11:43 AM EDT, 07/23/2024 (MT Newswires) -- United Parcel Service ( UPS ) fell short of second-quarter estimates on Tuesday and tempered full-year revenue expectations as the package delivery company expects US customers to continue trading down between its services.

Revenue fell to $21.82 billion for the three months ended June 30 from $22.06 billion a year ago and missed the $22.24 billion average analyst estimate on Capital IQ. Adjusted earnings per share declined to $1.79 from $2.54 and was below the Street's view of $1.99.

UPS shares tumbled 13% in Tuesday trading.

US domestic package revenue dropped to $14.12 billion from $14.4 billion reported in the prior-year quarter. International package revenue slid 1% to $4.37 billion while supply chain solutions edged up 2.6% to $3.33 billion.

"This quarter was a significant turning point for our company as we returned to volume growth in the US, the first time in nine quarters," Chief Executive Carol Tome said in a statement. "As expected, our operating profit declined in the first half of 2024 from what we reported last year. Going forward we expect to return to operating profit growth."

In the first half, UPS front-loaded costs of implementing its new labor contracts, Tome told analysts on a conference call, according to a Capital IQ transcript. The second quarter saw customers trade down between services, Chief Financial Officer Brian Dykes said on the call. They shifted from air to ground and from ground to SurePost, pushing total air average daily volume down 7.8% and ground average daily volume up 2.3%, according to Dykes. SurePost is an economy service for non-urgent, residential shipments.

The company is now expecting 2024 revenue of about $93 billion, which reflects a downgrade from the midpoint of its prior $92 billion to $94.5 billion range. The Capital IQ-polled consensus was for revenue of $92.86 billion for the ongoing year.

UPS lowered its full-year adjusted operating margin guidance to roughly 9.4% from the range of 10% to 10.6% it provided late in April. It reduced its expectation for 2024 capital expenditures to $4 billion from $4.5 billion.

The updated guidance reflects first-half revenue that was below management's expectations, operating profit that came in at the low end of the range it had provided, and UPS' expectation that the product shift trend in the US will continue through the rest of the year, Dykes said on the call.

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