United Parcel Service on Tuesday reported profit and revenue for the second quarter that came in below expectations and cut its 2024 revenue guidance.

The company’s stock was down more than 13% in midday trading, on pace for its worst day on record.

“Our revenue came in just short of the low end given the current volume momentum we are now experiencing in our business,” UPS Chief Executive Officer Carol Tomé said during the company’s earnings call. “Accordingly, we are adjusting our full-year operating margin guidance to reflect the nature of the volume flowing through our U.S. network.”

UPS now expects 2024 revenue to be approximately $93 billion, revised from a previous forecast for as much as $94.5 billion. Full-year capital expenditures, however, are now expected at around $4 billion, rather than the previous $4.5 billion.

UPS noted that the current 2024 outlook still includes revenue from its trucking business Coyote Logistics, which the company recently announced it’s selling to RXO, Inc. The transaction is expected to close by the end of the year, freeing up cash that the company plans to deploy for share repurchases totaling around $500 million.

The company also recently entered into an agreement to acquire Mexican express delivery company Estafeta, which the company is targeting to close by the end of the year.

Here’s how the shipping giant did in the quarter ended June 30 compared with what Wall Street was anticipating, based on a survey of analysts by LSEG:

• Earnings per share: $1.79 cents adjusted vs. $1.99 expected
• Revenue: $21.8 billion vs. $22.18 billion expected

The company’s reported net income for the quarter was $1.41 billion, or $1.65 cents per share, compared with $2.08 billion, or $2.42 per share, a year earlier. Adjusting for the impact of settling an “international regulatory matter,” UPS posted earnings of $1.79 per share.

The company reported operating profit of $1.94 billion, down from $2.78 billion a year earlier.

“This quarter was a significant turning point for our company as we returned to volume growth in the U.S., the first time in nine quarters,” Tomé said in the company’s earnings release. “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.”

Revenue also fell to $21.82 billion, down from $22.06 billion a year earlier, mainly due to declines in the company’s domestic and international segments.

Its U.S. operation saw a 1.9% decrease in revenue, which the company said was due primarily to changes in product mix.

“Product mix is expected to continue to pressure revenue per piece, however through expense management and slowing labor inflation, we expect to grow third-quarter operating profit by double digits and exit the year with a U.S. operating margin of 10%,” CFO Brian Dykes said.

August 1 will mark the one year anniversary of UPS’ massive five-year labor contract with the International Brotherhood of Teamsters, which included big wage increases. The company said during the earnings call that it expects the cost pressures associated with the contract to “moderate dramatically in the back half” of the year.

UPS’s international segment saw a 1% decline in revenue during the second quarter, which UPS attributes to a 2.9% decrease in average daily volume.

The company’s third segment, supply chain solutions, increased its revenue by 2.6% from same time last year, due primarily to growth in logistics, including health care.

The report comes as weak freight demand and soft pricing in the shipping sector is causing what some call a global freight recession. Investors had turned to UPS earnings to understand whether demand was improving.

The company said it saw pockets of improved demand outside the U.S.

Growth in volumes in the quarter was partly driven by e-commerce as business-to-consumer volume increased to make up 58.5% of UPS’ total volume, the company said.

“There were two new e-commerce customers that came into our network, and you can imagine who they are. These are new e-commerce shippers in the United States whose volume has been quite explosive,” CEO Tomé said. “[The volume] was certainly more than we anticipated flowing into our network.”

A recent analyst note by Wells Fargo predicted that Temu and Shein were driving the market, accounting for “substantial global small package volume growth,” and driving “favorable supply/demand and better pricing.”

Within the U.S., CFO Dykes said the company saw customers favoring “more economical products,” choosing Ground and its non-urgent value option SurePost over the more expensive Air shipping.

UPS recently snagged an air cargo contract with the United States Postal Service from rival FedEx, which the company included in its guidance for fiscal 2024. UPS will become USPS’ primary air cargo provider starting Oct. 1, after FedEx’s current contract expires.

Although financial details of the deal were previously undisclosed, UPS referred to the award as “significant” in an April press release. The deal brought in $1.75 billion to FedEx in fiscal 2023, that company said.

Correction: UPS reported second-quarter profit and revenue on Tuesday. An earlier version misstated the day.