UPS fourth-quarter results were strong across the board, helping the company net a $1.22 billion profit, up almost 10% over Q4 2010. For the full year UPS posted a profit of $4.2 billion, up 20% over 2010. One of the driving factors in the strong results is the growth of ecommerce, which grew faster than retail sales during the holiday shopping season.
That’s one of the reasons the company raised its profit outlook from 9 to 15 percent for 2012, far outpacing expected GDP growth of 2.5-3%. Another reason for the expected strong earnings is churned business from the USPS, which will be eliminating next-day delivery service and ending Saturday deliveries this year. The USPS is facing huge budget shortfalls and may have to lay off up to 120,000 workers to bring its costs in line. UPS and FedEx figure to be by far the largest beneficiaries from any business lost to the USPS. With the growth of e-commerce and USPS situation both UPS and FedEx may have to invest heavily in growing their capacity this year. On their peak days in December UPS and FedEx were handling double the normal volume of shipments in their network.