United Parcel Service (NYSE: UPS) is gearing up for what is expected to be a record year in holiday shipping volume. The company's shipments between Thanksgiving and Christmas are projected to rise 8% from a year earlier, boosted by an expected 15 percent increase in online retail orders. Over 34 million packages will be picked up globally on its projected peak day of Dec. 16.
"We expect this year's holiday season will be another for the record books, as we pick up more than 34 million packages on our peak day," said chief sales, marketing and strategy officer Alan Gershenhorn in a conference call to investors. To handle the extra volume, the company will hire 55,000 seasonal employees.
In addition to bracing for the holiday season, UPS is also preparing to upgrade its route planning system to make package deliveries more efficient. The new technology is called On-Road Integrated Optimization and Navigation, or Orion, and gathers electronic data from UPS customers, delivery vehicles and handheld devices carried by drivers to map optimal routes that reduce distance, time and fuel. Early Orion tests show a decline in miles driven, a huge improvement considering that a reduction of just 1 mile per day for every driver can save UPS $50 million a year in fuel, vehicle maintenance and time. The technologies have been in the works for nearly 10 years and will be fully implemented by 2017.
UPS is hoping the new navigation system will contribute to the company's profitability, which more than doubled in the recent quarter. Last week, the company announced that net income in the third quarter soared to $1.10 billion, or $1.16 per share, up from $469 million, or 48 cents per share, a year ago. Sales were up 3.4 percent to $13.5 billion, as the company handled almost 5 percent more packages in the year-earlier period. UPS says the results were helped by a 4.6 percent increase in worldwide package deliveries.
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