International shipping company UPS reported a 16.7% decline in revenue to $10.83 billion for its second quarter ending June 30, down from $13 billion in Q2 2008. Price reduction due to lower fuel charges, as well as the global recession, were cited as the root causes for the company’s under performance. In addition, mail volume was down: US packages were reduced by 4.6%, while international export volume decreased 7.3%.
“The global economic environment pressured our performance, but UPS remains financially very strong,” said Scott Davis, UPS chairman and CEO, in a statement. He assured stockholders the company would “weather this recession” through investment and improved productivity. Kurt Kuehn, UPS’s chief financial officer, also noted the company had exceeded its targeted cost savings and was investing in cost cutting strategies. In early July, UPS completed initial work to expand and increase sort capacity by 15% at its largest international air hub in Louisville, KY.
UPS was not alone in feeling the pinch of the economy. Competitor FedEx Co. reported similar declines in its Q4 earning statement for the period ending May 31, 2009. FedEx revenue dropped 20% from $9.87 billion to $7.85 billion. It reported its US domestic package volume was down 2%, while international package volume dropped 12%.