UPS Implements Fuel Surcharge, Posts Record Quarter

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United Parcel Service, the world's largest package delivery company, said yesterday that it would begin implementing a temporary 1.25 percent fuel surcharge on packages effective Aug. 7.


The company implemented the surcharge because fuel prices have not stabilized as projected earlier in the year, UPS said. Oil has been trading at more than $30 a barrel, compared with about $19 a barrel a year ago.


Susan Rosenberg, a UPS spokeswoman, said the company tried to "stave off adding a fuel charge over the past six months, but the surge in oil prices has been sustained longer than we had hoped. At this point in time, there aren't any other options -- we had to instate this."


While both FedEx Corp., Memphis, TN, and Airborne Express, Seattle, implemented fuel surcharges earlier this year -- at 4 percent and 3 percent, respectively -- UPS had said repeatedly that it had no plans for one.


However, Rosenberg said UPS' temporary surcharge is "significantly lower than what some of our competitors have had over these many months."


Yesterday, UPS, Atlanta, also reported record financial performance for its second quarter on the strength of significant gains in volume and growth in market share.


For the three months ending June 30, revenues totaled $7.3 billion, up 11 percent from $6.6 billion reported for the same period a year earlier. Net income rose 18.2 percent to $695 million.


UPS was buoyed by growth in average daily package volumes in international and U.S. markets.


UPS averaged volumes of about 1.1 million pieces a day for its international service, a 15.3 percent gain from last year. Volumes for the company's domestic package business averaged 12.1 million pieces a day, a 6 percent increase from the same period last year.


"More than anything, we're pleased by the company's growth across all segments," said Jim Kelly, UPS chairman and CEO. "Customers are rewarding us for superior service and the industry's broadest product portfolio."
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