costs over faster deliveries. From an overall volume perspective, there is no impact for UPS. However, the trend has been putting pressure on UPS’s revenue per package.
Lately there has been a shift in customer preference towards economical means of shipping packages, even if it means waiting a few extra days for their shipments to get delivered. For UPS, this leads to a cannibalization effect wherein package volumes of time-efficient-yet-pricy services decline and volumes for economical services increase. Volume for UPS SurePost, a low cost service which leverages the resources of the U.S. Postal service, increased more than 30% in the fourth quarter 2013 as shippers continued to choose lower costs over faster deliveries. From an overall volume perspective, there is no impact for UPS. However, the trend has been putting pressure on UPS’s revenue per package.
