Why might blindly trusting ABC analysis be risky? United Parcel Service Inc. said higher fuel surcharges and shippingrates helped offset a larger-than-expected decline in packages shipped in thesecond quarter.Average daily shipping volume fell 4% in the U.S. and 9.2% in its internationalmarkets from a year ago, as Covid-19 lockdowns in China, fallout from Russia’sinvasion of Ukraine and high inflation have disrupted manufacturing output,UPS said.“Supply chains are flowing better than a year ago, but we’re not out of thewoods,” Chief Executive Carol Tomé said on a conference call with analysts. TheCovid lockdowns in different cities in China have disrupted manufacturing andreduced ocean freight volume levels.  The lower volumes haven’t damaged its business, however. The Atlanta-based carrier has been focused on shipping more profitable packages, rather than pursuing volume growth. Part of the decline in the U.S. was due to the company shipping fewer packagesfrom Amazon.com Inc., its largest single customer by revenue. The change in theapproach, UPS said, frees it up to focus on gaining new and more profitablecustomers, including small- and medium-size shippers, and those in healthcare.Residential deliveries typically are less profitable routes since there are fewerpackages per stop.“We’ve contractually agreed on what makes sense for us versus what makessense for them. That means that both volume and revenue from Amazon iscoming down,” Ms. Tomé said.UPS projects that revenue from Amazon will make up less than 11% of its totalrevenue by year’s end, she added. Amazon accounted for 11.7% of UPS’s totalrevenue in 2021, down from 13% the year before that.For the remainder of 2022, UPS executives said they expect volume to improveslightly from the first half of the year and for revenue per piece to grow at aslower rate.The company has said its efforts to pass along costs to customers haven’tdamaged the business, as the U.S. job market and consumer spending remainsteady. It also has said that it was reaping the benefits of automation and othertechnological improvements to boost efficiency.As inflation pressures pile up, Ms. Tomé said UPS is working on a program thatcould lower shipping costs for some customers. It is running a pilot with a third-party company that would hold individual orders from being shipped for a setperiod of time until another order is received going to the same address. Thatwould enable more packages to be delivered per stop, she said.Higher fuel costs drove the bulk of growth in operating expenses in the latestquarter.UPS has also been paying benefits to retain workers rather than have to rehirethem for the coming peak season. “That’s the money we left on the table, but we’ll get that back in spades by givinggreat service to our customers during peak,” said Ms. Tomé.For the June quarter, revenue rose 5.7% to $24.8 billion, helped by revenue perpiece shipped increasing nearly 12%. Analysts expected revenue of $24.6 billion.Profit rose 6.5% to $2.85 billion. Per-share earnings excluding one-time itemswas $3.29. Analysts polled by FactSet estimated earnings at $3.16 a share.UPS also raised its share-repurchase target for the year to $3 billion, up from $2billion previously. It also maintained its financial targets for the year, includingrevenue hitting $102 billion.Shares ended down 3.4% Tuesday, compared with the 1.2% slide in the S&P 500.The company’s stock is down 15% this year, compared with an 18% decline in theS&P 500.