Global logistics heavyweight UPS Friday slashed its profit forecast for the upcoming quarter, citing weak US industrial activity and air freight overcapacity.
UPS, considered a proxy for the global economy, said profits would miss expectations because of the "slowing" US industrial economy, overcapacity in the global air freight market and a shift in customer preference away from premium deliveries and towards cheaper shipments.
UPS said it expects second quarter profits to come in at $1.13 per share. Analysts had forecast $1.20 per share.
"We expect the second quarter market trends to persist and UPS is adapting to meet these conditions," said Kurt Kuehn. "Despite downward revisions to economic forecasts for the second half of the year, we anticipate solid profit growth."
UPS now expects 2013 profits to be between $4.65 and $4.85 per share, compared with expectations of $4.98 per share. UPS reported $4.53 per share profits in 2012.
UPS, along with rival FedEx, is considered an economic bellwether because it provides deliveries to a wide variety of sectors. FedEx also cited tepid economic growth and customer preference for cheap deliveries when it reported earnings in June.
UPS shares were off 5.8 percent in early trade Friday, while FedEx slipped 1.4 percent. The broader market was up slightly.