From being involved with drones delivering medicine in Rwanda to preparing for another intense holiday season, UPS (UPS) sure has a lot on its plate right now. But the shipping giant has also been making some news in the present day, too.
UPS says it will soon raise daily rates for ground and air service by an average of 4.9%. The price increases are set to take effect Dec. 26. The package-delivery company will also implement an average 4.9% general rate increase on freight on Sept. 19. The price of shipping packages has catapulted over the past decade, with the cost of ground shipping for both FedEx and UPS increasing 79.2%, according to transportation software provider Lojistic. Air shipping rates have gained 95.5% over the last decade, says Lojistic.
UPS CFO Richard Peretz explains in an interview with TheStreet that price increases are necessary as the company invests in new technology to improve delivery speed and general productivity amid the boom in online shopping.
Meanwhile, UPS is fresh off a solid second quarter, thanks to the shift toward online shopping in the U.S. and strength abroad. UPS posted second-quarter earnings of $1.43 a share, up from $1.35 a share a year ago.
Revenue for the quarter rose 3.5% year over year to $14.6 billion. Analysts expected UPS to deliver earnings of $1.43 a share on revenue of about $14.625 billion.
Growth was fairly broad-based. International revenue increased 1.1% from the prior year, despite the negative impact of volatile currency exchange rates and lower fuel surcharges. Daily export packages increased 3.9%, lifted by European orders as customers used UPS to take advantage of a strong U.S. dollar, said the company.
International operating profit increased 11%, marking the sixth consecutive quarter of double-digit growth. In the U.S., revenue increased 2.4%, helped by online shopping demand and new technology that boosted productivity.
Average daily package volume in the U.S. increased 2.5%, while operating profit rose 2.7%. The company reaffirmed its full-year outlook of $5.70 to $5.90 a share. UPS shares are up about 13.5% this year compared to a 10.4% gain for FedEx (FDX) .
Peretz talks with TheStreet's Brian Sozzi about drone delivery, the future for same-day delivery and the tough talk on trade being offered up by presidential candidates Hillary Clinton and Donald Trump.