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UPS sees 2010 volume growth, higher rates

By Harry Suhartono
/ Source: Reuters

By Harry Suhartono

SINGAPORE (Reuters) - United Parcel Service Inc, the world's largest package delivery service, expects growth in its volumes next year as the global economy gradually recovers, its chief said on Wednesday.

UPS CEO Scott Davis told Reuters the company will hike shipping rates for 2010, which follows a similar move by rival Fedex, and it will announce the size of the hike later this month.

"I think we will go back to see positive volumes next year as the economy improves," Scott said in an interview, ahead of a meeting of Asia-Pacific corporate and political leaders in Singapore.

Global cargo companies have been hit by a sharp decline in consumer spending, especially in the United States, as the financial crisis has hurt businesses and boosted unemployment.

Davis told a business luncheon earlier on Wednesday that a global economic recovery will happen in a gradual manner.

"I believe the recovery is real, but it is gradual. It is sustainable but vulnerable."

He said this will lead the U.S. holiday season to be slightly better than expected.

"We talked to our customers in recent months, mainly our retail and technology customers, and many of them are quite bullish on this Christmas season while others are pretty cautious," Davis said.

"Most people, the consensus, are saying it is going to be a pretty flat holiday in the U.S. I think it will be slightly better than that," he added.

UPS last month reported a 43 percent drop in earnings that nonetheless topped analysts' forecasts, saying that cost-cutting helped its profit margins.

It said then that the outlook for holiday season -- when it transports orders from major retailers as well as consumer purchases -- remained unclear, with online merchants more confident about the season than their bricks-and-mortar rivals.

Looking at the Asia-Pacific region, Davis said that India is a big opportunity for the company and it will continue to make investments there.

(Editing by Neil Chatterjee)