UPS said it will begin Sunday deliveries and pickups on Jan. 1, though it told Insider that the impact on Worldport’s 22,000 employees is as yet unclear.
The logistics giant also said that rising online orders from increasingly impatient customers resulted in better-than-expected quarterly results Wednesday, causing its share price to spike 9% in early trading.
UPS, Louisville’s largest employer, said that it had a 30% surge in Next Day Air volume in the second quarter, which was “driven by accelerated delivery requirements from e-commerce shippers.”
“Demand for faster delivery is a structural change in our industry,” Chairman and CEO David Abney said in a news release. “Anticipating this change, our additional air capacity and modernized network enabled this growth to have a positive impact on profitability and positions UPS well to serve the growing needs of the market.”
To meet rising demand, UPS will expand pickup and delivery services to seven days a week for both residential and business customers, beginning Jan. 1.
The company told Insider via email that it was still in the planning stages of that expansion and therefore could not provide specifics about how the move will affect the local operations. It could not yet say whether Sunday deliveries would result in more jobs in Louisville.
A local union official had told Insider last summer that the move to Sunday deliveries was “inevitable” because of competition from Amazon, the U.S. Postal Service and FedEx. He also said that many Teamsters union members don’t want to work Sundays and that the rollout of Saturday service had been “bumpy.” At the time, the company said it had made no definitive commitment on Sunday deliveries.
UPS also told Insider Wednesday that it is “in the midst of a multi-year capital investment program” to build, expand and upgrade facilities. That includes more planes and delivery trucks, better information technology platforms and higher levels of automation.
The company said it would add capacity at 20 new and existing facilities and acquire 11 planes. The company last year added and retrofitted 22 facilities, which increased its sorting capacity by 400,000 packages per hour. The company said that’s the equivalent of adding another Worldport to its network.
UPS also said that investments at five regional ground “superhubs” — Atlanta, Dallas-Fort Worth, Phoenix, Salt Lake City and Indianapolis — have increased the speed and flexibility with which packages move through the network and therefore reduce the time that packages spend in transit.
The company said revenue from domestic package deliveries rose 7.7% in the second quarter, more than offsetting smaller declines in international packages and supply chain divisions. Total revenue, at $18 billion, was up 3.4%.
Operating profit jumped nearly 21%, and net income, at nearly $1.7 billion, rose 13.5%.
UPS also announced a slew of new and expanded services, including an expansion of its residential MyChoice service to businesses, with a web-based dashboard and notifications of deliveries.
For residential customers, UPS is expanding its network of pickup and drop-off points to include more than 6,000 standalone CVS Pharmacy locations, boosting the current access point network to more than 15,000. UPS told Insider that the expansion covers most standalone CVS pharmacies, but it could not provide a store-by-store breakdown yet.
The company said that soon, 90% of its U.S. customers will live within five miles of one of its 78,000 UPS Access Point locations. UPS said the collaboration with CVS marks a significant shift in its access point strategy, as such locations previously have largely been at local businesses and company-branded stores.
The company also said it has created a subsidiary, UPS Flight Forward, to develop and operate drone deliveries. UPS said it hopes to obtain as early as this year Federal Aviation Administration certification to operate commercial drone flights.
The certification would lay “the foundation for drone flights beyond an operator’s visual line of sight, and for flights occurring day or night,” the company said in a news release.
Shares spiked 9% in early trading Wednesday. Early afternoon, shares traded for $113.39, up 7.7%.