Volume grew across all products as ground rose 3%, UPS Next Day Air® increased 5% and deferred air climbed 8.6%. The majority of the improvement was driven by large e-commerce customers shipping low-weight residential packages.
The shift to residential deliveries has resulted in UPS’s revenue per piece rising far less than its change in rates from a yar ago. UPS states that the change is due to a customer and product mix. The change in customer mix describes the growing proportion of UPS”s business that is business to consumer parcels. The shift in product mix reflects the growing importance light weight, business-to-consumer parcels. UPS volume in these shipments grew by 25% in the quarter. UPS SurePost most likely made a significant contribution to the growth of UPS’s light-weight business-to-consumer business and a growing UPS Surepost business means that USPS sees growing Parcel Select volume.
United Parcel Service appears to be handling the shift in its U.S. domestic business well as the profit margins in its U.S. domestic business is up. Operating margin expanded 100 basis points to 14.1%. Operating profit of its U.S. domestic businessjumped more than 12% over 2011 adjusted results.
For more on why business to consumer delivery is hte the fastest growing part of United Parcel Service’s business see: