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United Parcel Service Inc shares fell to a three-month low on Tuesday on worries that growth from the pandemic-fueled e-commerce boom may be fading.

The company said second-quarter domestic volume fell 2.9 per cent, with ground – composed largely of e-commerce deliveries – dropping 4 per cent versus the year earlier.

“Investors are likely reading this as an indication the pandemic-driven demand trend is slowing,” Cowen Research analyst Helane Becker said in a client note.

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The stock was down 9.3 per cent at $190.32 in midday trading, its lowest price since late April.

UPS has been a key beneficiary of the pandemic shift to online shopping. Like rival FedEx Corp it responded to the boom in home delivery demand by adding profit-boosting surcharges.

The share price decline came despite second-quarter profit and revenue that topped Wall Street estimates.

Excluding items, UPS earned $3.06 per share, above analysts’ average estimate of $2.82, according to Refinitiv data.

Total revenue jumped 14.5 per cent to $23.42-billion, beating a forecast $23.24-billion.

Executives said domestic package volume could be under pressure in the second half of the year as some shoppers return to in-store shopping and customers scramble to replenish inventory at a time when goods are getting stuck in clogged seaports and rail yards.

Since Carol Tomé became CEO in June 2020, UPS has been reining in costs and focusing on high-margin packages under her “better not bigger” strategy. During the second quarter, UPS reported growth in lucrative air and health care shipments.

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Inflation and the more contagious Delta variant of the coronavirus are creating uncertainty as UPS prepares for the upcoming holiday shipping peak – when delivery demand is expected to exceed supply by 5 million packages per day.

UPS is reserving planes and other equipment needed for the expected surge, Tomé said.

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