UPS cuts result forecasts on economic worries The slowing of the US economy and worldwide air freight overcapacity prompted UPS, the express parcel delivery service, to cut its full-year earnings forecast and warn on the outlook for second-quarter profits and revenues. The warning from UPS - which said second-quarter diluted earnings per share would be $1.13 against $1.15 for the same period in 2012 - follows similar warnings in recent months by FedEx, the company's main rival. IN Transport UPS cut forecast full-year 2013 profits from the previous $4.80-$5.06 range to $4.65-$4.85, or about 4 per cent. Kurt Kuehn, chief financial officer, said the anticipated full-year figure would still represent a 3-7 per cent increase over 2012"s profits and that the company still anticipated "solid profit growth" in the second half. He added: "We expect the second-quarter market trends to persist and UPS is adapting to meet these conditions." The company had not previously given a forecast for the second-quarter results. Both UPS and FedEx are often seen as bellwethers for the world economy, given their important role connecting businesses. FedEx warned as long ago as September that it was suffering from customers" growing preference for its cheaper FedEx Ground services over its more expensive air offerings and for slower delivery of air packages. FedEx said on June 19, when it announced its results for the year to May 31, that it was planning further capacity cuts on top of a series of accelerated retirements of aircraft announced in early June. UPS's statement on Friday was strikingly similar. "Overcapacity in the global air freight market, increasing customer preference for lower-yielding shipping solutions, and a slowing US industrial economy drove revenue and operating profit below expectations," it said. In addition, UPS experienced some slowing in package volume growth as a result of labour negotiations. While express parcel and logistics operators such as UPS and FedEx are vulnerable to swings in world economic demand, they are also exposed to changes in air cargo capacity. Air cargo rates have been depressed by significant deliveries of pure air cargo aircraft such as the new Boeing 747-8F freighter, as well as the expansion of capacity in the cargo holds of new, long-haul twin aisle jets such as Boeing's 787 and Airbus's A380. UPS gave no indication how it planned to cut capacity to reflect the slower-than-expected demand growth. UPS shares lost about 5 per cent of their value on opening in New York, trading at around $87 each.