Impact of E-Commerce on United Parcel Service Earnings

Tuesday, 23 July 2024, 16:49
United Parcel Service (UPS) has revised its 2024 operating margin target downward, attributed to an influx of new e-commerce customers like Shein and Temu. This surge in lower-profit shipments has resulted in a significant 13% plunge in UPS shares during midday trading, adversely affecting rival FedEx as well, which saw a 2% decrease in its stock. The disappointing second-quarter profit figures contributed to concerns over UPS’s operational performance moving forward.
Yahoo Finance
Impact of E-Commerce on United Parcel Service Earnings

UPS Earnings Decline

United Parcel Service (UPS) has experienced a notable decline in earnings due to an overwhelming number of new e-commerce clients. This situation has led to the company lowering its 2024 operating margin target.

Impact of E-Commerce Customers

  • Major new clients include Shein and Temu
  • These clients are associated with slower and lower-profit shipments

Market Reaction

As a result, shares of UPS saw a staggering 13% drop in midday trading. Additionally, this performance also negatively impacted rivals in the delivery market, particularly FedEx, which saw its shares decline by 2%.

Conclusion

The overall effect of the missed profit estimates for the second quarter has raised concerns regarding the future performance of UPS in a rapidly changing market.

This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.

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