UPS takes a hit during the holidays, cuts outlook

NEW YORK (AP) -- The huge cost of ensuring timely deliveries cost UPS during the holidays and the shipping company cut its outlook for the year.<br /> <br /> Its shares plunged almost 10 percent in morning trading Friday.<br /> <br /> The Atlanta-based company hired more workers and boosted capacity at its facilities during the busy holiday season to avoid a repeat of 2013, when shippers struggled with a deluge of orders. Millions of packages sent through shipping companies failed to arrive in time, largely due to a surge last-minute online shopping.<br /> <br /> "UPS invested heavily to ensure we would provide excellent service during peak when deliveries more than double," said CEO David Abney. "Though customers enjoyed high quality service, it came at a cost to UPS."<br /> <br /> The disappointing news from UPS shows how difficult logistics have become as shopping habits of Americans change.<br /> <br /> The company added capacity to prepare for the "extreme spike" in volume on Cyber Monday and on Dec. 22, which is a peak delivery day before Christmas. However, UPS said demand fell on other days, meaning that the company's tires began to spin.<br /> <br /> An ongoing labor dispute between longshoremen and shipping lines on the West Coast has also led to additional difficulties in shipping.<br /> <br /> The company will cut costs and change its pricing strategy during the peak shipping season this year, Abney said in a printed statement.<br /> <br /> UPS now expects 2014 earnings of $4.75 per share, down from its previous forecast of between $4.90 per share and $5 per share. Industry analysts had been looking for earnings of $4.96 per share, according to FactSet. For the fourth quarter, UPS expects earnings of $1.25 per share, well below the $1.47 per share analysts had projected.<br /> <br /> Shares of UPS Inc. fell $10.91 to $103.34 early Friday. Shares of FedEx Corp. fell $3.23, or 1.8 percent, to $178.17.

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