UPS Names Operating Chief Abney as CEO -- 3rd Update

By Dow Jones Business News, 
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By Anna Prior

United Parcel Service Inc. on Friday named Chief Operating Officer David Abney as its next chief executive, again promoting an insider to its highest post.

Mr. Abney started with the shipping giant as a part-time package loader in 1974 and will succeed Scott Davis, who is 62 years old and has served as UPS's chairman and CEO since 2008. Mr. Davis will retain the role of chairman, the company said.

The moves are effective Sept. 1, and the turnover is consistent with the company's past practices in which chief executives typically serve five to seven years. UPS is also known for promoting executives from within its ranks.

Mr. Abney, 58, held various operational positions at UPS prior to his stint as operating chief, including president of UPS International where he led the expansion of the company's global logistics capabilities.

Meanwhile, Mr. Davis is a 29-year veteran of the company, and UPS noted the company made significant improvements in its logistics network during his tenure as CEO as UPS expanded. Mr. Davis also presided over rapid growth in international operations and supply chain and freight, the company said.

Since Mr. Davis took over the CEO post at the beginning of 2008, the company's share price has risen 50%. Revenue, meanwhile, increased to $55.4 billion in 2013 from $49.7 billion in 2007.

"As the chairman and CEO for the past nearly seven years, Scott Davis has skillfully guided UPS through one of the most turbulent global economic periods in history," said Duane Ackerman, a member of the UPS board and chairman of the nominating and corporate governance committee.

As CEO, Mr. Abney will be tasked with improving UPS's efficiency as it looks to keep up with a boom in e-commerce.

Average daily package volume at UPS has grown 12% over the past five years, partly thanks to online shopping, but that expansion has also led to growing pains.

During the most recent holiday season, for instance, UPS was unable to deliver some goods in time for Christmas, as a spike in last-minute shopping overwhelmed its system.

The company in January outlined plans for preventing another Christmas disaster that included investing in expanding some of its hubs to handle more packages and working more closely with customers to determine how many packages they'll expect to ship.

Meanwhile, competition in the shipping industry is likely to increase as a number of retailers like Amazon.com Inc. and Wal-Mart Stores Inc. test their own delivery networks. FedEx Corp. likely added fuel to that fire when it unveiled plans last month to change the way it charges to ship bulky packages, effectively increasing prices on more than a third of its U.S. ground shipments.

Instead of charging by weight alone, all FedEx ground packages will be priced according to size, which boosts the priced for delivering items as diverse as diapers, shoes and paper towels. The change in pricing could dramatically affect either online shoppers or retailers or both as one of the parties will have to swallow the estimated hundreds of millions of dollars in extra shipping costs.

Industry watchers are still waiting to see if UPS will match the price increase.

UPS in April posted a lower first-quarter profit, pointing to unusually harsh weather that increased its expenses and slowed its revenue growth.

Write to Anna Prior at anna.prior@wsj.com

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  06-06-140929ET
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This article appears in: News Headlines

Referenced Stocks: UPS

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