UPS customers trade down

Key conclusions

• UPS customers are trading lower, another signal from the second-quarter earnings season that they are looking for positive options in the U.S. economy.

• Chief Financial Officer Brian Dykes said on a conference call that UPS “has seen customers shift from air to ground and from ground to SurePost.”

• Many companies in their recent quarterly reports drew attention to the fact that both consumers and corporate customers are looking for cheaper options for purchasing goods and services.

United Parcel Service (UPS) customers are trading lower, another signal from the second-quarter earnings season that they are looking for positive options in the U.S. economy.

“We’ve seen customers change services,” Brian Dykes, the shipping giant’s new chief financial officer, said in a conference call Tuesday, a transcript of which was provided by AlphaSense. “We’ve seen customers move from air to land and from land to SurePost.”

SurePost is the company’s “budget” business-to-consumer service. New e-commerce customers in particular have been “leveraging” SurePost, executives said on the call.

CFRA analysts say pricing pressure remains a headwind

UPS shares fell Tuesday after the company reported second-quarter earnings that fell year over year and missed analyst estimates and narrowed its sales outlook. “UPS revenue fell in the U.S. despite a return to e-commerce-led volume growth, indicating that pricing pressures remain a drag on revenue expansion,” CFRA analysts wrote Tuesday.

FedEx (FDX) the company’s shares also fell on Tuesday.

In recent quarterly reports, a number of companies have highlighted the search for cheaper options for goods and services by individual and corporate customers. Coca-Cola (KO) during today’s earnings conference call, company executives also noted “slightly greater” consumer interest in value in the home market.

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