UPS sinks as worries about delivery demand overshadow strong earnings beat

UPS delivery man mask
  • UPS shares were dragged lower by 9% on Tuesday following the company’s quarterly earnings report.
  • The logistics heavyweight said average daily package volume in the US fell by 2.9%, stoking slowdown concerns.
  • Adjusted earnings of $3.06 per share beat the FactSet estimate of $2.80 per share

UPS shares dropped to a three-month low Tuesday as investors keyed in on cooling in package deliveries in the US during the second quarter as the logistics heavyweight turned in profit and sales growth that were ahead of expectations.

The company late Monday said consolidated revenue rose by 14.5% to $23.4 billion, higher than the $23.2 billion expected by analysts polled by FactSet.

Revenue in the US climbed by 10% to $14.4 billion, aided by a price per piece increase of 13.4%. But the report also said US average daily package volume fell by 2.9% during the three months ended June 30.

UPS stock fell as much as 9% to $190.27, the lowest price since April 27. The stock pared the loss to 8.3% during the session during which trading volume was heavy with more than 7.8 million shares exchanged by midday.

The company also posted a 15.8% decline in average daily volume shipments from business to residential locations.

UPS experienced a boom in package deliveries a year ago as the COVID-19 pandemic forced millions of people into lockdown, prompting them to have items they purchased delivered to their homes.

The company’s adjusted earnings of $3.06 per share beat the FactSet estimate of $2.81 per share. The latest quarter also showed a 30% rise in international revenue to $4.8 billion.

UPS backed its estimate of $4 billion in planned expenditures for 2021.

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Sen. Chuck Schumer is demanding accountability from UPS after more than 100 AP exams of high school students never made it to the College Board for grading

Chuck Schumer
U.S. Senate Majority Leader Sen. Chuck Schumer (D-NY) speaks during a news briefing after the weekly Senate Democratic Policy Luncheon at the U.S. Capitol June 22, 2021 in Washington, DC.

  • Sen. Chuck Schumer called on UPS to respond, saying it lost more than 100 AP exams.
  • The College Board initially proposed offering a refund to students or allowing them to retake the exam.
  • Starpoint High School students asked Schumer to request action from UPS or to reimburse them for the lost college credit.
  • See more stories on Insider’s business page.

Senate Majority Leader Chuck Schumer demanded action from UPS after more than 100 AP exams never made it to the College Board for grading.

UPS lost 106 exams, taken by junior and senior students at Starpoint High School, earlier this week, according to Superintendent Sean Croft.

“We were quite shocked by that information,” Croft told WKBW. “They told us that four of our boxes that we sent at different times had arrived, however this one was missing.”

He added: “Without those exams, they will not fix a score to a student even though they went through the entire course and the exams were lost. That’s a huge disappointment for our students.”

Croft said the College Board proposed giving the impacted students a refund of $95 for the test or allowing them to retake the exam in August.

Nearly 50 students wrote a letter to Schumer asking him “to demand a meaningful effort from UPS and a much better explanation of what has happened.”

“That box of exams is somewhere, and UPS must find it,” the students wrote in the letter. “This isn’t a missing package that can simply be replaced. This failure by UPS has real world consequences for all of us and they should act accordingly. “

The students went on to suggest UPS should reimburse them for the value of the tests in college credit, as certain colleges and universities accept test scores in exchange for class credit.

“If UPS cannot find the box, then they should be obligated to replace the value of what was in the box,” the letter continued. “For each student, the exam could be worth 6 credit hours, so at $1000 per credit hour, each student should be given a $6,000 check by UPS.”

Schumer answered the call and urge UPS to address the incident, WKBW reported. He penned a letter to UPS CEO Carol Tomé urging her and UPS to” dedicate all time and resources needed to rectify this situation for aggrieved and understandably anxious Starpoint High School students and their parents.”

“The time and effort required to prepare and sit for an Advanced Placement exam is substantial,” he wrote in the letter to Tomé. “Students take on considerable detailed and nuanced learning in the hopes of securing a score that will enhance their ability to achieve admissions to colleges of choice, as well as the possibility of earning college credit – and the possibility that one would work hard to prepare and then be denied a result due to a mistake like this is both unjust and painful.”

“To punish good students because of logistical error at UPS would be unfair and it is my hope that focused work by UPS can rectify the situation,” he added.

Representatives from UPS and the College Board did not immediately return Insider’s request for comment.

In a statement to WGRZ, UPS said “we regret that some of the tests were not delivered and we are working with the school on a resolution.”

The College Board said in a statement that, “in very rare instances,” exam materials do not make it to their processing centers and that it works “with those who have had custody of the materials in an exhaustive attempt to locate the materials.”

“However, experience has shown that if materials have not arrived by this point, they are unlikely to be located,” they said, citing the WGRZ report. “The exams were lost during the shipping process. Based on what UPS told us, the exams are unlikely to be recovered.”

The organization said they will administer a make-up test for students over the summer.

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How UPS drivers are trained to deliver 21 million packages a day

  • UPS spends $200 million a year on safety training for its drivers.
  • We went inside the UPS driving school in West Boylston, Massachusetts, to see how drivers learn to walk on ice, handle aggressive dogs, and drive safely.
  • UPS drivers collectively drive more than 3.5 billion miles a year, with each worker averaging 100 to 150 delivery stops per day.
  • Visit the Business section of Insider for more stories.

EDITOR’S NOTE: This video was originally published in December 2020.

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Yes, Amazon delivers on Sunday – but not everywhere

amazon boxes packages delivery
If you live in the right location, Amazon will deliver to you on Sundays.

  • Yes, Amazon does make deliveries on Sunday – but not everywhere in the United States.
  • If Amazon delivers on Sunday in your area, you’ll likely see it as a shipping option when you order something.
  • You can also contact UPS or USPS directly for more information, since they handle Amazon’s Sunday deliveries.
  • Visit Insider’s Tech Reference library for more stories.

Amazon has become one of the biggest companies in the world by offering quick shipping nearly everywhere in the country. And in most places, “quick” even means delivering on Sundays.

Yes, Amazon delivers on Sunday

Unlike traditional mail, Amazon makes package deliveries every day of the week, Sunday included. These Sunday deliveries are available to all customers where the service is available, regardless of Amazon Prime membership.

If you choose to have your package delivered to an Amazon Locker, there’s a chance that it’ll be delivered there on Sunday too.

Amazon does this by partnering with UPS and the United States Postal Service. UPS and USPS both receive packages from Amazon, and then make the “last mile” delivery to your doorstep. But don’t expect them to deliver any other kinds of packages – Amazon is the only company that they deliver on Sunday for (aside from the occasional USPS Priority mail).

UPS driver
Amazon outsources many of its deliveries to companies like UPS and USPS.

However, there are some restrictions.

Sunday deliveries aren’t available in all areas

UPS and USPS only launched Sunday delivery a few years ago, and it still isn’t available everywhere in the United States. This means that if you live in certain areas – especially more rural areas – Sunday delivery won’t be an option for you.

Amazon doesn’t keep a public list of areas with Sunday delivery; when asked for comment, an Amazon spokesperson simply said it’s available in areas where their “delivery partner and carrier network supports Sunday delivery service.”

Amazon delivery
As time goes on, more cities will support Sunday deliveries.

If you go to checkout with an order and then see “Sunday” as an option under Review items and shipping, it’s definitely available in your area.

But the surefire way to find out if you’re living in the right area for Sunday deliveries is to call UPS and USPS directly. If you connect to a representative and give them your address, they should be able to tell you if your address is eligible for Sunday deliveries.

The best ways to contact Amazon for help when you have a problem with your accountHow to report a missing package on Amazon with the online retailer or a third-party sellerHow to easily reorder items you’ve bought on Amazon in 2 waysHow to change your Amazon account password or reset it if you’ve forgotten it

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FedEx is limiting the number of items small businesses can ship during the pandemic-fueled holiday and retailers are calling it a ‘shipageddon’

fedex amazon
FedEx’s small business customers are facing daily shipping limits as low as 75 packages per day.

  • FedEx is placing daily package limits on some businesses as its shipping network faces capacity issues during the pandemic-fueled surge in online holiday shopping.
  • Carriers have taken similar steps before, but small business owners told Business Insider that FedEx hasn’t been transparent about the current wave of quotas, which have been as low as 75 packages per day and hit them right before Black Friday and Cyber Monday.
  • Shipping experts told Business Insider that smaller businesses are likely getting hit the hardest because of worse access to customer support, fewer resources to make alternative shipping arrangements, and less bargaining power with FedEx.
  • The pandemic has also forced UPS, Amazon, and other major carriers to impose restrictions on businesses and scramble to add capacity during what experts have called “shipageddon.”
  • Visit Business Insider’s homepage for more stories.

Like many e-commerce businesses, Letterfolk held its annual holiday sale early this year – the week before Black Friday – in an attempt to get customers’ orders to their doorsteps before the pandemic-fueled surge in online shopping overwhelmed mail carriers.

Letterfolk, which makes bespoke letter boards and other home decor and is based in Salt Lake City, Utah, has four full-time employees and five to 10 part-timers during peak season. But on the Saturday after its sale, co-founder Johnny Galbraith had gathered all hands on deck, even rounding up family and friends to help fulfill the flurry of orders.

“We were feeling great because we had done our holiday sale early, we had about 3,000 orders in the queue, and that was after already having shipped out a decent volume,” Galbraith said.

But when he got home Saturday night, Galbraith got a call from his FedEx representative, who told him Letterfolk would be capped at its September shipping levels plus an additional 10%.

“The math on that worked out to be 110 packages a day,” Galbraith said. That equaled out to less than 4% of the orders his company was waiting to ship that Saturday.

“We had been pretty loyal to FedEx, probably 75% of our shipping business has gone through them, the [remaining] balance going through USPS, and so we didn’t really have any contingency plans,” Galbraith said. He attempted to find a workaround, even offering to personally drive the packages more than 400 miles to larger FedEx hubs in Denver or Las Vegas, but was unsuccessful.

“I felt like this could really compromise our entire small business operation. We’ll lose the trust of our customers,” he said. “And then to apply it the week before Black Friday with no warning, it was just unbelievable. It was just crazy to have to adapt to that among all the other challenges that a year with COVID is presenting.”

‘Unprecedented surge’

Galbraith isn’t alone, either in being capped by FedEx this holiday season or in facing challenges getting clear answers from the company about the quotas.

Business owners from Portland, Oregon, to Toronto, Canada, told Business Insider they’ve faced daily limits of just a fraction of their expected shipping volume – in one case as low as 75 packages per day – and in some instances weren’t told about the limits by FedEx ahead of time.

“FedEx expected an unprecedented surge in packages during this season, and we implemented various measures proactively to prepare. This included hiring more than 70,000 seasonal workers, moving to seven-day operations and accelerating Sunday delivery capabilities, improving the efficiency of our delivery routes, and, as always, proactively working with our customers to understand their expected volume and identify opportunities to ensure the best possible service throughout the season,” FedEx spokesperson Janna Hughes told Business Insider in a statement.

“In some cases, volume has significantly exceeded customer projections. We know how important it is to our customers that their packages are delivered on time, and we remain committed to working with them on ways to leverage our network flexibility,” she added.

FedEx and other carriers have been forced to take extreme steps to prepare for the unprecedented holiday rush expected this year as COVID-19 exposure risks drive more shoppers online and more packages into carriers’ shipping networks.

Scott Wingo, co-founder of e-commerce software company ChannelAdvisor and the host of an e-commerce podcast, coined it “shipageddon.

According to analysis from eMarketer, online shopping is expected to grow 35.8% this year, and logistics data company ShipMatrix recently told the Wall Street Journal that, between Thanksgiving and Christmas, it expects there to be an excess of about 7 million packages per day that the shipping industry won’t have the capacity to ship.

Earlier this month, The Wall Street Journal reported that UPS imposed limits on major retailers, including Nike, Gap, L.L. Bean, Hot Topic, Newegg, and Macy’s. Last week, CNBC reported that Amazon had capped the number of products third-party sellers can ship to its warehouses, causing them to lose out on some holiday sales.

Jason Goldberg, chief strategist for RetailGeek and co-host of the podcast with Wingo, told Business Insider that, while carriers have rolled out package limits and higher rates in past years in response to increased shipping volumes, rarely did they actually refuse to pick up packages.

Another key difference with companies like Letterfolk, he said, is that while FedEx has conversations with larger retailers months in advance in order to estimate how much they’ll need to ship, many smaller businesses don’t have that level of access to FedEx or the leverage to negotiate better prices and quotas.

“Nike or Gap were not surprised in the slightest that they hit their caps… they knew what their cap was, they were informed well in advance,” he said. “It’s more likely to be a surprise for the smaller shipper.”

While it’s possible a particular business owner may have missed communication from FedEx about the caps, Goldberg said that multiple businesses in an e-commerce group he belongs to reported being blindsided by FedEx’s limits.

‘Caught us off guard’

That was the case for Second Closet, a Canada-based self-storage company that began using its warehouse space to help businesses fulfill their e-commerce orders during the pandemic.

“We found out one day, about a week before Black Friday Cyber Monday, that FedEx was going to cap us at 80 shipments a day,” Jarrett Stewart, senior operations manager at Second Closet, told Business Insider.

But Second Closet didn’t find out about its own quota directly from FedEx – it only learned about the new caps from one of its own merchants. That business had received an email from a FedEx representative with instructions not to send more than 80 packages per day on Cyber Monday and the day after.

“Basically, if you have 100 packages on Monday, please have the warehouse hold back 20 packages until the following day. The volumes in the network are extremely high at the moment and will get even more crazy over the next week, so we just need to manage capacity,” the FedEx rep said in the email, which was seen by Business Insider.

“Moving forward, I now have to submit and get approval when you are shipping 30 packages or more, which can take some time,” they added.

That email implied the caps might only apply during Black Friday and Cyber Monday, Stewart said. But that Thursday, the merchant received another email from FedEx asking the merchant to remind Second Closet about its daily limits after they shipped 135 packages on Wednesday, suggesting the caps had been extended.

“Caught us off guard, and it wasn’t for the lack of asking for a heads up,” Stewart said, adding that while FedEx had warned Second Closet about possible delays this holiday season, it provided nothing beyond “generic statements” when he asked about the caps.

As a result, Stewart said, Second Closet couldn’t “set expectations with merchants on a proactive basis,” and has had to issue refunds in some cases.

‘Highly chaotic and disorganized’

Multiple small business owners said they were similarly frustrated at the lack of clarity from FedEx around who would face shipping limits, how the limits were determined, how long they would be in place for, and whether they could help reduce some of the bottleneck by dropping off shipments at FedEx’s hubs.

“The little guys are complaining that it’s highly chaotic and disorganized and that no one’s taking their calls and they’re getting bad information… the communication is very spotty and ad hoc,” RetailGeek’s Goldberg said.

Read more: CEO of logistics startup that works with Sephora, Home Depot, and Levi’s explains why shipping updates are essential ‘even if it’s not good news’

Stewart said FedEx has not been as responsive as other carriers in answering his questions about peak season challenges, adding: “They will always point you towards their different phone numbers, to different emails for customer support, so it’s hard to have that one-to-one relationship with an account rep.”

“It’s really been inconsistent,” another business owner in Portland, Oregon, told Business Insider. “The day after Cyber Monday, they called and said we were capped at 150 units. We brought everything else to our FedEx hub, and they were okay with that. Then the word from our account manager was we’re capped at 150 unless there is more room in the truck.”

Several business owners said they also tried to bypass their shipping limits by dropping packages at FedEx’s distribution hubs, to varying degrees of success – but that also introduces other issues.

“There is a big loophole in this whole system… FedEx and UPS are not in the business of turning away packages,” Goldberg said, “so they don’t actually have a robust infrastructure to enforce those caps.”

“If you drive those packages to a distribution center or a FedEx store and drop them off, they’re highly unlikely to get refused because they don’t even get scanned when you drop them off… they’re going to get processed later,” he said. “A lot of small sellers have bypassed their caps by just finding some alternative way to get them into the network.”

‘A small guy can’t do that’

While FedEx declined to share details about how it determines daily limits, experts said smaller businesses are likely being hit the hardest.

“I’ve been particularly worried about the small merchant,” Wingo told Business Insider. “The problem is, they don’t have the ability to go and negotiate a quota.”

Larger businesses can, as part of larger conversations around things like exclusivity and shipping rates, also tell FedEx what they expect to ship and negotiate higher shipping limits.

“A small guy can’t do that. You just don’t have the financial leverage,” Wingo said.

“Think about who FedEx least wants to alienate for next year,” Goldberg said. “It’s a Walmart, right? It’s not the mom and pop shipper.”

Galbraith said he understood that dynamic, admitting Letterfolk is “a drip in the ocean of packages that FedEx is moving.” But, he added, “I was hoping to hear more from FedEx about this issue… to make sure that you’re not being singled out as a small business owner.”

“I understand if it was being applied consistently,” he continued. “But a couple hundred packages for a small business – it kneecaps everything that we’re doing. And so for us to come out of this and then give FedEx all of our business again… I just don’t see that happening.”

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