10-Q

United States

Securities and Exchange Commission

Washington, D.C. 20549

_____________________________________ 

Form 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022 or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from             to             

Commission file number 001-15451

_____________________________________ 

United Parcel Service, Inc.

(Exact name of registrant as specified in its charter)

Delaware			58-2480149
(State or Other Jurisdiction of Incorporation or Organization)			(IRS Employer Identification No.)
55 Glenlake Parkway N.E. ,	Atlanta,	Georgia	30328
(Address of Principal Executive Offices)			(Zip Code)

(404) 828-6000

(Registrant’s telephone number, including area code)

____________________ 

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Class B common stock, par value $0.01 per share	UPS	New York Stock Exchange
0.375% Senior Notes due 2023	UPS23A	New York Stock Exchange
1.625% Senior Notes due 2025	UPS25	New York Stock Exchange
1% Senior Notes due 2028	UPS28	New York Stock Exchange
1.500% Senior Notes due 2032	UPS32	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☑    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☑    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	x	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes   ☐   No  ☑

There were 136,813,849 Class A shares, and 731,854,184 Class B shares, with a par value of $0.01 per share, outstanding at July 22, 2022.

TABLE OF CONTENTS

PART I—FINANCIAL INFORMATION
	Cautionary Statement About Forward-Looking Statements	1
Item 1.	Financial Statements	2
	Consolidated Balance Sheets	2
	Statements of Consolidated Income	3
	Statements of Consolidated Comprehensive Income (Loss)	3
	Statements of Consolidated Cash Flows	4
	Notes to Unaudited, Consolidated Financial Statements	5
	Note 1—Basis of Presentation and Accounting Policies	5
	Note 2—Recent Accounting Pronouncements	6
	Note 3—Revenue Recognition	7
	Note 4—Stock-Based Compensation	9
	Note 5—Cash and Investments	11
	Note 6—Property, Plant and Equipment	14
	Note 7—Employee Benefit Plans	15
	Note 8—Goodwill and Intangible Assets	18
	Note 9—Debt and Financing Arrangements	19
	Note 10—Leases	21
	Note 11—Legal Proceedings and Contingencies	25
	Note 12—Shareowners’ Equity	26
	Note 13—Segment Information	32
	Note 14—Earnings Per Share	33
	Note 15—Derivative Instruments and Risk Management	34
	Note 16—Income Taxes	40
	Note 17—Transformation Strategy Costs	41
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	42
	Overview	42
	Supplemental Information - Items Affecting Comparability	44
	Results of Operations - Segment Review	46
	U.S. Domestic Package Operations	47
	International Package Operations	50
	Supply Chain Solutions Operations	53
	Consolidated Operating Expenses	55
	Other Income and (Expense)	58
	Income Tax Expense	59
	Liquidity and Capital Resources	60
	Cash Flows From Operating Activities	60
	Cash Flows From Investing Activities	62
	Cash Flows From Financing Activities	63
	Sources of Credit	64
	Contractual Commitments	64
	Legal Proceedings and Contingencies	64
	Collective Bargaining Agreements	64
	Recent Accounting Pronouncements	64
	Rate Adjustments	65
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	66
Item 4.	Controls and Procedures	67
PART II—OTHER INFORMATION
Item 1.	Legal Proceedings	68
Item 1A.	Risk Factors	68
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	69
Item 6.	Exhibits	70

PART I. FINANCIAL INFORMATION

Cautionary Statement About Forward-Looking Statements

This report, our Annual Report on Form 10-K for the year ended December 31, 2021 and our other filings with the Securities and Exchange Commission contain and in the future may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Statements other than those of current or historical fact, and all statements accompanied by terms such as “will,” “believe,” “project,” “expect,” “estimate,” “assume,” “intend,” “anticipate,” “target,” “plan” and similar terms, are intended to be forward-looking statements. Forward-looking statements are made subject to the safe harbor provisions of the federal securities laws pursuant to Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.

From time to time, we also include written or oral forward-looking statements in other publicly disclosed materials. Such statements may relate to our intent, belief, forecasts of, or current expectations about our strategic direction, prospects, future results, or future events; they do not relate strictly to historical or current facts. Management believes that these forward-looking statements are reasonable as and when made. However, caution should be taken not to place undue reliance on any forward-looking statements because such statements speak only as of the date when made and the future, by its very nature, cannot be predicted with certainty.

Forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations or anticipated results. These risks and uncertainties, include, but are not limited to: continued uncertainties related to the impact of the COVID-19 pandemic on our business and operations, financial performance and liquidity, our customers and suppliers, and on the global economy; changes in general economic conditions, in the United States (U.S.) or internationally; significant competition on a local, regional, national and international basis; changes in our relationships with our significant customers; changes in the regulatory environment in the U.S. or internationally; increased or more complex physical or data security requirements; legal, regulatory or market responses to global climate change; results of negotiations and ratifications of labor contracts; strikes, work stoppages or slowdowns by our employees; the effects of changing prices of energy, including gasoline, diesel and jet fuel, and interruptions in supplies of these commodities; changes in exchange rates or interest rates; uncertainty from the expected discontinuance of LIBOR and transition to any other interest rate benchmark; our ability to maintain our brand image; our ability to attract and retain qualified employees; breaches in data security; disruptions to the Internet or our technology infrastructure; interruptions in or impacts on our business from natural or man-made events or disasters including terrorist attacks, epidemics or pandemics; our ability to accurately forecast our future capital investment needs; exposure to changing economic, political and social developments in international and emerging markets; changes in business strategy, government regulations, or economic or market conditions that may result in impairment of our assets; increases in our expenses or funding obligations relating to employee health, retiree health and/or pension benefits; potential additional U.S. or international tax liabilities; potential claims or litigation related to labor and employment, personal injury, property damage, business practices, environmental liability and other matters; our ability to realize the anticipated benefits from acquisitions, dispositions, joint ventures or strategic alliances; our ability to realize the anticipated benefits from our transformation initiatives; cyclical and seasonal fluctuations in our operating results; our ability to manage insurance and claims expenses; and other risks described in our filings with the Securities and Exchange Commission from time to time, including our Annual Report on Form 10-K for the year ended December 31, 2021, our Quarterly Report on Form 10-Q for the quarter ended March 31, 2022 and subsequently filed reports. You should consider the limitations on, and risks associated with, forward-looking statements and not unduly rely on the accuracy of predictions contained in such forward-looking statements. We do not undertake any obligation to update forward-looking statements to reflect events, circumstances, changes in expectations, or the occurrence of unanticipated events after the date of those statements, except as required by law.

1

Item 1. Financial Statements

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

June 30, 2022 (unaudited) and December 31, 2021 (in millions)

	June 30, 2022		December 31, 2021
ASSETS
Current Assets:
Cash and cash equivalents	$	11,735	$	10,255
Marketable securities	336		338
Accounts receivable	11,541		12,669
Less: Allowance for credit losses	(145)		(128)
Accounts receivable, net	11,396		12,541
Other current assets	2,104		1,800
Total Current Assets	25,571		24,934
Property, Plant and Equipment, Net	33,487		33,475
Operating Lease Right-Of-Use Assets	3,436		3,562
Goodwill	3,675		3,692
Intangible Assets, Net	2,476		2,486
Investments and Restricted Cash	21		26
Deferred Income Tax Assets	158		176
Other Non-Current Assets	1,265		1,054
Total Assets	$	70,089	$	69,405
LIABILITIES AND SHAREOWNERS’ EQUITY
Current Liabilities:
Current maturities of long-term debt, commercial paper and finance leases	$	2,579	$	2,131
Current maturities of operating leases	562		580
Accounts payable	7,168		7,523
Accrued wages and withholdings	3,376		3,819
Self-insurance reserves	1,079		1,048
Accrued group welfare and retirement plan contributions	945		1,038
Other current liabilities	1,628		1,430
Total Current Liabilities	17,337		17,569
Long-Term Debt and Finance Leases	17,997		19,784
Non-Current Operating Leases	2,962		3,033
Pension and Postretirement Benefit Obligations	8,343		8,047
Deferred Income Tax Liabilities	3,577		3,125
Other Non-Current Liabilities	3,563		3,578
Shareowners’ Equity:
Class A common stock (138 shares issued in 2022 and 2021)	2		2
Class B common stock (732 shares issued in 2022 and 2021)	7		7
Additional paid-in capital	573		1,343
Retained earnings	18,958		16,179
Accumulated other comprehensive loss	(3,251)		(3,278)
Deferred compensation obligations	12		16
Less: Treasury stock (0.2 shares in 2022 and 0.3 shares in 2021)	(12)		(16)
Total Equity for Controlling Interests	16,289		14,253
Noncontrolling interests	21		16
Total Shareowners’ Equity	16,310		14,269
Total Liabilities and Shareowners’ Equity	$	70,089	$	69,405

See notes to unaudited, consolidated financial statements.

2

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

STATEMENTS OF CONSOLIDATED INCOME

(In millions, except per share amounts)

(unaudited)

 

	Three Months Ended  June 30,				Six Months Ended  June 30,
	2022		2021		2022		2021
Revenue	$	24,766	$	23,424	$	49,144	$	46,332
Operating Expenses:
Compensation and benefits	11,358		11,327		22,974		22,810
Repairs and maintenance	643		599		1,269		1,218
Depreciation and amortization	762		739		1,526		1,461
Purchased transportation	4,385		4,446		8,985		8,689
Fuel	1,697		915		2,917		1,722
Other occupancy	420		402		911		868
Other expenses	1,966		1,738		3,776		3,541
Total Operating Expenses	21,231		20,166		42,358		40,309
Operating Profit	3,535		3,258		6,786		6,023
Other Income and (Expense):
Investment income and other	333		345		648		3,961
Interest expense	(171)		(167)		(345)		(344)
Total Other Income and (Expense)	162		178		303		3,617
Income Before Income Taxes	3,697		3,436		7,089		9,640
Income Tax Expense	848		760		1,578		2,172
Net Income	$	2,849	$	2,676	$	5,511	$	7,468
Basic Earnings Per Share	$	3.26	$	3.06	$	6.31	$	8.54
Diluted Earnings Per Share	$	3.25	$	3.05	$	6.28	$	8.51

STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME (LOSS)

(In millions)

(unaudited)

 

	Three Months Ended  June 30,				Six Months Ended  June 30,
	2022		2021		2022		2021
Net Income	$	2,849	$	2,676	$	5,511	$	7,468
Change in foreign currency translation adjustment, net of tax	(245)		48		(285)		(34)
Change in unrealized gain (loss) on marketable securities, net of tax	(1)		(1)		(7)		(5)
Change in unrealized gain (loss) on cash flow hedges, net of tax	234		(46)		277		68
Change in unrecognized pension and postretirement benefit costs, net of tax	18		1,594		42		4,020
Comprehensive Income (Loss)	$	2,855	$	4,271	$	5,538	$	11,517

See notes to unaudited, consolidated financial statements.

3

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

STATEMENTS OF CONSOLIDATED CASH FLOWS

(In millions)

(unaudited)

	Six Months Ended  June 30,
	2022		2021
Cash Flows From Operating Activities:
Net income	$	5,511	$	7,468
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization	1,526		1,461
Pension and postretirement benefit (income) expense	433		(2,839)
Pension and postretirement benefit contributions	(123)		(276)
Self-insurance reserves	112		130
Deferred tax (benefit) expense	360		1,127
Stock compensation expense	617		521
Other (gains) losses	11		—
Changes in assets and liabilities, net of effects of business acquisitions:
Accounts receivable	820		439
Other assets	(62)		169
Accounts payable	(508)		56
Accrued wages and withholdings	(348)		227
Other liabilities	22		(27)
Other operating activities	(78)		(2)
Net cash from operating activities	8,293		8,454
Cash Flows From Investing Activities:
Capital expenditures	(1,388)		(1,670)
Proceeds from disposal of businesses, property, plant and equipment	9		863
Purchases of marketable securities	(132)		(141)
Sales and maturities of marketable securities	130		214
Net change in finance receivables	7		16
Cash paid for business acquisitions, net of cash and cash equivalents acquired	(99)		(5)
Other investing activities	(26)		(11)
Net cash used in investing activities	(1,499)		(734)
Cash Flows From Financing Activities:
Net change in short-term debt	—		498
Proceeds from long-term borrowings	—		—
Repayments of long-term borrowings	(1,105)		(2,599)
Purchases of common stock	(1,242)		—
Issuances of common stock	136		141
Dividends	(2,567)		(1,718)
Other financing activities	(508)		(360)
Net cash used in financing activities	(5,286)		(4,038)
Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash	(28)		16
Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash	1,480		3,698
Cash, Cash Equivalents and Restricted Cash:
Beginning of period	10,255		5,910
End of period	$	11,735	$	9,608

See notes to unaudited, consolidated financial statements.

4

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. BASIS OF PRESENTATION AND ACCOUNTING POLICIES

Principles of Consolidation

The accompanying interim unaudited, consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. These interim unaudited, consolidated financial statements contain all adjustments (consisting of normal recurring accruals) necessary to present fairly our financial position as of June 30, 2022, our results of operations for the three and six months ended June 30, 2022 and 2021, and our cash flows for the six months ended June 30, 2022 and 2021. The results reported in these interim unaudited, consolidated financial statements should not be regarded as indicative of results that may be expected for any other period or the entire year. The interim unaudited, consolidated financial statements should be read in conjunction with the audited, consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2021.

Fair Value of Financial Instruments

The carrying amounts of our cash and cash equivalents, accounts receivable, finance receivables and accounts payable approximate fair value as of June 30, 2022 and December 31, 2021. The fair values of our investment securities are disclosed in note 5, our recognized multiemployer pension withdrawal liabilities in note 7, our short- and long-term debt in note 9 and our derivative instruments in note 15. We apply a fair value hierarchy (Levels 1, 2 and 3) when measuring and reporting items at fair value. Fair values are based on listed market prices (Level 1), when such prices are available. To the extent that listed market prices are not available, fair value is determined based on other relevant factors, including dealer price quotations (Level 2). If listed market prices or other relevant factors are not available, inputs are developed from unobservable data reflecting our own assumptions and include situations where there is little or no market activity for the asset or liability (Level 3). We utilized Level 1 inputs in the fair value hierarchy to determine the fair value of our cash and cash equivalents, and Level 2 inputs to determine the fair value of our accounts receivable, finance receivables and accounts payable.

Use of Estimates

The preparation of the accompanying interim unaudited, consolidated financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingencies at the date of these financial statements, as well as the reported amounts of revenues and expenses during the reporting period.

Although our estimates contemplate current and expected future conditions, as applicable, it is reasonably possible that actual conditions could differ from our expectations, which could materially affect our results of operations and financial position. As a result, our accounting estimates and assumptions may change significantly over time.

5

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2. RECENT ACCOUNTING PRONOUNCEMENTS

Adoption of New Accounting Standards

Accounting pronouncements adopted during the periods covered by the unaudited, consolidated financial statements did not have a material impact on our consolidated financial position, results of operations or cash flows. For accounting standards adopted in the period ended June 30, 2021, refer to note 1 to our audited, consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2021.

Accounting Standards Issued But Not Yet Effective

Accounting pronouncements issued before, but not effective until after, June 30, 2022, are not expected to have a material impact on our consolidated financial position, results of operations or cash flows.

6

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3. REVENUE RECOGNITION

Revenue Recognition

Substantially all of our revenues are from contracts associated with the pickup, transportation and delivery of packages and freight (“transportation services”) domestically or internationally. These services may be carried out by or arranged by us, and generally occur over a short period of time. We also provide value-added logistics services to customers, both domestically and internationally, through our global network of distribution centers and field stocking locations.

The majority of our contracts with customers for transportation services include only one performance obligation: the transportation services themselves. We generally recognize revenue over time as we perform the services in the contract because of the continuous transfer of control to the customer. Our remaining performance obligations are primarily comprised of transportation services started but not completed as of the reporting date and we expect to complete these remaining performance obligations within a short period of time. All of our major businesses act as a principal in their revenue arrangements and as such, we report revenue and the associated purchased transportation costs on a gross basis within our statements of consolidated income.

Disaggregation of Revenue

	Three Months Ended  June 30,				Six Months Ended  June 30,
	2022		2021		2022		2021
Revenue:
Next Day Air	$	2,656	$	2,456	$	5,250	$	4,787
Deferred	1,392		1,313		2,812		2,573
Ground	11,411		10,633		22,521		21,052
U.S. Domestic Package	15,459		14,402		30,583		28,412
Domestic	829		936		1,680		1,864
Export	3,976		3,674		7,754		7,167
Cargo & Other	268		207		515		393
International Package	5,073		4,817		9,949		9,424
Forwarding	2,389		2,309		4,978		4,381
Logistics	1,290		1,162		2,541		2,266
Freight	—		297		—		1,064
Other	555		437		1,093		785
Supply Chain Solutions	4,234		4,205		8,612		8,496
Consolidated revenue	$	24,766	$	23,424	$	49,144	$	46,332

Contract Assets and Liabilities

Contract assets include billed and unbilled amounts resulting from in-transit packages, as we have an unconditional right to payment only once all performance obligations have been completed (i.e. packages have been delivered) and our right to payment is not solely based on the passage of time. Amounts may not exceed their net realizable value. Contract assets are generally classified as current and the full balance is converted each quarter based on the short-term nature of the transactions.

7

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Contract liabilities consist of advance payments and billings in excess of revenue as well as deferred revenue. Advance payments and billings in excess of revenue represent payments received from our customers that will be earned over the contract term. Deferred revenue represents the amount of consideration due from customers related to in-transit shipments that has not yet been recognized as revenue based on our selected measure of progress. We classify advance payments and billings in excess of revenue as either current or long-term, depending on the period over which the advance payment will be earned. We classify deferred revenue as current based on the timing of when we expect to recognize revenue, which typically occurs within a short window after period-end. The full balance of deferred revenue is converted each quarter based on the short-term nature of the transactions. Our contract assets and liabilities are reported in a net position on a contract-by-contract basis at the end of each reporting period. In order to determine revenue recognized in the period from contract liabilities, we first allocate revenue to the individual contract liability balance outstanding at the beginning of the period until the revenue exceeds that deferred revenue balance.

Contract assets related to in-transit packages were $350 and $304 million as of June 30, 2022 and December 31, 2021, respectively, net of deferred revenue related to in-transit packages of $339 and $314 million as of June 30, 2022 and December 31, 2021, respectively, and are included within Other current assets in the consolidated balance sheets. Short-term contract liabilities related to advance payments from customers were $10 and $27 million as of June 30, 2022 and December 31, 2021, respectively, and are included within Other current liabilities in the consolidated balance sheets. Long-term contract liabilities related to advance payments from customers were $26 and $25 million as of June 30, 2022 and December 31, 2021, respectively, and are included within Other Non-Current Liabilities in the consolidated balance sheets.

Accounts Receivable, Net

Accounts receivable, net, include amounts billed and currently due from customers. The amounts due are stated at their net estimated realizable value. Losses on accounts receivable are recognized when reasonable and supportable forecasts affect the expected collectability. This requires us to make our best estimate of the current expected losses inherent in our accounts receivable at each balance sheet date. This estimate requires consideration of historical loss experience, adjusted for current conditions, forward looking indicators, trends in customer payment frequency and judgments about the probable effects of relevant observable data, including present and future economic conditions and the financial health of specific customers and market sectors. Our risk management process includes standards and policies for reviewing major account exposures and concentrations of risk.

Our allowance for credit losses as of June 30, 2022 and December 31, 2021 was $145 and $128 million, respectively. Amounts for credit losses charged to expense, before recoveries, during the three months ended June 30, 2022 and 2021 were $52 and $39 million, respectively, and for six months ended June 30, 2022 and 2021, were $106 and $80 million, respectively.

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UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4. STOCK-BASED COMPENSATION

We issue share-based awards under various incentive compensation plans, including non-qualified and incentive stock options, stock appreciation rights, restricted stock and stock units ("RSUs") and restricted performance shares and performance units ("RPUs", collectively with RSUs, "Restricted Units"). Upon vesting, Restricted Units result in the issuance of the equivalent number of UPS class A common shares after required tax withholdings. Dividends accrued on Restricted Units are reinvested in additional Restricted Units at each dividend payable date and are subject to the same vesting and forfeiture conditions as the underlying Restricted Units.

Our primary equity compensation programs are the UPS Management Incentive Award program (the "MIP"), the UPS Long-Term Incentive Performance Award program (the "LTIP") and the UPS Stock Option program. We also maintain an employee stock purchase plan which allows eligible employees to purchase shares of UPS class A common stock at a discount. Our matching contributions to our primary employee defined contribution savings plan are made in shares of UPS class A common stock.

Management Incentive Award Program

RPUs issued under the MIP vest one year following the grant date based on continued employment with the Company (except in the case of death, disability or retirement, in which case immediate vesting occurs). The grant value is expensed on a straight-line basis (less estimated forfeitures) over the requisite service period (except in the case of death, disability or retirement, in which case immediate expensing occurs).

Based on the date of Compensation Committee approval of the 2021 MIP award, we determined the award measurement dates to be February 9, 2022 (for U.S.-based employees and executive management) and March 21, 2022 (for international employees). The RPUs issued under the MIP were valued using the closing New York Stock Exchange ("NYSE") prices of $225.07 and $218.56 on those dates.

Long-Term Incentive Performance Award Program

RPUs issued under the LTIP vest at the end of a three-year performance period, assuming continued employment with the Company (except in the case of death, disability or retirement, in which case immediate vesting occurs on a prorated basis). The actual number of RPUs earned is based on achievement of the performance targets established on the grant date.

The performance targets are equally weighted between adjusted earnings per share and adjusted cumulative free cash flow. The actual number of RPUs earned is subject to adjustment based on total shareholder return relative to the Standard & Poors 500 Index ("S&P 500"). We determine the grant date fair value of the RPUs using a Monte Carlo model and recognize compensation expense (less estimated forfeitures) ratably over the vesting period, based on the number of awards expected to be earned.

Based on the date of Compensation Committee approval of the 2022 LTIP award performance targets, we determined March 23, 2022 to be the award measurement date and the target RPUs awarded were valued at $230.67.

The weighted-average assumptions used and the weighted-average fair values of the LTIP awards granted in 2022 and 2021 are as follows:

	2022			2021
Risk-free interest rate	2.29		%	0.19		%
Expected volatility	31.90		%	30.70		%
Weighted-average fair value of RPUs granted	$	230.67		$	168.05
Share payout	107.50		%	102.39		%

There is no expected dividend yield as units earn dividend equivalents.

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UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Non-Qualified Stock Options

We grant non-qualified stock options to a limited group of eligible senior management employees under the UPS Stock Option program. Stock option awards vest over a five-year period with approximately 20% of the award vesting at each anniversary of the grant date (except in the case of death, disability or retirement, in which case immediate vesting occurs). The option grants expire 10 years after the date of the grant. On March 23, 2022, we granted 0.1 million stock options at an exercise price of $214.58, the NYSE closing price on that date.

The fair value of each option grant is estimated using the Black-Scholes option pricing model. The weighted-average assumptions used and the weighted-average fair values of options granted in 2022 and 2021 are as follows:

	2022			2021
Expected dividend yield	2.35		%	3.31		%
Risk-free interest rate	2.39		%	0.84		%
Expected life (in years)	7.5			7.5
Expected volatility	25.04		%	23.15		%
Weighted-average fair value of options granted	$	48.45		$	23.71

Pre-tax compensation expense for share-based awards recognized in Compensation and benefits on the statements of consolidated income for the three months ended June 30, 2022 and 2021 was $231 and $206 million, respectively, and for the six months ended June 30, 2022 and 2021 was $617 and $521 million, respectively.

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UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5. CASH AND INVESTMENTS

The following is a summary of marketable securities classified as trading and available-for-sale as of June 30, 2022 and December 31, 2021 (in millions):

	Cost		Unrealized Gains		Unrealized Losses		Estimated Fair Value
June 30, 2022:
Current trading marketable securities:
Equity securities	$	2	$	—	$	—	$	2
Total trading marketable securities	2		—		—		2
Current available-for-sale securities:
U.S. government and agency debt securities	200		—		(5)		195
Mortgage and asset-backed debt securities	12		—		—		12
Corporate debt securities	125		—		(3)		122
U.S. state and local municipal debt securities	5		—		—		5
Non-U.S. government debt securities	—		—		—		—
Total available-for-sale marketable securities	342		—		(8)		334
Total current marketable securities	$	344	$	—	$	(8)	$	336
	Cost		Unrealized Gains		Unrealized Losses		Estimated Fair Value
December 31, 2021:
Current trading marketable securities:
Equity securities	$	2	$	—	$	—	$	2
Total trading marketable securities	2		—		—		2
Current available-for-sale securities:
U.S. government and agency debt securities	199		2		(1)		200
Mortgage and asset-backed debt securities	7		—		—		7
Corporate debt securities	121		—		—		121
U.S. state and local municipal debt securities	5		—		—		5
Non-U.S. government debt securities	3		—		—		3
Total available-for-sale marketable securities	335		2		(1)		336
Total current marketable securities	$	337	$	2	$	(1)	$	338

    

Investment Impairments

We have concluded that no material impairment losses existed as of June 30, 2022. In making this determination, we considered the financial condition and prospects of each issuer, the magnitude of the losses compared with the cost, the probability that we will be unable to collect all amounts due according to the contractual terms of the security, the credit rating of the security and our ability and intent to hold these investments until the anticipated recovery in market value occurs.

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Maturity Information

The amortized cost and estimated fair value of marketable securities as of June 30, 2022 by contractual maturity are shown below (in millions). Actual maturities may differ from contractual maturities because the issuers of the securities may have the right to prepay obligations with or without prepayment penalties.

	Cost		Estimated Fair Value
Due in one year or less	$	30	$	29
Due after one year through three years	312		305
Due after three years through five years	—		—
Due after five years	—		—
	342		334
Equity securities	2		2
	$	344	$	336

Non-Current Investments and Restricted Cash

We hold an investment in a variable life insurance policy to fund benefits for the UPS Excess Coordinating Benefit Plan. The investment had a fair market value of $19 and $23 million as of June 30, 2022 and December 31, 2021, respectively. Changes in fair value are recognized in Investment income and other in the statements of consolidated income. Additionally, we held cash in escrow related to the acquisition and disposition of certain assets of $2 and $3 million as of June 30, 2022 and December 31, 2021, respectively. These amounts are classified as Investments and Restricted Cash in the consolidated balance sheets.

A reconciliation of cash and cash equivalents and restricted cash from the consolidated balance sheets to the statements of consolidated cash flows is shown below (in millions):

	June 30, 2022		December 31, 2021		June 30, 2021
Cash and cash equivalents	$	11,735	$	10,255	$	9,608
Restricted cash	—		—		—
Total cash, cash equivalents and restricted cash	$	11,735	$	10,255	9,608

Fair Value Measurements

Marketable securities valued utilizing Level 1 inputs include active exchange-traded equity securities and equity index funds, and most U.S. government debt securities, as these securities all have quoted prices in active markets. Marketable securities valued utilizing Level 2 inputs include asset-backed securities, corporate bonds and municipal bonds. These securities are valued using market corroborated pricing, matrix pricing or other models that utilize observable inputs such as yield curves.

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The following table presents information about our investments measured at fair value on a recurring basis as of June 30, 2022 and December 31, 2021, and indicates the fair value hierarchy of the valuation techniques utilized to determine such fair value (in millions):

	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance
June 30, 2022:
Marketable securities:
U.S. government and agency debt securities	$	195	$	—	$	—	$	195
Mortgage and asset-backed debt securities	—		12		—		12
Corporate debt securities	—		122		—		122
U.S. state and local municipal debt securities	—		5		—		5
Equity securities	—		2		—		2
Non-U.S. government debt securities	—		—		—		—
Total marketable securities	195		141		—		336
Other non-current investments	19		—		—		19
Total	$	214	$	141	$	—	$	355

December 31, 2021:
Marketable securities:
U.S. government and agency debt securities	$	200	$	—	$	—	$	200
Mortgage and asset-backed debt securities	—		7		—		7
Corporate debt securities	—		121		—		121
U.S. state and local municipal debt securities	—		5		—		5
Equity securities	—		2		—		2
Non-U.S. government debt securities	—		3		—		3
Total marketable securities	200		138		—		338
Other non-current investments	23		—		—		23
Total	$	223	$	138	$	—	$	361

There were no transfers of investments between Level 1 and Level 2 during the six months ended June 30, 2022 or 2021.

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment as of June 30, 2022 and December 31, 2021 consisted of the following (in millions):

	2022		2021
Vehicles	$	10,181	$	10,018
Aircraft	22,507		21,973
Land	2,106		2,140
Buildings	5,794		5,802
Building and leasehold improvements	5,027		5,010
Plant equipment	15,629		15,650
Technology equipment	2,858		2,798
Construction-in-progress	1,520		1,418
	65,622		64,809
Less: Accumulated depreciation and amortization	(32,135)		(31,334)
Property, Plant and Equipment, Net	$	33,487	$	33,475

Property, plant and equipment purchased on account was $477 and $248 million as of June 30, 2022 and December 31, 2021, respectively. 

We continually monitor our aircraft fleet utilization in light of current and projected volume levels, aviation fuel prices and other factors. Additionally, we monitor all other property, plant and equipment categories for any indicators that the carrying value of the assets may not be recoverable. For the three months ended June 30, 2022 and 2021, and for the six months ended June 30, 2022, there were no material impairment charges. We recorded impairment charges of $24 million for the six months ended June 30, 2021, due to the reevaluation of certain facility projects.

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 7. EMPLOYEE BENEFIT PLANS

Company-Sponsored Benefit Plans

Information about the net periodic benefit cost (income) for our company-sponsored pension and postretirement benefit plans for the three and six months ended June 30, 2022 and 2021 is as follows (in millions):

	U.S. Pension Benefits				U.S. Postretirement Medical Benefits				International Pension Benefits
	2022		2021		2022		2021		2022		2021
Three Months Ended June 30:
Service cost	$	506	$	461	$	7	$	7	$	17	$	19
Interest cost	487		481		21		20		11		10
Expected return on assets	(820)		(831)		(1)		(1)		(20)		(17)
Amortization of prior service cost	23		34		—		1		1		1
Net periodic benefit cost	$	196	$	145	$	27	$	27	$	9	$	13
	U.S. Pension Benefits				U.S. Postretirement Medical Benefits				International Pension Benefits
	2022		2021		2022		2021		2022		2021
Six Months Ended June 30:
Service cost	$	1,012	$	1,014	$	15	$	14	$	35	$	38
Interest cost	975		969		41		39		23		20
Expected return on assets	(1,640)		(1,677)		(2)		(3)		(40)		(34)
Amortization of prior service cost	46		67		—		3		1		1
Actuarial (gain) loss	—		(3,290)		—		—		—		—
Settlement and curtailment (gain) loss	—		—		—		—		(33)		—
Net periodic benefit (income) cost	$	393	$	(2,917)	$	54	$	53	$	(14)	$	25

The components of net periodic benefit cost (income) other than current service cost are presented within Investment income and other in the statements of consolidated income.

During the six months ended June 30, 2022, we amended the UPS Canada Ltd. Retirement Plan to cease future benefit accruals effective December 31, 2023. We remeasured plan assets and benefit obligations for this plan, which resulted in a curtailment gain of $33 million ($24 million after tax) during the six month period. The gain is included in Investment income and other in the statement of consolidated income for the six months ended June 30, 2022.

On April 30, 2021, we divested our UPS Freight business, which triggered an interim remeasurement of the plan assets and benefit obligations of the UPS Pension Plan, UPS Retirement Plan and UPS Retired Employee Health Care Plan as of this date. The interim remeasurement resulted in an actuarial gain of $2.1 billion, reflecting updated actuarial assumptions and was recorded in other comprehensive income within the equity section of the consolidated balance sheet. An actuarial gain of $69 million ($52 million after tax) for a prior service credit related to the divested group and a $66 million loss ($50 million after tax) for certain plan amendments to the UPS Pension Plan were immediately recognized within Other expenses in the statement of consolidated income for the six months ended June 30, 2021.

During the six months ended June 30, 2021, we remeasured the UPS/IBT Full Time Employee Pension Plan following the enactment into law of the American Rescue Plan Act, which is discussed below. The interim remeasurement resulted in a pre-tax mark-to-market gain of $3.3 billion ($2.5 billion after tax) during the six month period. The gain was included within Investment income and other in the statement of consolidated income for the six months ended June 30, 2021.

Contributions to our company-sponsored pension and U.S. postretirement medical benefit plans for the first six months of 2022 were $66 and $57 million, respectively. We expect to contribute approximately $1.9 billion and $221 million over the remainder of the year to our pension and U.S. postretirement medical benefit plans, respectively.

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UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Multiemployer Benefit Plans

We contribute to a number of multiemployer defined benefit and health and welfare plans under the terms of collective bargaining agreements that cover our union-represented employees. Our current collective bargaining agreements set forth the annual contribution increases allotted to the plans that we participate in, and we are in compliance with these contribution rates. These limitations on annual contribution rates will remain in effect throughout the terms of the existing collective bargaining agreements.

As of June 30, 2022 and December 31, 2021, we had $826 and $830 million, respectively, recorded in Other Non-Current Liabilities on our consolidated balance sheets and $8 million as of June 30, 2022 and December 31, 2021, recorded in Other current liabilities on our consolidated balance sheets associated with our previous withdrawal from the New England Teamsters and Trucking Industry Pension Fund. This liability is payable in equal monthly installments over a remaining term of approximately 40 years. Based on the borrowing rates currently available to us for long-term financing of a similar maturity, the fair value of this withdrawal liability as of June 30, 2022 and December 31, 2021 was $744 and $963 million, respectively. We utilized Level 2 inputs in the fair value hierarchy of valuation techniques to determine the fair value of this liability.

UPS was a contributing employer to the Central States Pension Fund (“CSPF”) until 2007 at which time UPS withdrew from the CSPF and paid a $6.1 billion withdrawal liability to satisfy our allocable share of unfunded vested benefits. Under a collective bargaining agreement with the International Brotherhood of Teamsters (“IBT”), UPS agreed to provide coordinating benefits in the UPS/IBT Full Time Employee Pension Plan (“UPS/IBT Plan”) for UPS participants whose last employer was UPS and who had not retired as of January 1, 2008 (“the UPS Transfer Group”) in the event that benefits are lawfully reduced by the CSPF in the future consistent with the terms of our withdrawal agreement with the CSPF. Under this withdrawal agreement, benefits to the UPS Transfer Group cannot be reduced without our consent and can only be reduced in accordance with applicable law. The financial crisis of 2008 created extensive asset losses at the CSPF, contributing to the plan’s projected insolvency, at which time benefits would be reduced to the legally permitted Pension Benefit Guaranty Corporation ("PBGC") limits, triggering the coordination of benefits provision in the collective bargaining agreement.

In 2014, Congress passed the Multiemployer Pension Reform Act (“MPRA”). This change in law for the first time permitted multiemployer pension plans to reduce benefit payments to retirees, subject to specific guidelines in the statute and government approval. In 2015, the CSPF submitted a proposed pension benefit reduction plan to the U.S. Department of the Treasury (“Treasury”). In 2016, Treasury rejected the proposed plan submitted by the CSPF. In light of its financial difficulties, the CSPF had stated that it believed a legislative solution to its funded status would be necessary or that it would become insolvent in 2025, at which time benefits would be reduced to the applicable PBGC benefit levels.

We account for the potential obligation to pay coordinating benefits to the UPS Transfer Group under ASC 715, which requires us to provide a best estimate of various actuarial assumptions, including the eventual outcome of this matter, in measuring our pension benefit obligation at the December 31st measurement date and at interim periods when a significant event occurs. ASC 715 does not permit anticipation of changes in law when developing a best estimate.

At the December 31, 2020 measurement date, we developed our best estimate for the potential obligation to pay coordinating benefits to the UPS Transfer Group using a deterministic cash flow projection that reflected estimated CSPF cash flows and investment earnings, the lack of legislative action having been taken, the expectation of payment of guaranteed benefits by the PBGC and the lack of a benefit reduction plan under MPRA having been filed by the CSPF. As a result, our best estimate at that time of the obligation for coordinating benefits that may have been required to be directly provided by the UPS/IBT Plan to the UPS Transfer Group was $5.5 billion.

In March 2021, the American Rescue Plan Act (“ARPA”) was enacted into law. The ARPA contains provisions that allow for qualifying financially distressed multiemployer pension plans to apply for special financial assistance ("SFA") from the PBGC, which will be funded by Treasury. Following approval of an application, a qualifying multiemployer pension plan will receive a lump sum payment to enable it to continue paying unreduced benefits through 2051. The multiemployer plan is not obligated to repay the SFA. The ARPA is intended to prevent both the PBGC and certain financially distressed multiemployer pension plans, including the CSPF, from becoming insolvent through 2051. On July 9, 2021, the PBGC issued interim final regulations implementing the SFA program established under the ARPA. On April 28, 2022, the CSPF submitted an application to the PBGC for SFA. The PBGC has up to 120 days from the date of submission to review the application.

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The passage of the ARPA and the expected receipt of SFA by the CSPF currently suspends our obligation to provide additional coordinating benefits to the UPS Transfer Group through 2051. These matters also triggered a plan remeasurement under ASC 715. Accordingly, we remeasured the plan assets and pension benefit obligation of the UPS/IBT Plan as of March 31, 2021 resulting in an actuarial gain of $6.4 billion, reflecting a reduction of the liability for coordinating benefits of $5.1 billion and a gain from other updated actuarial assumptions of $1.3 billion.

The future value of this estimate will continue to be influenced by a number of factors, including interpretations of the ARPA, future legislative actions, actuarial assumptions and the ability of the PBGC to sustain its commitments. Actual events may result in a change in our best estimate of the projected benefit obligation. We will continue to assess the impact of these uncertainties in accordance with ASC 715.

Collective Bargaining Agreements

We have approximately 327,000 employees employed under a national master agreement and various supplemental agreements with local unions affiliated with the IBT. These agreements run through July 31, 2023.

We have approximately 3,200 pilots who are employed under a collective bargaining agreement with the Independent Pilots Association ("IPA"). This collective bargaining agreement becomes amendable September 1, 2023. In the second quarter of 2022, we reached a tentative agreement on a two-year contract extension with the IPA. If ratified, the new agreement will extend the amendable date to September 1, 2025.

We have approximately 1,700 airline mechanics who are covered by a collective bargaining agreement with Teamsters Local 2727 which becomes amendable November 1, 2023. In addition, approximately 3,300 of our auto and maintenance mechanics who are not employed under agreements with the IBT are employed under collective bargaining agreements with the International Association of Machinists and Aerospace Workers (“IAM”). The collective bargaining agreement with the IAM runs through July 31, 2024.

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UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8. GOODWILL AND INTANGIBLE ASSETS

The following table indicates the allocation of goodwill as of June 30, 2022 and December 31, 2021 (in millions):

	U.S. Domestic Package		International Package		Supply Chain Solutions		Consolidated
December 31, 2021:	$	847	$	403	$	2,442	$	3,692
Acquired	—		—		61		61
Currency / Other	—		(21)		(57)		(78)
June 30, 2022:	$	847	$	382	$	2,446	$	3,675

The goodwill balances for both International Package and Supply Chain Solutions decreased due to the impact of changes in the value of the U.S. Dollar on the translation of non-U.S. Dollar goodwill balances. In May 2022, we acquired Delivery Solutions, a digital platform that optimizes customer deliveries across multiple networks. The acquisition was funded with cash from operations and was not material to our consolidated financial position or results of operations. The goodwill associated with the acquisition is included within Supply Chain Solutions.

The following is a summary of intangible assets as of June 30, 2022 and December 31, 2021 (in millions):

	Gross Carrying Amount		Accumulated Amortization		Net Carrying Value
June 30, 2022:
Capitalized software	$	5,048	$	(3,406)	$	1,642
Licenses	48		(22)		26
Franchise rights	138		(36)		102
Customer relationships	720		(435)		285
Trade name	67		(5)		62
Trademarks, patents and other	169		(14)		155
Amortizable intangible assets	$	6,190	$	(3,918)	$	2,272
Indefinite-lived intangible assets	204		—		204
Total Intangible Assets, Net	$	6,394	$	(3,918)	$	2,476
December 31, 2021:
Capitalized software	$	4,910	$	(3,275)	$	1,635
Licenses	58		(27)		31
Franchise rights	119		(37)		82
Customer relationships	733		(408)		325
Trade name	67		(1)		66
Trademarks, patents and other	158		(15)		143
Amortizable intangible assets	$	6,045	$	(3,763)	$	2,282
Indefinite-lived intangible assets	204		—		204
Total Intangible Assets, Net	$	6,249	$	(3,763)	$	2,486

As of June 30, 2022, we had a trade name with a carrying value of $200 million and licenses with a current carrying value of $4 million, which are deemed to be indefinite-lived intangible assets and are included in the table above. Our 2021 annual impairment testing of these assets indicated that the fair value of the trade name, which is associated with our truckload brokerage business, remained greater than its carrying value as of our testing date, although this excess was less than 10 percent. There were no events or changes in circumstances during the six months ended June 30, 2022 that would indicate the carrying amount of our indefinite-lived intangible assets may be impaired as of the date of this report.

Impairment tests for finite-lived intangible assets are performed when a triggering event occurs that may indicate that the carrying value of the intangible asset may not be recoverable. There were no impairment charges for finite-lived intangible assets during the three or six months ended June 30, 2022. We recorded $1 and $7 million in impairment charges for finite-lived intangible assets during the three and six months ended June 30, 2021, respectively.

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9. DEBT AND FINANCING ARRANGEMENTS

The carrying value of our outstanding debt obligations as of June 30, 2022 and December 31, 2021 consists of the following (in millions):

	Principal Amount			Carrying Value
			Maturity	2022		2021
Fixed-rate senior notes:
2.450% senior notes	1,000		2022	999		1,010
2.350% senior notes	—		2022	—		600
2.500% senior notes	1,000		2023	999		998
2.800% senior notes	500		2024	498		498
2.200% senior notes	400		2024	399		399
3.900% senior notes	1,000		2025	997		996
2.400% senior notes	500		2026	499		498
3.050% senior notes	1,000		2027	994		994
3.400% senior notes	750		2029	746		746
2.500% senior notes	400		2029	397		397
4.450% senior notes	750		2030	744		744
6.200% senior notes	1,500		2038	1,484		1,484
5.200% senior notes	500		2040	494		494
4.875% senior notes	500		2040	491		491
3.625% senior notes	375		2042	368		368
3.400% senior notes	500		2046	492		492
3.750% senior notes	1,150		2047	1,137		1,137
4.250% senior notes	750		2049	743		743
3.400% senior notes	700		2049	688		688
5.300% senior notes	1,250		2050	1,231		1,231
Floating-rate senior notes:
Floating-rate senior notes	—		2022	—		400
Floating-rate senior notes	500		2023	500		500
Floating-rate senior notes	1,039		2049-2067	1,027		1,027
Debentures:
7.620% debentures	276		2030	280		280
Pound Sterling notes:
5.500% notes	81		2031	80		89
5.125% notes	553		2050	525		583
Euro senior notes:
0.375% senior notes	728		2023	727		791
1.625% senior notes	728		2025	726		791
1.000% senior notes	520		2028	518		564
1.500% senior notes	520		2032	517		564
Canadian senior notes:
2.125% senior notes	582		2024	580		585
Finance lease obligations	372		2022-2046	372		408
Facility notes and bonds	320		2029-2045	320		320
Other debt	4		2022-2025	4		5
Total debt	$	20,748		20,576		21,915
Less: current maturities				(2,579)		(2,131)
Long-term debt				$	17,997	$	19,784

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Commercial Paper

We are authorized to borrow up to $10.0 billion under a U.S. commercial paper program and €5.0 billion (in a variety of currencies) under a European commercial paper program. As of June 30, 2022, we had no outstanding balances under our commercial paper programs.

Debt Classification

We have classified certain floating-rate senior notes that are redeemable at the option of the note holder as long-term liabilities on our consolidated balance sheets, due to our intent and ability to refinance the debt if the put option is exercised.

Debt Repayments

During the quarter ended June 30, 2022, our 2.350% senior notes with a principal balance of $600 million and our floating rate senior notes with a principal balance of $400 million matured and were repaid in full.

Reference Rate Reform

Our floating-rate senior notes with maturities ranging from 2049 through 2067 bear interest at rates that reference the London Interbank Offer Rate ("LIBOR") for U.S. Dollars. As part of a broader program of reference rate reform, it is expected that U.S. Dollar LIBOR rates will cease to be published after June 2023. We are currently working to transition these notes to an alternative reference rate, and we anticipate that the Secured Overnight Financing Rate ("SOFR") will be adopted in accordance with recommendations of the Alternative Reference Rates Committee.

Sources of Credit

We maintain two credit agreements with a consortium of banks. The first of these agreements provides revolving credit facilities of $1.0 billion, and expires on December 6, 2022. Amounts outstanding under this agreement bear interest at a periodic fixed rate equal to the term SOFR rate, plus 0.10% per annum and an applicable margin based on our then-current credit rating. The applicable margin from the credit pricing grid as of June 30, 2022 was 0.875%. Alternatively, a fluctuating rate of interest equal to the highest of (1) the rate of interest last quoted by The Wall Street Journal as the prime rate in the United States; (2) the Federal Funds effective rate plus 0.50%; or (3) the Adjusted Term SOFR Rate for a one-month interest period plus 1.00%, may be used at our discretion.

The second agreement provides revolving credit facilities of $2.0 billion, and expires on December 7, 2026. Amounts outstanding under this facility bear interest at a periodic fixed rate equal to the term SOFR rate plus 0.10% per annum and an applicable margin based on our then-current credit rating. The applicable margin from the credit pricing grid as of June 30, 2022 was 0.875%. Alternatively, a fluctuating rate of interest equal to the highest of (1) the rate of interest last quoted by The Wall Street Journal as the prime rate in the United States; (2) the Federal Funds effective rate plus 0.50%; or (3) the Adjusted Term SOFR Rate for a one-month interest period plus 1.00%, plus an applicable margin, may be used at our discretion.

If the credit ratings established by Standard & Poors and Moody's differ, the higher rating will be used, except in cases where the lower rating is two or more levels lower. In these circumstances, the rating one step below the higher rating will be used. We are also able to request advances under these facilities based on competitive bids for the applicable interest rate. There were no amounts outstanding under these facilities as of June 30, 2022.

Debt Covenants

Our existing debt instruments and credit facilities subject us to certain financial covenants. As of June 30, 2022, and for all prior periods presented, we have satisfied these financial covenants. These covenants limit the amount of secured indebtedness that we may incur, and limit the amount of attributable debt in sale-leaseback transactions, to 10% of net tangible assets. As of June 30, 2022, 10% of net tangible assets was equivalent to $4.7 billion and we had no covered sale-leaseback transactions or secured indebtedness outstanding. We do not expect these covenants to have a material impact on our financial condition or liquidity.

Fair Value of Debt

Based on the borrowing rates currently available to us for long-term debt with similar terms and maturities, the fair value of long-term debt, including current maturities, was approximately $20.4 and $25.1 billion as of June 30, 2022 and December 31, 2021, respectively. We utilized Level 2 inputs in the fair value hierarchy of valuation techniques to determine the fair value of all of our debt instruments.

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10. LEASES

We have finance and operating leases for real estate, aircraft and engines, information technology equipment (primarily mainframes, servers and copiers), vehicles and various other equipment used in operating our business. Certain leases for real estate and aircraft contain options to purchase, extend or terminate the lease.

We recognize a right-of-use ("ROU") asset and lease obligation for all leases greater than twelve months. Some of our leases contain both lease and non-lease components, which we have elected to treat as a single lease component. We have also elected not to recognize leases that have an original lease term, including reasonably certain renewal or purchase options, of twelve months or less in our consolidated balance sheets for all classes of underlying assets. Lease costs for short-term leases are recognized on a straight-line basis over the lease term.

Determining the lease term and amount of lease payments to include in the calculation of the ROU asset and lease obligation for leases containing options requires the use of judgment to determine whether the exercise of an option is reasonably certain and whether the optional period and payments should be included in the calculation of the associated ROU asset and lease obligation. In making this determination, we consider all relevant economic factors that would compel us to exercise or not exercise an option.

When our leases contain future payments that are dependent on an index or rate, such as the consumer price index, we initially measure the lease obligation and ROU asset using the index or rate at the commencement date. In subsequent periods, lease payments dependent on an index or rate are not remeasured. Rather, changes to payments due to a change in an index or rate are recognized in our statements of consolidated income in the period of the change.

When available, we use the rate implicit in the lease to discount lease payments; however, the rate implicit in the lease is not readily determinable for substantially all of our leases. For these leases, we use an estimate of our incremental borrowing rate to discount lease payments based on information available at lease commencement. The incremental borrowing rate is derived using multiple inputs including our credit rating, the impact of full collateralization, lease term and denominated currency. Our remaining lease terms vary from 1 month to 138 years.

Aircraft

In addition to the aircraft that we own, we have leases for 311 aircraft. Of these leased aircraft, 19 are classified as finance leases, 18 are classified as operating leases and the remaining 274 are classified as short-term leases. A majority of the obligations associated with the aircraft classified as finance leases have been legally defeased. A majority of our long-term aircraft operating leases are operated by a third party to handle package and cargo volume in geographic regions where, due to government regulations, we are restricted from operating an airline.

In order to meet customers' needs, we charter aircraft to handle package and cargo volume on certain international trade lanes and domestic routes. Due to the nature of these agreements, primarily being that either party can cancel the agreement with short notice, we have classified these as short-term leases. Additionally, the lease payments associated with these charter agreements are variable in nature based on the number of hours flown.

Real Estate

We have operating and finance leases for package centers, airport facilities, warehouses, office space and expansion facilities utilized during peak shipping periods. Many of our leases contain charges for common area maintenance or other expenses that are updated based on landlord estimates. Due to this variability, the cash flows associated with these charges are not included in the minimum lease payments used in determining the ROU asset and associated lease obligation.

Some of our real estate leases contain options to renew or extend the lease or terminate the lease before the expiration date. These options are factored into the determination of the lease term and lease payments when their exercise is considered to be reasonably certain.

We also enter into real estate leases that contain lease incentives, such as tenant improvement allowances or move-in allowances, that are received or receivable at lease commencement. These incentives reduce lease payments for classification purposes and reduce the initial ROU asset. When lease incentives are receivable at lease commencement, these also reduce the initial lease obligation.

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From time to time, we enter into leases with the intention of purchasing the underlying property, either through purchase options with a fixed price or a purchase agreement negotiated contemporaneously with the lease agreement. We classify these leases as finance leases and include the purchase date and purchase price in the determination of the lease term and lease payments, respectively, when the option to exercise or purchase is reasonably certain.

Transportation equipment and other equipment

We enter into both long-term and short-term leases for transportation equipment to supplement our capacity or meet contractual demands. Some of these assets are leased on a month-to-month basis and the leases can be terminated without penalty. The lease term for these types of leases is determined by the length of the underlying customer contract or based on the judgment of the business unit. We also enter into multi-year leases for trailers to increase capacity during periods of high demand, which are typically only used for 90-120 days during the year. These leases are treated as short-term as the cumulative right of use is less than 12 months over the term of the contract.

The remainder of our leases are primarily related to equipment used in our air operations, vehicles required to meet capacity needs during periods of higher demand for our shipping services, technology equipment and office equipment used in our facilities.

Some of our transportation and technology equipment leases require us to make additional lease payments based on the underlying usage of the assets. Due to the variable nature of these costs, these are expensed as incurred and are not included in the ROU asset and associated lease obligation.

The components of lease expense for the three and six months ended June 30, 2022 and 2021 are as follows (in millions):

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Operating lease costs	$	184	$	179	$	367	$	354
Finance lease costs:
Amortization of assets	28		23		56		46
Interest on lease liabilities	3		3		7		7
Total finance lease costs	31		26		63		53
Variable lease costs	64		62		132		127
Short-term lease costs	323		251		625		530
Total lease costs	$	602	$	518	$	1,187	$	1,064

In addition to the lease costs disclosed in the table above, we monitor all lease categories for any indicators that the carrying value of the assets may not be recoverable. There were no material impairments recognized during the three or six months ended June 30, 2022 or 2021.

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Supplemental information related to leases and location within our consolidated balance sheets is as follows (in millions, except lease term and discount rate):

	June 30, 2022			December 31, 2021
Operating Leases:
Operating lease right-of-use assets	$	3,436		$	3,562
Current maturities of operating leases	$	562		$	580
Non-current operating leases	2,962			3,033
Total operating lease obligations	$	3,524		$	3,613
Finance Leases:
Property, plant and equipment, net	$	1,008		$	1,225
Current maturities of long-term debt, commercial paper and finance leases	$	79		$	129
Long-term debt and finance leases	293			279
Total finance lease obligations	$	372		$	408
Weighted average remaining lease term (in years):
Operating leases	11.3			11.7
Finance leases	8.6			8.0
Weighted average discount rate:
Operating leases	2.06		%	1.94		%
Finance leases	3.06		%	2.79		%

Supplemental cash flow information related to leases is as follows (in millions):

	Six Months Ended June 30,
	2022		2021
Cash paid for amounts included in measurement of obligations:
Operating cash flows from operating leases	$	354	$	364
Operating cash flows from finance leases	2		7
Financing cash flows from finance leases	105		33
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	345	$	854
Finance leases	72		113

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Maturities of lease obligations as of June 30, 2022 are as follows (in millions):

	Finance Leases		Operating Leases
2022	$	49	$	304
2023	80		620
2024	54		521
2025	40		461
2026	33		415
Thereafter	196		1,748
Total lease payments	452		4,069
Less: Imputed interest	(80)		(545)
Total lease obligations	372		3,524
Less: Current obligations	(79)		(562)
Long-term lease obligations	$	293	$	2,962

As of June 30, 2022, we had $808 million of additional leases which had not commenced. These leases will commence between 2022 and 2023 when we are granted access to the property, such as when leasehold improvements are completed by the lessor or a certificate of occupancy is obtained.

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NOTE 11. LEGAL PROCEEDINGS AND CONTINGENCIES

We are involved in a number of judicial proceedings and other matters arising from the conduct of our business.

Although there can be no assurances as to the ultimate outcome, we have generally denied, or believe we have meritorious defenses and will deny, liability in all pending matters, including (except as otherwise noted herein) the matters described below, and we intend to vigorously defend each matter. We accrue amounts associated with legal proceedings when and to the extent a loss becomes probable and can be reasonably estimated. The actual costs of resolving legal proceedings may be substantially higher or lower than the amounts accrued on those claims.

For matters as to which we are not able to estimate a possible loss or range of losses, we are not able to determine whether any such loss will have a material impact on our operations or financial condition. For these matters, we have described the reasons that we are unable to estimate a possible loss or range of losses.

Judicial Proceedings

We are a defendant in a number of lawsuits filed in state and federal courts containing various class action allegations under state wage-and-hour laws. At this time, we do not believe that any loss associated with any such matter will have a material impact on our operations or financial condition. One of these matters, Hughes v. UPS Supply Chain Solutions, Inc. and United Parcel Service, Inc. had previously been certified as a class action in Kentucky state court. In the second quarter of 2019, the court granted our motion for judgment on the pleadings related to the wage-and-hour claims. The plaintiffs' appeal of this decision was denied; however, in the second quarter of 2022 the plaintiffs were granted discretionary review of these claims by the Kentucky Supreme Court.

Other Matters

In August 2016, Spain’s National Markets and Competition Commission ("CNMC") announced an investigation into 10 companies in the commercial delivery and parcel industry, including UPS, related to alleged nonaggression agreements to allocate customers. In May 2017, we received a Statement of Objections issued by the CNMC. In July 2017, we received a Proposed Decision from the CNMC. On March 8, 2018, the CNMC adopted a final decision, finding an infringement and imposing an immaterial fine on UPS. We appealed the decision and, in September 2018, obtained a suspension of the implementation of the decision (including payment of the fine). The appeal is pending. We do not believe that any loss from this matter would have a material impact on our operations or financial condition. We are vigorously defending ourselves and believe that we have a number of meritorious legal defenses. There are also unresolved questions of law and fact that could be important to the ultimate resolution of this matter.

In November 2021, the Environmental Protection Agency (the "EPA") sent us an information request related to hazardous waste regulatory compliance at certain of our facilities. The EPA has indicated that it is investigating potential recordkeeping violations of the Resource Conservation and Recovery Act at those facilities. We are cooperating with the EPA. An immaterial accrual with respect to this matter is included in our consolidated balance sheets. We do not believe that any loss from this matter would have a material impact on our operations or financial condition, although we are unable to predict what action, if any, might be taken in the future by the EPA as a result of this request.

We are a party in various other matters that arose in the normal course of business. We do not believe that the eventual resolution of these other matters (either individually or in the aggregate), including any reasonably possible losses in excess of current accruals, will have a material impact on our operations or financial condition.

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12. SHAREOWNERS' EQUITY

Capital Stock, Additional Paid-In Capital, Retained Earnings and Non-Controlling Minority Interests

We are authorized to issue two classes of common stock, which are distinguished from each other primarily by their respective voting rights. Class A shares of UPS are entitled to 10 votes per share, whereas class B shares are entitled to one vote per share. Class A shares are primarily held by UPS employees and retirees, as well as trusts and descendants of the Company's founders, and these shares are fully convertible into class B shares at any time. Class B shares are publicly traded on the NYSE under the symbol “UPS”. Class A and B shares both have a $0.01 par value, and as of June 30, 2022, there were 4.6 billion class A shares and 5.6 billion class B shares authorized to be issued. Additionally, there are 200 million preferred shares authorized to be issued, with a par value of $0.01 per share. As of June 30, 2022, no preferred shares had been issued.

The following is a rollforward of our common stock, additional paid-in capital, retained earnings and non-controlling minority interests accounts for the three and six months ended June 30, 2022 and 2021 (in millions, except per share amounts):

Three Months Ended June 30:	2022			2021
	Shares	Dollars		Shares	Dollars
Class A Common Stock
Balance at beginning of period	140	$	2	148	$	2
Stock award plans	2	—		2	—
Conversions of class A to class B common stock	(4)	—		(6)	—
Class A shares issued at end of period	138	$	2	144	$	2
Class B Common Stock
Balance at beginning of period	734	$	7	722	$	7
Common stock purchases	(6)	—		—	—
Conversions of class A to class B common stock	4	—		6	—
Class B shares issued at end of period	732	$	7	728	$	7
Additional Paid-In Capital
Balance at beginning of period		$	1,231		$	1,049
Common stock purchases		(983)			—
Stock award plans		212			193
Common stock issuances		113			87
Balance at end of period		$	573		$	1,329
Retained Earnings
Balance at beginning of period		$	17,433		$	10,748
Net income attributable to common shareowners		2,849			2,676
Dividends ($1.52 and $1.02 per share) (1)		(1,327)			(893)
Other		3			—
Balance at end of period		$	18,958		$	12,531
Non-Controlling Minority Interest
Balance at beginning of period		$	18		$	12
Change in non-controlling minority interest		3			5
Balance at end of period		$	21		$	17
(1) The dividend per share amount is the same for both class A and class B common stock. Dividends include $44 and $33 million as of June 30, 2022 and 2021, respectively, that were settled in shares of class A common stock.

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Six Months Ended June 30:	2022			2021
	Shares	Dollars		Shares	Dollars
Class A Common Stock:
Balance at beginning of period	138	$	2	147	$	2
Stock award plans	6	—		6	—
Common stock issuances	1	—		1	—
Conversions of class A to class B common stock	(7)	—		(10)	—
Class A shares outstanding at end of period	138	$	2	144	$	2
Class B Common Stock:
Balance at beginning of period	732	$	7	718	$	7
Common stock purchases	(7)	—		—	—
Conversions of class A to class B common stock	7	—		10	—
Class B shares outstanding at end of period	732	$	7	728	$	7
Additional Paid-In Capital:
Balance at beginning of period		$	1,343		$	865
Common stock purchases		(1,243)			—
Stock award plans		177			223
Common stock issuances		296			241
Balance at end of period		$	573		$	1,329
Retained Earnings:
Balance at beginning of period		$	16,179		$	6,896
Net income attributable to controlling interests		5,511			7,468
Dividends ($3.04 and $2.04 per share) (1)		(2,733)			(1,831)
Other		1			(2)
Balance at end of period		$	18,958		$	12,531
Non-Controlling Interests:
Balance at beginning of period		$	16		$	12
Change in non-controlling interest		5			5
Balance at end of period		$	21		$	17
(1) The dividend per share amount is the same for both class A and class B common stock. Dividends include $166 and $113 million as of June 30, 2022 and 2021, respectively, that were settled in shares of class A common stock.

In August 2021, the Board of Directors authorized the company to repurchase up to $5.0 billion of class A and class B common stock. We repurchased 5.5 and 6.7 million shares of class B common stock for $983 million and $1.2 billion under this program during the three and six months ended June 30, 2022, respectively. As of June 30, 2022, we had $3.3 billion of our share repurchase authorization available. In July 2022, we announced that we anticipate our share repurchases will total approximately $3.0 billion for all of 2022.

Future share repurchases may be in the form of accelerated share repurchase programs, open market purchases or other methods we deem appropriate. The timing of share repurchases will depend upon market conditions. Unless terminated earlier by the Board of Directors, this program will expire when we have purchased all shares authorized for repurchase under the program.

Movements in additional paid-in capital in respect of stock award plans comprise accruals for unvested awards, offset by adjustments for awards that vest during the period.

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UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Accumulated Other Comprehensive Income (Loss)

We recognize activity in other comprehensive income for foreign currency translation adjustments, unrealized holding gains and losses on available-for-sale securities, unrealized gains and losses from derivatives that qualify as hedges of cash flows and unrecognized pension and postretirement benefit costs. The activity in accumulated other comprehensive income for the three and six months ended June 30, 2022 and 2021 was as follows (in millions):

Three Months Ended June 30:	2022		2021
Foreign Currency Translation Gain (Loss), Net of Tax:
Balance at beginning of period	$	(1,202)	$	(1,063)
Translation adjustment (net of tax effect of $7 and $(1))	(245)		48
Balance at end of period	(1,447)		(1,015)
Unrealized Gain (Loss) on Marketable Securities, Net of Tax:
Balance at beginning of period	(7)		2
Current period changes in fair value (net of tax effect of $0 and $0)	(1)		—
Reclassification to earnings (net of tax effect of $0 and $0)	—		(1)
Balance at end of period	(8)		1
Unrealized Gain (Loss) on Cash Flow Hedges, Net of Tax:
Balance at beginning of period	26		(109)
Current period changes in fair value (net of tax effect of $89 and $(14))	283		(43)
Reclassification to earnings (net of tax effect of $(16) and $(1))	(49)		(3)
Balance at end of period	260		(155)
Unrecognized Pension and Postretirement Benefit Costs, Net of Tax:
Balance at beginning of period	(2,074)		(3,489)
Net actuarial gain (loss) resulting from remeasurements of plan assets and liabilities (net of tax effect of $0 and $495)	—		1,569
Reclassification to earnings (net of tax effect of $6 and $8)	18		25
Balance at end of period	(2,056)		(1,895)
Accumulated other comprehensive income (loss) at end of period	$	(3,251)	$	(3,064)

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Six Months Ended June 30:	2022		2021
Foreign currency translation gain (loss), net of tax:
Balance at beginning of period	$	(1,162)	$	(981)
Translation adjustment (net of tax effect of $7 and $29)	(285)		(34)
Balance at end of period	(1,447)		(1,015)
Unrealized gain (loss) on marketable securities, net of tax:
Balance at beginning of period	(1)		6
Current period changes in fair value (net of tax effect of $(2) and $0)	(7)		(1)
Reclassification to earnings (net of tax effect of $0 and $0)	—		(4)
Balance at end of period	(8)		1
Unrealized gain (loss) on cash flow hedges, net of tax:
Balance at beginning of period	(17)		(223)
Current period changes in fair value (net of tax effect of $112 and $25)	355		81
Reclassification to earnings (net of tax effect of $(25) and $(4))	(78)		(13)
Balance at end of period	260		(155)
Unrecognized pension and postretirement benefit costs, net of tax:
Balance at beginning of period	(2,098)		(5,915)
Net actuarial gain (loss) resulting from remeasurements of plan assets and liabilities (net of tax effect of $11 and $2,039)	31		6,470
Reclassification to earnings (net of tax effect of $3 and $(772))	11		(2,450)
Balance at end of period	(2,056)		(1,895)
Accumulated other comprehensive income (loss) at end of period	$	(3,251)	$	(3,064)

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Detail of the gains (losses) reclassified from AOCI to the statements of consolidated income for the three and six months ended June 30, 2022 and 2021 is as follows (in millions):

	Amount Reclassified from AOCI				Affected Line Item in the Income Statement
Three Months Ended June 30:	2022		2021
Unrealized Gain (Loss) on Marketable Securities:
Realized gain (loss) on sale of securities	$	—	$	1	Investment income and other
Income tax (expense) benefit	—		—		Income tax expense
Impact on net income	—		1		Net income
Unrealized Gain (Loss) on Cash Flow Hedges:
Interest rate contracts	(2)		(3)		Interest expense
Foreign currency exchange contracts	67		7		Revenue
Income tax (expense) benefit	(16)		(1)		Income tax expense
Impact on net income	49		3		Net income
Unrecognized Pension and Postretirement Benefit Costs:
Prior service costs	(24)		(36)		Investment income and other
Prior service credit for divested business	—		69		Other expenses
Plan amendments for divested business	—		(66)		Other expenses
Income tax (expense) benefit	6		8		Income tax expense
Impact on net income	(18)		(25)		Net income
Total amount reclassified for the period	$	31	$	(21)	Net income

	Amount Reclassified from AOCI				Affected Line Item in the Income Statement
Six Months Ended June 30:	2022		2021
Unrealized gain (loss) on marketable securities:
Realized gain (loss) on sale of securities	$	—	$	4	Investment income and other
Income tax (expense) benefit	—		—		Income tax expense
Impact on net income	—		4		Net income
Unrealized gain (loss) on cash flow hedges:
Interest rate contracts	(5)		(5)		Interest expense
Foreign currency exchange contracts	108		22		Revenue
Income tax (expense) benefit	(25)		(4)		Income tax expense
Impact on net income	78		13		Net income
Unrecognized pension and postretirement benefit costs:
Prior service costs	(47)		(71)		Investment income and other
Prior service credit for divested business	—		69		Other expenses
Plan amendments for divested business	—		(66)		Other expenses
Remeasurement of benefit obligation	—		3,290		Investment income and other
Curtailment of benefit obligation	33		—		Investment income and other
Income tax (expense) benefit	3		(772)		Income tax expense
Impact on net income	(11)		2,450		Net income
Total amount reclassified for the period	$	67	$	2,467	Net income

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Deferred Compensation Obligations and Treasury Stock

We maintain a deferred compensation plan whereby certain employees were previously able to elect to defer the gains on stock option exercises by deferring the shares received upon exercise into a rabbi trust. The shares held in this trust are classified as treasury stock, and the liability to participating employees is classified as Deferred compensation obligations in the Shareowners’ Equity section of the consolidated balance sheets. The number of shares needed to settle the liability for deferred compensation obligations is included in the denominator in both the basic and diluted earnings per share calculations. Employees are generally no longer able to defer the gains from stock options exercised subsequent to December 31, 2004.

Activity in the deferred compensation program for the three and six months ended June 30, 2022 and 2021 was as follows (in millions):

	2022			2021
Three Months Ended June 30:	Shares	Dollars		Shares	Dollars
Deferred Compensation Obligations:
Balance at beginning of period		$	12		$	15
Reinvested dividends		1			1
Benefit payments		(1)			—
Balance at end of period		$	12		$	16
Treasury Stock:
Balance at beginning of period	—	$	(12)	—	$	(15)
Reinvested dividends	—	(1)		—	(1)
Benefit payments	—	1		—	—
Balance at end of period	—	$	(12)	—	$	(16)

	2022			2021
Six Months Ended June 30:	Shares	Dollars		Shares	Dollars
Deferred Compensation Obligations:
Balance at beginning of period		$	16		$	20
Reinvested dividends		1			1
Benefit payments		(5)			(5)
Balance at end of period		$	12		$	16
Treasury Stock:
Balance at beginning of period	—	$	(16)	—	$	(20)
Reinvested dividends	—	(1)		—	(1)
Benefit payments	—	5		—	5
Balance at end of period	—	$	(12)	—	$	(16)

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 13. SEGMENT INFORMATION

We have two reportable segments: U.S. Domestic Package and International Package, which are together referred to as our global small package operations. Our remaining businesses are reported as Supply Chain Solutions. Global small package operations represent our most significant business and are broken down into regional operations around the world. Regional operations managers are responsible for both domestic and export products within their geographic area. Supply Chain Solutions comprises the results of non-reportable operating segments that do not meet the quantitative and qualitative criteria of a reportable segment as defined under ASC Topic 280 – Segment Reporting.

U.S. Domestic Package

U.S. Domestic Package operations include the time-definite delivery of letters, documents and packages throughout the United States.

International Package

International Package operations include delivery to more than 220 countries and territories worldwide, including shipments wholly outside the United States, as well as shipments with either origin or destination outside the United States. Our International Package reporting segment includes our operations in Europe, Asia, Americas and Indian Sub-Continent, Middle East and Africa.

Supply Chain Solutions

Supply Chain Solutions includes our Forwarding, Logistics, Coyote, Marken, UPS Mail Innovations and other businesses. Our Forwarding, Logistics and UPS Mail Innovations units provide services in more than 200 countries and territories worldwide and include international air and ocean freight forwarding, customs brokerage, distribution and post-sales services, mail and consulting services. Coyote offers truckload brokerage services primarily in the United States. Marken is a global provider of supply chain solutions to the healthcare and life sciences industry, specializing in clinical trials logistics. Our other businesses include The UPS Store, UPS Capital, Roadie and Delivery Solutions. UPS Freight was included within this segment until its divestiture in the second quarter of 2021.

In evaluating financial performance, we focus on operating profit as a segment’s measure of profit or loss. Operating profit is before investment income and other, interest expense and income tax expense. Certain expenses are allocated between the segments using activity-based costing methods that require us to make estimates that impact the amount of each expense category that is attributed to each segment. Changes in these estimates would directly impact the expense allocated to each segment, and therefore the operating profit of each reporting segment. We periodically refine our allocation methodologies to reflect changes in our business. There were no significant changes to our allocation methodologies in the second quarter or year-to-date periods.

Results of operations for the three and six months ended June 30, 2022 and 2021 are as follows (in millions):

	Three Months Ended  June 30,				Six Months Ended  June 30,
	2022		2021		2022		2021
Revenue:
U.S. Domestic Package	$	15,459	$	14,402	$	30,583	$	28,412
International Package	5,073		4,817		9,949		9,424
Supply Chain Solutions	4,234		4,205		8,612		8,496
Consolidated revenue	$	24,766	$	23,424	$	49,144	$	46,332
Operating Profit:
U.S. Domestic Package	$	1,829	$	1,567	$	3,491	$	2,926
International Package	1,193		1,184		2,309		2,269
Supply Chain Solutions	513		507		986		828
Consolidated operating profit	$	3,535	$	3,258	$	6,786	$	6,023

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NOTE 14. EARNINGS PER SHARE

The earnings per share amounts are the same for class A and class B common shares as the holders of each class are legally entitled to equal per-share distributions whether through dividends or in liquidation.

The following table sets forth the computation of basic and diluted earnings per share for the three and six months ended June 30, 2022 and 2021 (in millions, except per share amounts):

	Three Months Ended  June 30,				Six Months Ended  June 30,
	2022		2021		2022		2021
Numerator:
Net income attributable to common shareowners	$	2,849	$	2,676	$	5,511	$	7,468
Denominator:
Weighted average shares	871		870		871		869
Vested portion of restricted units	3		5		3		5
Denominator for basic earnings per share	874		875		874		874
Effect of dilutive securities:
Restricted units	1		2		3		3
Stock options	1		1		1		1
Denominator for diluted earnings per share	876		878		878		878
Basic earnings per share	$	3.26	$	3.06	$	6.31	$	8.54
Diluted earnings per share	$	3.25	$	3.05	$	6.28	$	8.51

Diluted earnings per share for the three months ended June 30, 2022 excluded the effect of 0.1 million shares of common stock that may be issued upon the exercise of employee stock options because such effect would be antidilutive. There were no antidilutive shares for the three months ended June 30, 2021. Antidilutive shares for the six months ended June 30, 2022 and 2021 were 0.1 million.

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UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 15. DERIVATIVE INSTRUMENTS AND RISK MANAGEMENT

Risk Management Policies

Changes in fuel prices, interest rates and foreign currency exchange rates impact our results of operations and we actively monitor these exposures. To manage the impact of these exposures, we may enter into a variety of derivative financial instruments. Our objective is to manage, where it is deemed appropriate to do so, fluctuations in earnings and cash flows associated with changes in foreign currency exchange rates, commodity prices and interest rates. It is our policy and practice to use derivative financial instruments only to the extent necessary to manage exposures. As we use price-sensitive instruments to hedge a certain portion of our existing and anticipated transactions, we expect that any loss in value from those instruments generally would be offset by increases in the value of those hedged transactions. We do not hold or issue derivative financial instruments for trading or speculative purposes.

Credit Risk Management

The forward contracts, swaps and options discussed below contain an element of risk that the counterparties may be unable to meet the terms of the agreements; however, we seek to minimize such risk exposures for these instruments by limiting the counterparties to banks and financial institutions that meet established credit guidelines and by monitoring counterparties to prevent concentrations of credit risk with any single counterparty.

 As of June 30, 2022 and December 31, 2021, we had agreements with all of our active counterparties (covering all of our derivative positions) which contained early termination rights and/or zero threshold bilateral collateral provisions whereby cash is required based on the net fair value of derivatives associated with those counterparties.

As of June 30, 2022 and December 31, 2021, we held cash collateral of $546 and $260 million, respectively, under these agreements. This collateral is included in Cash and cash equivalents in the consolidated balance sheets and our use of it is not restricted. As of June 30, 2022 and December 31, 2021, no collateral was required to be posted with our counterparties.

Events such as a counterparty credit rating downgrade (depending on the ultimate rating level) could also allow us to take additional protective measures such as the early termination of trades. Alternatively, we could be required to provide additional collateral or terminate transactions with certain counterparties in the event of a downgrade of our credit rating. The amount of collateral required would be determined by the net fair value of the associated derivatives with each counterparty. We have not historically incurred, and do not expect to incur in the future, any losses as a result of counterparty default.

Types of Hedges

Commodity Risk Management

Currently, the fuel surcharges that we apply to our domestic and international package services are the primary means of reducing the risk of adverse fuel price changes on our business. In order to mitigate the impact of fuel surcharges imposed on us by outside carriers, we regularly adjust the rates we charge for our freight brokerage services.

Foreign Currency Risk Management

To protect against the reduction in value of forecasted foreign currency cash flows from our international package business, we maintain a foreign currency cash flow hedging program. Our most significant foreign currency exposures relate to the Euro, British Pound Sterling, Canadian Dollar, Chinese Renminbi and Hong Kong Dollar. We hedge portions of our forecasted revenue denominated in foreign currencies with forward contracts. We normally designate and account for these contracts as cash flow hedges of anticipated foreign currency denominated revenue and, therefore, the resulting gains and losses from these hedges are recognized as a component of international package revenue when the underlying sales transactions occur.

We also hedge portions of our anticipated cash settlements of intercompany transactions and interest payments on certain debt subject to foreign currency remeasurement using foreign currency forward contracts. We normally designate and account for these contracts as cash flow hedges of forecasted foreign currency denominated transactions; therefore, the resulting gains and losses from these hedges are recognized as a component of Investment income and other when the underlying transactions are subject to currency remeasurement.

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UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

We hedge our net investment in certain foreign operations with foreign currency denominated debt instruments. The use of foreign denominated debt as the hedging instrument allows the debt to be remeasured to foreign currency translation adjustment within other comprehensive income to offset the translation risk from those investments. Balances in the foreign currency translation adjustment account remain until the sale or substantially complete liquidation of the foreign entity, upon which we recognize these balances as a component of Investment income and other in the statements of consolidated income.

Interest Rate Risk Management

Our indebtedness under our various financing arrangements creates interest rate risk. We use a combination of derivative instruments as part of our program to manage the fixed and floating interest rate mix of our total debt portfolio and related overall cost of borrowing. Interest rate swaps allow us to maintain a target range of floating-rate debt within our capital structure. The notional amount, interest payment date and maturity date of the swaps match the terms of the associated debt being hedged.

We have designated and account for the majority of our interest rate swaps that convert fixed-rate interest payments into floating-rate interest payments as fair value hedges of the associated debt instruments. Therefore, the gains and losses resulting from fair value adjustments to the interest rate swaps and fair value adjustments to the associated debt instruments are recorded to interest expense in the period in which the gains and losses occur. We have designated and account for interest rate swaps that convert floating-rate interest payments into fixed-rate interest payments as cash flow hedges of the forecasted payment obligations. The gains and losses resulting from fair value adjustments to these interest rate swaps are recorded to other comprehensive income.

We periodically hedge the forecasted fixed-coupon interest payments associated with anticipated debt offerings by using forward starting interest rate swaps, interest rate locks or similar derivatives. These agreements effectively lock a portion of our interest rate exposure between the time the agreement is entered into and the date when the debt offering is completed, thereby mitigating the impact of interest rate changes on future interest expense. These derivatives are settled commensurate with the issuance of the debt, and any gain or loss upon settlement is amortized as an adjustment to the effective interest yield on the debt.

Outstanding Positions

As of June 30, 2022 and December 31, 2021, the notional amounts of our outstanding derivative positions were as follows (in millions):

		June 30, 2022	December 31, 2021
Currency hedges:
Euro	EUR	4,279	4,257
British Pound Sterling	GBP	1,421	1,402
Canadian Dollar	CAD	1,655	1,633
Hong Kong Dollar	HKD	4,327	4,033
Interest rate hedges:
Fixed to Floating Interest Rate Swaps	USD	1,000	1,000
Floating to Fixed Interest Rate Swaps	USD	28	28

As of June 30, 2022 and December 31, 2021, we had no outstanding commodity hedge positions.

Our fixed to floating interest rate swaps are designated as a fair value hedge of our 2.450% fixed rate notes that mature in October 2022. These instruments utilize LIBOR as the reference rate to determine the floating interest rate to be paid. As these instruments will settle before the applicable U.S. Dollar LIBOR rate ceases to be published in June 2023, we have not evaluated the application of ASC Topic 848 to these instruments.

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UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Balance Sheet Recognition

The following table indicates the location in the consolidated balance sheets where our derivative assets and liabilities have been recognized, the fair value hierarchy level applicable to each derivative type and the related fair values of those derivatives.

We have master netting arrangements with substantially all of our counterparties giving us the right of offset for our derivative positions. However, we have not elected to offset the fair value positions of our derivative contracts recorded in the consolidated balance sheets. The columns labeled Net Amounts if Right of Offset had been Applied indicate the potential net fair value positions by type of contract and location in the consolidated balance sheets had we elected to apply the right of offset as of June 30, 2022 and December 31, 2021 (in millions):

		Fair Value Hierarchy Level	Gross Amounts Presented in Consolidated Balance Sheets				Net Amounts if Right of Offset had been Applied
Asset Derivatives	Balance Sheet Location		June 30, 2022		December 31, 2021		June 30, 2022		December 31, 2021
Derivatives designated as hedges:
Foreign currency exchange contracts	Other current assets	Level 2	$	214	$	100	$	207	$	82
Interest rate contracts	Other current assets	Level 2	—		11		—		11
Foreign currency exchange contracts	Other non-current assets	Level 2	328		123		320		90
Derivatives not designated as hedges:
Foreign currency exchange contracts	Other current assets	Level 2	2		2		2		2
Total Asset Derivatives			$	544	$	236	$	529	$	185

		Fair Value Hierarchy Level	Gross Amounts Presented in Consolidated Balance Sheets				Net Amounts if Right of Offset had been Applied
Liability Derivatives	Balance Sheet Location		June 30, 2022		December 31, 2021		June 30, 2022		December 31, 2021
Derivatives designated as hedges:
Foreign currency exchange contracts	Other current liabilities	Level 2	$	7	$	19	$	—	$	1
Interest rate contracts	Other current liabilities	Level 2	1		—		1		—
Foreign currency exchange contracts	Other non-current liabilities	Level 2	8		33		—		—
Interest rate contracts	Other non-current liabilities	Level 2	6		10		6		10
Total Liability Derivatives			$	22	$	62	$	7	$	11

Our foreign currency exchange, interest rate and investment market price derivatives are largely comprised of over-the-counter derivatives, which are primarily valued using pricing models that rely on market observable inputs such as yield curves, currency exchange rates and investment forward prices. These derivatives are classified as Level 2. As of June 30, 2022 and December 31, 2021 we did not have any derivatives that were classified as Level 1 or Level 3 within the fair value hierarchy.

Balance Sheet Location of Hedged Item in Fair Value Hedges    

The following table indicates the amounts that were recorded in the consolidated balance sheets related to cumulative basis adjustments for fair value hedges as of June 30, 2022 and December 31, 2021 (in millions):

Line Item in the Consolidated Balance Sheets in Which the Hedged Item is Included	Carrying Amount of Hedged Liabilities		Cumulative Amount of Fair Value Hedge Adjustments		Carrying Amount of Hedged Liabilities		Cumulative Amount  of Fair Value Hedge Adjustments
	June 30, 2022		June 30, 2022		December 31, 2021		December 31, 2021
Current maturities of long-term debt, commercial paper and finance leases	$	999	$	(1)	$	1,010	$	11
Long-term debt and finance leases	$	280	$	5	$	280	$	5

The cumulative amount of fair value hedging losses remaining for any hedged assets and liabilities for which hedge accounting has been discontinued as of June 30, 2022 is $5 million. These amounts will be recognized over the next 8 years.

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UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Income Statement and AOCI Recognition

The following table indicates the amount of gains and (losses) that have been recognized in the statements of consolidated income for fair value and cash flow hedges, as well as the associated gain or (loss) for the underlying hedged item for fair value hedges for the three and six months ended June 30, 2022 and 2021 (in millions):

	Three Months Ended June 30,
Location and Amount of Gain (Loss) Recognized in Income on Fair Value and Cash Flow Hedging Relationships	2022						2021
	Revenue		Interest Expense		Investment Income and Other		Revenue		Interest Expense		Investment Income and Other
Gain or (loss) on fair value hedging relationships:
Interest Contracts:
Hedged items	$	—	$	3	$	—	$	—	$	4	$	—
Derivatives designated as hedging instruments	—		(3)		—		—		(4)		—
Gain or (loss) on cash flow hedging relationships:
Interest Contracts:
Amount of gain or (loss) reclassified from accumulated other comprehensive income	—		(2)		—		—		(3)		—
Foreign Currency Exchange Contracts:
Amount of gain or (loss) reclassified from accumulated other comprehensive income	67		—				7				—
Total amounts of income and expense line items presented in the statement of income in which the effects of fair value or cash flow hedges are recorded	$	67	$	(2)	$	—	$	7	$	(3)	$	—

	Six Months Ended June 30,
	2022						2021
Location and Amount of Gain (Loss) Recognized in Income on Fair Value and Cash Flow Hedging Relationships	Revenue		Interest Expense		Investment Income and Other		Revenue		Interest Expense		Investment Income and Other
Gain or (loss) on fair value hedging relationships:
Interest Contracts:
Hedged items	$	—	$	11	$	—	$	—	$	10	$	—
Derivatives designated as hedging instruments	—		(11)		—		—		(10)		—
Gain or (loss) on cash flow hedging relationships:
Interest Contracts:
Amount of gain or (loss) reclassified from accumulated other comprehensive income	—		(5)		—		—		(5)		—
Foreign Currency Exchange Contracts:
Amount of gain or (loss) reclassified from accumulated other comprehensive income	108		—		—		22		—		—
Total amounts of income and expense line items presented in the statement of income in which the effects of fair value or cash flow hedges are recorded	$	108	$	(5)	$	—	$	22	$	(5)	$	—

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UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The following table indicates the amount of gains and (losses) that have been recognized in AOCI for the three and six months ended June 30, 2022 and 2021 for those derivatives designated as cash flow hedges (in millions):

Three Months Ended June 30:
Derivative Instruments in Cash Flow Hedging Relationships	Amount of Gain (Loss) Recognized in AOCI on Derivatives
	2022		2021
Interest rate contracts	$	1	$	(3)
Foreign currency exchange contracts	371		(54)
Total	$	372	$	(57)
Six Months Ended June 30:
Derivative Instruments in Cash Flow Hedging Relationships	Amount of Gain (Loss) Recognized in AOCI on Derivatives
	2022		2021
Interest rate contracts	$	4	$	—
Foreign currency exchange contracts	463		106
Total	$	467	$	106

As of June 30, 2022, there were $199 million of unrealized pre-tax gains related to cash flow hedges deferred in AOCI that are expected to be reclassified to income over the 12 month period ending June 30, 2023. The actual amounts that will be reclassified to income over the next 12 months will vary from this amount as a result of changes in market conditions. The maximum term over which we are hedging exposures to the variability of cash flows is approximately 10 years.

The following table indicates the amount of gains and (losses) that have been recognized in AOCI within foreign currency translation adjustment for the three and six months ended June 30, 2022 and 2021 for those instruments designated as net investment hedges (in millions):

Three Months Ended June 30:
Non-derivative Instruments in Net Investment Hedging Relationships	Amount of Gain (Loss) Recognized in AOCI on Debt
	2022		2021
Foreign denominated debt	$	181	$	(47)
Total	$	181	$	(47)
Six Months Ended June 30:
Non-derivative Instruments in Net Investment Hedging Relationships	Amount of Gain (Loss) Recognized in AOCI on Debt
	2022		2021
Foreign denominated debt	$	227	$	77
Total	$	227	$	77

Additionally, we maintain foreign currency exchange forward contracts that are not designated as hedges. These foreign currency exchange forward contracts are intended to provide an economic offset to foreign currency remeasurement and settlement risk for certain assets and liabilities in our consolidated balance sheets.

We also periodically terminate foreign currency exchange forward contracts by entering into offsetting foreign currency exchange positions with different counterparties. As part of this process, we de-designate our original foreign currency exchange contracts. These transactions provide an economic offset that effectively eliminates the effects of changes in market valuation.

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UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The following is a summary of the amounts recorded in the statements of consolidated income related to fair value changes and settlements of foreign currency exchange forward contracts not designated as hedges for the three and six months ended June 30, 2022 and 2021 (in millions):

Derivative Instruments Not Designated in Hedging Relationships	Location of Gain (Loss) Recognized in Income	Amount of Gain (Loss) Recognized in Income
		2022		2021
Three Months Ended June 30:
Foreign currency exchange contracts	Investment income and other	$	(58)	$	3
Total		$	(58)	$	3
Six Months Ended June 30:
Foreign currency exchange contracts	Investment income and other	$	(86)	$	(3)
Total		$	(86)	$	(3)

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UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 16. INCOME TAXES

Our effective tax rate increased to 22.9% in the second quarter from 22.1% in the same period of 2021 (22.3% year to date compared to 22.5% in 2021). The recognition in income tax of excess tax benefits related to share-based compensation reduced our effective rate by 0.1% in the second quarter compared to 0.3% in the same period of 2021 (1.2% year to date compared to 0.8% in 2021). Other items that impacted our effective tax rate in the second quarter compared to 2021 included favorable changes in uncertain tax positions and unfavorable changes in our jurisdictional earnings mix.

As discussed in our Annual Report on Form 10-K for the year ended December 31, 2021, we have recognized liabilities for uncertain tax positions and we reevaluate these uncertain tax positions on a quarterly basis. A number of years may elapse before an uncertain tax position is audited and ultimately settled. It is difficult to predict the ultimate outcome or the timing of resolution for uncertain tax positions. It is reasonably possible that the amount of unrecognized tax benefits could significantly increase or decrease within the next twelve months, however, an estimate of the range of reasonably possible outcomes cannot be made. Items that may cause changes to unrecognized tax benefits include the timing of interest deductions and the allocation of income and expense between tax jurisdictions. These changes could result from the settlement of ongoing litigation, the completion of ongoing examinations, the expiration of statutes of limitations or other unforeseen circumstances.

In the first six months of 2022, we recognized an immaterial income tax expense related to a pre-tax curtailment gain of $33 million on the UPS Canada Ltd. Retirement Plan. This income tax expense was generated at a higher average tax rate than the U.S. federal statutory tax rate because it included the effect of foreign taxes.

In the first six months of 2021, we recognized an income tax expense of $788 million related to a pre-tax mark-to-market gain of $3.3 billion on the UPS/IBT Full-Time Employee Pension Plan. This income tax expense was generated at a higher average tax rate than the U.S. federal statutory tax rate because it included the effect of U.S. state and local taxes.

As discussed in note 17, we recognized pre-tax transformation strategy costs of $41 million in the second quarter of 2022 compared to $116 million in the same period of 2021 ($96 million year to date compared to $234 million in the prior year). As a result, we recorded an income tax benefit of $10 million in the second quarter compared to $28 million in the same period of 2021 ($22 million year to date compared to $56 million in the prior year). The income tax benefit was generated at a higher average tax rate than the U.S. federal statutory tax rate primarily due to the effect of U.S. state and local taxes and foreign taxes.

We recorded a pre-tax valuation allowance against assets held for sale of $66 million during the first quarter of 2021, resulting in an additional income tax benefit of $16 million. This income tax benefit was generated at a higher average tax rate than the U.S. federal statutory tax rate due to the effect of U.S. state and local taxes. In the second quarter of 2021, we completed the divestiture of UPS Freight and recorded a pre-tax gain of $101 million. As a result, we recorded additional income tax expense of $24 million. The 2021 expense was generated at a higher average tax rate than the U.S. federal statutory tax rate due to the effect of U.S. state and local taxes.

Beginning in 2012, we were granted a tax incentive for certain of our non-U.S. operations, which was effective through December 31, 2021. During the first six months of 2022, the tax incentive was renegotiated and extended. The tax incentive is conditioned upon our meeting specific employment and investment thresholds, which we expect to meet. The impact of the tax incentive did not significantly change our effective tax rate for the first six months of 2022 compared to 2021.

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UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 17. TRANSFORMATION STRATEGY COSTS

In 2018, we launched a multi-year, enterprise-wide transformation strategy impacting our organization. The program includes investments, as well as changes in processes and technology, that impact global direct and indirect operating costs.

The table below presents transformation strategy costs for the three and six months ended June 30, 2022 and 2021 (in millions):

	Three Months Ended  June 30,				Six Months Ended  June 30,
	2022		2021		2022		2021
Transformation Strategy Costs:
Compensation and benefits	$	23	$	55	$	56	$	131
Total other expenses	18		61		40		103
Total Transformation Strategy Costs	$	41	$	116	$	96	$	234
Income Tax Benefit from Transformation Strategy Costs	(10)		(28)		(22)		(56)
After Tax Transformation Strategy Costs	$	31	$	88	$	74	$	178

The income tax effects of transformation strategy costs are calculated by multiplying the amount of the adjustments by the statutory tax rates applicable in each tax jurisdiction.

41

Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

Pursuing our Customer First, People Led, Innovation Driven strategy, we continue to build capabilities that create value for our customers. Our strategy involves creating speed and ease of access to our services, particularly in the parts of the market that value our end-to-end network, and driving productivity improvements in our business, while delivering strong financial results to our shareowners.

Customer First is focused on leveraging technology to enable digital commerce solutions. During the quarter, we expanded our Digital Access Program and our advanced technology healthcare solution that prioritizes complex healthcare shipments within our network. We also completed the acquisition of Delivery Solutions, a digital platform that optimizes customer deliveries across multiple networks. As part of our People Led strategic focus, we recently appointed a Chief Digital and Technology Officer to lead the continuing digital transformation of our business. Executing under our Innovation Driven strategic pillar, we continue to increase the agility and automation of our network with smart facility technology that better enables us to respond more rapidly to shifting volume trends and improves productivity.

A number of external factors contributed to a challenging operating environment for the first half of the year, including global inflation, which impacted consumer spending, geopolitical uncertainties, wage and labor market pressures, fuel prices and foreign currency exchange rates. Additionally, areas within Asia continued to experience shutdowns and other restrictions as a result of the ongoing COVID-19 pandemic. These factors resulted in disruptions to certain parts of our business, negatively impacted demand for our services and contributed to increases in certain of our operating costs. We expect these impacts will continue throughout the remainder of 2022.

Volume declined in our U.S. Domestic Package reportable segment in both the current year periods, driven by lower residential volume as we continued to optimize our network within our Better not Bigger strategic framework. Broader economic factors also contributed to reduced demand for residential deliveries. Revenue per piece growth more than offset the decline in volume for both the quarter and year to date. Successful execution of our strategy primarily drove increases in operating profit and operating margin in both periods.

Our International Package reportable segment was also impacted by those external factors, as well as the year-over-year impact of the COVID-19 pandemic on e-commerce spending. This resulted in volume declines in the current year periods, although the declines were more than offset by revenue per piece growth. Results were also impacted by the strengthening of the U.S. Dollar against European currencies. Despite the challenging global environment, we continued to invest in our business by adding strategic lanes to our network and creating joint ventures to expand our services.

Within Supply Chain Solutions, year-over-year revenue growth was impacted by the second quarter 2021 divestiture of UPS Freight. Operating profit and operating margin increased, driven by growth in Forwarding and Logistics. Our Forwarding business continued to benefit from elevated market rates in international airfreight and ocean freight, which we anticipate will decrease in the latter half of the year. Truckload brokerage increased operating profit through revenue quality initiatives. Operating profit growth in Logistics was driven by business growth across our operations, including healthcare.

Our strategic execution continued to result in the generation of strong cash flows in the first half of the year, which we are reinvesting in the business and returning to shareowners through dividends and share repurchases. We recently announced an increase in our targeted share repurchases for 2022 to $3.0 billion.

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UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

Highlights of our consolidated results, which are discussed in more detail below, include:

	Three Months Ended  June 30,						Change				Six Months Ended  June 30,						Change
	2022			2021			$		%		2022			2021			$		%
Revenue (in millions)	$	24,766		$	23,424		$	1,342	5.7	%	$	49,144		$	46,332		$	2,812	6.1	%
Operating Expenses (in millions)	21,231			20,166			1,065		5.3	%	42,358			40,309			2,049		5.1	%
Operating Profit (in millions)	$	3,535		$	3,258		$	277	8.5	%	$	6,786		$	6,023		$	763	12.7	%
Operating Margin	14.3		%	13.9		%					13.8		%	13.0		%
Net Income (in millions)	$	2,849		$	2,676		$	173	6.5	%	$	5,511		$	7,468		$	(1,957)	(26.2)	%
Basic Earnings Per Share	$	3.26		$	3.06		$	0.20	6.5	%	$	6.31		$	8.54		$	(2.23)	(26.1)	%
Diluted Earnings Per Share	$	3.25		$	3.05		$	0.20	6.6	%	$	6.28		$	8.51		$	(2.23)	(26.2)	%
Operating Days	64			64							128			127
Average Daily Package Volume (in thousands)	23,071			24,236					(4.8)	%	23,175			24,191					(4.2)	%
Average Revenue Per Piece	$	13.72		$	12.26		$	1.46	11.9	%	$	13.49		$	12.19		$	1.30	10.7	%

•Revenue increased in all segments in the current year periods, with double-digit revenue per piece growth in our global small package operations.

•Average daily package volume in our global small package operations decreased, primarily due to business-to-consumer volume declines.

•Operating expenses increased for both the quarter and year to date, primarily driven by higher fuel prices.

•Operating profit increased in all segments for both the quarter and year to date. U.S. Domestic Package segment operating margin increased while International Package segment margin declined slightly in each period.

•Net income was $2.8 billion and diluted earnings per share was $3.25 for the second quarter ($5.5 billion and $6.28 per share year to date). Adjusted diluted earnings per share was $3.29 for the quarter ($6.33 per share year to date) after adjusting for the after-tax impacts of:

◦transformation strategy costs of $31 million, or $0.04 per diluted share, for the second quarter ($74 million and $0.08 per diluted share year to date); and

◦a first-quarter defined benefit plan curtailment gain of $24 million, or $0.03 per diluted share that impacted the year-to-date period.

In the U.S. Domestic Package segment, revenue increased for the quarter and year to date, primarily due to higher fuel revenue driven by increases in both price per gallon and in fuel surcharge rates as part of our pricing strategy. Revenue quality and favorable shifts in customer mix also contributed to the increase. These factors were partially offset by volume declines. Expenses increased due to higher fuel prices and higher compensation and benefits costs.

In the International Package segment, revenue increased for the quarter and year to date, driven by fuel revenue and revenue quality, partially offset by lower volumes and unfavorable currency movements. Expense increases were primarily driven by higher jet fuel prices.

In Supply Chain Solutions, revenue growth for the quarter and year to date was primarily attributable to Forwarding and Logistics. Forwarding revenue growth was driven by market price increases, while Logistics experienced growth across its operations, particularly healthcare. Expenses were relatively flat for the quarter and year to date, as higher transportation costs in Forwarding and Logistics were offset by a reduction in operating expenses due to the second quarter 2021 divestiture of UPS Freight.

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UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

Supplemental Information - Items Affecting Comparability

We supplement the reporting of our financial information determined under generally accepted accounting principles in the United States ("GAAP") with certain non-GAAP financial measures. These include: "adjusted" compensation and benefits; operating expenses; operating profit; operating margin; other income and (expense); income before income taxes; income tax expense; effective tax rate; net income; and earnings per share. Adjusted financial measures may exclude the impact of period-over-period exchange rate changes and hedging activities, defined benefit plan gains and losses, transformation and other charges, goodwill and asset impairment charges, and divestitures, as described below.

We believe that these non-GAAP measures provide additional meaningful information to assist users of our financial statements in more fully understanding our financial results and assessing our ongoing performance, because they exclude items that may not be indicative of, or are unrelated to, our underlying operations, and may provide a useful baseline for analyzing trends in our underlying businesses. These non-GAAP measures are used internally by management for business unit operating performance analysis, business unit resource allocation and in connection with incentive compensation award determinations.

Adjusted financial measures should be considered in addition to, and not as an alternative for, our reported results prepared in accordance with GAAP. Our adjusted financial measures do not represent a comprehensive basis of accounting. Therefore, our adjusted financial measures may not be comparable to similarly-titled measures reported by other companies.

Adjusted amounts reflect the following (in millions):

	Three Months Ended June 30,				Six Months Ended  June 30,
Non-GAAP Adjustments	2022		2021		2022		2021
Operating Expenses:
Transformation Strategy Costs	$	41	$	116	$	96	$	234
Asset Impairment Charges and Divestitures	—		(101)		—		(35)
Total Adjustments to Operating Expenses	$	41	$	15	$	96	$	199
Other Income and (Expense):
Defined Benefit Plan (Gains) and Losses	$	—	$	—	$	(33)	$	(3,290)
Total Adjustments to Other Income and (Expense)	$	—	$	—	$	(33)	$	(3,290)
Total Adjustments to Income Before Income Taxes	$	41	$	15	$	63	$	(3,091)
Income Tax (Benefit) Expense:
Transformation Strategy Costs	$	(10)	$	(28)	$	(22)	$	(56)
Asset Impairment Charges and Divestitures	—		24		—		8
Defined Benefit Plan (Gains) and Losses	—		—		9		788
Total Adjustments to Income Tax (Benefit) Expense	$	(10)	$	(4)	$	(13)	$	740
Total Adjustments to Net Income	$	31	$	11	$	50	$	(2,351)

Transformation and Other Charges, Goodwill and Asset Impairment Charges, and Divestitures

We supplement the presentation of our operating profit, operating margin, income before income taxes, net income and earnings per share with non-GAAP measures that exclude the impact of charges related to transformation activities, goodwill and asset impairment charges, and divestitures. For more information regarding transformation activities, see note 17 to the unaudited, consolidated financial statements. For more information regarding goodwill and asset impairment charges, and divestitures, see note 4 to our audited, consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2021.

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Foreign Currency Exchange Rate Changes and Hedging Activities

We also supplement the reporting of revenue, revenue per piece and operating profit with adjusted measures that exclude the period-over-period impact of foreign currency exchange rate changes and hedging activities. We believe currency-neutral revenue, revenue per piece and operating profit information allows users of our financial statements to understand growth trends in our products and results. We evaluate the performance of International Package and Supply Chain Solutions on this currency-neutral basis.

Currency-neutral revenue, revenue per piece and operating profit are calculated by dividing current period reported U.S. Dollar revenue, revenue per piece and operating profit by the current period average exchange rates to derive current period local currency revenue, revenue per piece and operating profit. The derived amounts are then multiplied by the average foreign currency exchange rates used to translate the comparable results for each month in the prior year period (including the period-over-period impact of foreign currency hedging activities). The difference between the current period reported U.S. Dollar revenue, revenue per piece and operating profit and the derived current period U.S. Dollar revenue, revenue per piece and operating profit is the period-over-period impact of currency fluctuations.

Defined Benefit Plan Gains and Losses

We incur certain employment-related expenses associated with pension and postretirement medical benefits. These pension and postretirement medical benefits costs for company-sponsored defined benefit plans are calculated using various actuarial assumptions and methodologies, including discount rates, expected returns on plan assets, healthcare cost trend rates, inflation, compensation increase rates, mortality rates and coordination of benefits with plans not sponsored by UPS. Actuarial assumptions are reviewed on an annual basis, unless circumstances require an interim remeasurement of any of our plans.

We recognize changes in the fair value of plan assets and net actuarial gains and losses in excess of a 10% corridor (defined as 10% of the greater of the fair value of plan assets or the plan's projected benefit obligation), as well as gains and losses resulting from plan amendments, for our pension and postretirement defined benefit plans immediately as part of Investment income and other in the statements of consolidated income. We supplement the presentation of our income before income taxes, net income and earnings per share with adjusted measures that exclude the impact of these gains and losses and the related income tax effects. We believe excluding these defined benefit plan gains and losses provides important supplemental information by removing the volatility associated with plan amendments and short-term changes in market interest rates, equity values and similar factors.

During the first quarter of 2022, we amended the UPS Canada Ltd. Retirement Plan to cease future benefit accruals effective December 31, 2023. As a result, we remeasured the plan's assets and benefit obligations as of March 31, 2022, resulting in a curtailment gain of $33 million ($24 million after-tax).

During the first quarter of 2021, we remeasured the UPS/IBT Full Time Employee Pension Plan following enactment into law of the American Rescue Plan Act and recognized a pre-tax mark-to-market gain outside of the 10% corridor of $3.3 billion ($2.5 billion after-tax).

These gains are included in Investment income and other in the statements of consolidated income. For additional information, refer to note 7 to the unaudited, consolidated financial statements.

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Results of Operations - Segment Review

The results and discussions that follow are reflective of how management monitors and evaluates the performance of our segments as defined in note 13 to the unaudited, consolidated financial statements.

Certain operating expenses are allocated between our reporting segments using activity-based costing methods. These activity-based costing methods require us to make estimates that impact the amount of each expense category that is attributed to each segment. Changes in these estimates directly impact the amount of expense allocated to each segment and therefore the operating profit of each reporting segment. Our allocation methodologies are refined periodically, as necessary, to reflect changes in our businesses. There were no significant changes to our allocation methodologies in the second quarter or year-to-date periods.

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U.S. Domestic Package

	Three Months Ended June 30,						Change				Six Months Ended  June 30,						Change
	2022			2021			$		%		2022			2021			$		%
Average Daily Package Volume (in thousands):
Next Day Air	1,910			2,071					(7.8)	%	1,928			2,041					(5.5)	%
Deferred	1,401			1,581					(11.4)	%	1,455			1,548					(6.0)	%
Ground	16,374			16,856					(2.9)	%	16,330			16,842					(3.0)	%
Total Average Daily Package Volume	19,685			20,508					(4.0)	%	19,713			20,431					(3.5)	%
Average Revenue Per Piece:
Next Day Air	$	21.73		$	18.53		$	3.20	17.3	%	$	21.27		$	18.47		$	2.80	15.2	%
Deferred	15.52			12.98			2.54		19.6	%	15.10			13.09			2.01		15.4	%
Ground	10.89			9.86			1.03		10.4	%	10.77			9.84			0.93		9.5	%
Total Average Revenue Per Piece	$	12.27		$	10.97		$	1.30	11.9	%	$	12.12		$	10.95		$	1.17	10.7	%
Operating Days in Period	64			64							128			127
Revenue (in millions):
Next Day Air	$	2,656		$	2,456		$	200	8.1	%	$	5,250		$	4,787		$	463	9.7	%
Deferred	1,392			1,313			79		6.0	%	2,812			2,573			239		9.3	%
Ground	11,411			10,633			778		7.3	%	22,521			21,052			1,469		7.0	%
Total Revenue	$	15,459		$	14,402		$	1,057	7.3	%	$	30,583		$	28,412		$	2,171	7.6	%
Operating Expenses (in millions):
Operating Expenses	$	13,630		$	12,835		$	795	6.2	%	$	27,092		$	25,486		$	1,606	6.3	%
Transformation and Other Charges	(26)			(108)			82		(75.9)	%	(69)			(212)			143		(67.5)	%
Adjusted Operating Expense	$	13,604		$	12,727		$	877	6.9	%	$	27,023		$	25,274		$	1,749	6.9	%
Operating Profit (in millions) and Operating Margin:
Operating Profit	$	1,829		$	1,567		$	262	16.7	%	$	3,491		$	2,926		$	565	19.3	%
Adjusted Operating Profit	$	1,855		$	1,675		$	180	10.7	%	$	3,560		$	3,138		$	422	13.4	%
Operating Margin	11.8		%	10.9		%					11.4		%	10.3		%
Adjusted Operating Margin	12.0		%	11.6		%					11.6		%	11.0		%

Revenue

The change in revenue was due to the following factors:

	Volume		Rates / Product Mix		Fuel Surcharge		Total Revenue Change
Revenue Change Drivers:
Second quarter 2022 vs. 2021	(4.0)	%	4.7	%	6.6	%	7.3	%
Year to date 2022 vs. 2021	(2.8)	%	5.0	%	5.4	%	7.6	%

Year to date, revenue also benefited from one additional operating day in the first half of 2022.

Volume

Average daily volume decreased in the second quarter and year to date, driven by an 8.2% decline in residential shipments (down 7.8% year to date). The decline in residential shipments for the quarter was primarily attributable to the optimization of volume from certain large customers as we continued to execute within our Better Not Bigger strategic framework. These declines were slightly offset by growth from small- and medium-sized businesses ("SMBs") and increased business-to-business shipments.

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Volume for the quarter and year to date was also impacted by rising inflation that affected consumer demand and by a shift in consumer spending towards services. Business-to-consumer shipments for both the quarter and year to date represented approximately 57.3% of average daily volume, compared to 59.9% and 60.0%, respectively, in 2021.

Business-to-business shipments increased 2.3% for the quarter (up 2.9% year to date), with growth primarily in our Ground commercial product. We experienced growth from all customer segments as business-to-business activity continued to return to pre-pandemic levels. Overall, we anticipate that average daily volume will improve slightly in the second half of 2022 compared to the first half of the year.

Within our Air products, average daily volume decreased for the quarter, driven by lower volumes from certain of our large customers. Year to date, these declines were slightly offset by increases in Next Day Air volume from SMBs and other customers.

Within our Ground products, average daily volume decreased for the quarter and year to date, as declines in SurePost and Ground residential outpaced the gains in Ground commercial. SurePost and Ground residential average daily volumes decreased 4.8% and 8.1%, respectively, for the quarter (both decreased 7.7% year to date), driven by a reduction in shipments from a number of large retail customers. Ground residential was also impacted by changes in consumer spending as discussed above. Ground commercial volume increased 4.1% and 4.4% for the quarter and year to date, respectively, with growth from all customer segments as business activity continued to increase.

Rates and Product Mix

Revenue per piece in both our Air and Ground products increased for both the second quarter and year to date, driven by increases in fuel surcharges, base rates, pricing actions and favorable changes in customer mix as we continued to optimize volume within our network. Rates for Air and Ground products increased an average of 5.9% in December 2021, and our SurePost rates also increased at that time. In our Next Day Air and Deferred products, overall revenue per piece growth for the quarter and year to date was slightly impacted by a reduction in average billable weight per piece.

For the remainder of 2022, we anticipate that revenue per piece growth will moderate relative to the first half of the year.

Fuel Surcharges

We apply a fuel surcharge on our domestic air and ground services that is adjusted weekly. Our air fuel surcharge is based on the U.S. Department of Energy's ("DOE") Gulf Coast spot price for a gallon of kerosene-type fuel, and our ground fuel surcharge is based on the DOE's On-Highway Diesel Fuel price.

Total domestic fuel surcharge revenue increased $949 million in the second quarter (up $1.6 billion year to date), driven by increases in both price per gallon and in fuel surcharge rates as part of our pricing strategy. We expect fuel surcharge revenue to remain elevated throughout the remainder of 2022.

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Operating Expenses

Operating expenses, and operating expenses excluding the year-over-year impact of transformation and other charges, increased for the quarter and year to date, partly due to the impact of one additional operating day in the year-to-date period. The cost of operating our integrated air and ground network increased $345 million (up $624 million year to date) and pickup and delivery costs increased $334 million (up $789 million year to date). Other indirect operating costs increased $176 million (up $234 million year to date) and package sorting costs increased $22 million (up $102 million year to date). These increases included the following:

•Higher fuel costs primarily attributable to increases in the price of jet fuel, diesel and gasoline, which we expect to persist.

•Increases in employee benefits expense for our union workforce primarily due to contractual rate increases for contributions to multiemployer benefit plans. We expect an additional contractual rate increase in the third quarter, in addition to higher year-over-year service cost for our company-sponsored pension plans.

•Higher compensation expense due to union contractual rate increases, cost of living and market-rate adjustments for our union workforce. These increases were partially offset by lower volumes, which led to a decrease in average daily union labor hours. We expect compensation expense will increase in the second half of the year as a result of the annual contractual rate increase, as well as additional cost of living and market-rate adjustments. Overall, we expect that compensation and benefits costs will increase by approximately $600 million year over year in the second half of 2022.

•Reallocation of Ground with Freight Pricing product expense following the second quarter 2021 divestiture of UPS Freight, which resulted in $26 million of increased segment operating expenses.

•Inflationary pressures that also contributed to cost increases in repairs and maintenance and facility operating costs.

Total cost per piece increased 10.6% for the second quarter (up 9.3% year to date). Excluding the impact of transformation and other charges, adjusted cost per piece increased 11.4% for the second quarter and 9.9% year to date, for the reasons described above. We anticipate that the cost per piece growth rate will moderate in the second half of the year and remain below revenue per piece growth as we expect our productivity initiatives to more than offset rising costs.

Operating Profit and Margin

As a result of the factors described above, operating profit increased $262 million in the second quarter (up $565 million year to date), with operating margin increasing 90 basis points to 11.8% (up 110 basis points to 11.4% year to date). Excluding the year-over-year impact of transformation and other charges, adjusted operating profit increased $180 million for the quarter (up $422 million year to date), with adjusted operating margin increasing 40 basis points to 12.0% (up 60 basis points to 11.6% year to date).

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International Package

	Three Months Ended  June 30,						Change				Six Months Ended  June 30,						Change
	2022			2021			$		%		2022			2021			$		%
Average Daily Package Volume (in thousands):
Domestic	1,703			1,967					(13.4)	%	1,754			1,988					(11.8)	%
Export	1,683			1,761					(4.4)	%	1,708			1,772					(3.6)	%
Total Average Daily Package Volume	3,386			3,728					(9.2)	%	3,462			3,760					(7.9)	%
Average Revenue Per Piece:
Domestic	$	7.61		$	7.44		$	0.17	2.3	%	$	7.48		$	7.38		$	0.10	1.4	%
Export	36.91			32.60			4.31		13.2	%	35.47			31.85			3.62		11.4	%
Total Average Revenue Per Piece	$	22.17		$	19.32		$	2.85	14.8	%	$	21.29		$	18.91		$	2.38	12.6	%
Operating Days in Period	64			64							128			127
Revenue (in millions):
Domestic	$	829		$	936		$	(107)	(11.4)	%	$	1,680		$	1,864		$	(184)	(9.9)	%
Export	3,976			3,674			302		8.2	%	7,754			7,167			587		8.2	%
Cargo and Other	268			207			61		29.5	%	515			393			122		31.0	%
Total Revenue	$	5,073		$	4,817		$	256	5.3	%	$	9,949		$	9,424		$	525	5.6	%
Operating Expenses (in millions):
Operating Expenses	$	3,880		$	3,633		$	247	6.8	%	$	7,640		$	7,155		$	485	6.8	%
Transformation and Other Charges	(11)			(6)			(5)		83.3	%	(15)			(12)			(3)		25.0	%
Adjusted Operating Expenses	$	3,869		$	3,627		$	242	6.7	%	$	7,625		$	7,143		$	482	6.7	%
Operating Profit (in millions) and Operating Margin:
Operating Profit	$	1,193		$	1,184		$	9	0.8	%	$	2,309		$	2,269		$	40	1.8	%
Adjusted Operating Profit	$	1,204		$	1,190		$	14	1.2	%	$	2,324		$	2,281		$	43	1.9	%
Operating Margin	23.5		%	24.6		%					23.2		%	24.1		%
Adjusted Operating Margin	23.7		%	24.7		%					23.4		%	24.2		%
Currency Benefit / (Cost) – (in millions)*:
Revenue							$	(261)									$	(404)
Operating Expenses							201										316
Operating Profit							$	(60)									$	(88)
* Net of currency hedging; amount represents the change in currency translation compared to the prior year.

Revenue

The change in revenue was due to the following:

	Volume		Rates / Product Mix		Fuel Surcharge		Currency		Total Revenue Change
Revenue Change Drivers:
Second quarter 2022 vs. 2021	(9.2)	%	9.5	%	10.4	%	(5.4)	%	5.3	%
Year to date 2022 vs. 2021	(7.1)	%	8.6	%	8.4	%	(4.3)	%	5.6	%

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Volume

Average daily volume decreased in the second quarter and year to date for both domestic and export products. Volume declined from both large customers and SMBs, primarily in the retail and technology sectors. Business-to-consumer volume decreased 22.8% for the quarter (down 21.7% year to date), driven by challenging global economic conditions, including rising inflation, geopolitical uncertainty and COVID-19 disruptions in Asia. Consumer e-commerce spending declined relative to the first half of 2021 when COVID-19 restrictions were in place in a number of countries, contributing to the year-over-year decline in residential volume. These factors also impacted business-to-business volume, which decreased 2.4% for the quarter (down 1.0% year to date). We expect overall volume growth rates to improve in the second half of the year, relative to the first half.

Export volume decreased for both the quarter and year to date periods, driven by declines in Europe and Asia. European volume declines were highest on intra-Europe trade lanes, driven by overall economic conditions. The intra-Europe declines were slightly offset by growth on the Europe to U.S. trade lane. The decline in Asia export volume for the quarter and year-to-date periods was primarily driven by COVID-19 disruptions, which resulted in fewer flights being operated and reduced business activity in certain areas within China.

We experienced a slight volume decline in our premium Express products for both the quarter and year to date, driven by declines in our Transborder Express Saver product. Volume for our non-premium export products decreased 4.3% in the quarter (down 3.3% year to date), primarily driven by declines in our Transborder Standard and Worldwide Expedited products. The decline in our Transborder products was driven by the factors discussed above, while the decline in our Worldwide Expedited product resulted from shifts in customer preferences.

Domestic volume also declined for the quarter and year to date, particularly in Canada and Germany, where the COVID-19 restrictions discussed above impacted year-over-year residential volume.

Rates and Product Mix

In December 2021, we implemented an average 5.9% net increase in base and accessorial rates for international shipments originating in the United States. Rate changes for shipments originating outside the U.S. are made throughout the year and vary by geographic market. Additionally, we continue to apply demand-related surcharges on certain lanes.

Total revenue per piece increased 14.8% in the quarter (up 12.6% year to date), primarily due to fuel surcharges and pricing structure changes, including demand-related surcharges, as well as favorable shifts in customer and product mix. These increases were partially offset by unfavorable currency movements. Excluding the impact of currency, revenue per piece increased 20.9% in the quarter (up 17.3% year to date). We expect our overall revenue per piece to decrease slightly for the remainder of the year. Additionally, we expect year-over-year growth in demand-related surcharges to moderate during the second half of the year.

Export revenue per piece increased 13.2% in the quarter (up 11.4% year to date) for the reasons described above. Excluding the impact of currency, export revenue per piece increased 17.9% in the quarter (up 14.9% year to date).

Domestic revenue per piece remained relatively flat for the second quarter and year to date, as unfavorable currency movements offset growth driven by the factors described above. Excluding the impact of currency, domestic revenue per piece increased 13.6% (up 10.2% year to date).

Fuel Surcharges

The fuel surcharge we apply to international air services originating inside or outside the U.S. is largely indexed to the DOE's Gulf Coast spot price for a gallon of kerosene-type jet fuel. The fuel surcharges for ground services originating outside the U.S. are indexed to fuel prices in the region or country where the shipment originates.

Total international fuel surcharge revenue increased by $451 million for the second quarter (up $710 million year to date), driven by increases in both price per gallon and in fuel surcharge rates as part of our pricing strategy. These increases were slightly offset by volume declines. We expect fuel surcharges to continue to remain elevated throughout the remainder of 2022.

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Operating Expenses

Operating expenses, and operating expenses excluding the year-over-year impact of transformation and other charges, increased in both the second quarter and year to date. The costs of operating our integrated international air and ground network increased $444 million for the quarter (up $739 million year to date), primarily due to higher fuel prices and additional aircraft charters. We expect these costs to remain elevated throughout the remainder of 2022.

Pickup and delivery costs decreased $113 million in the quarter (down $151 million year to date), as inflationary pressures were more than offset by favorable currency movements and volume declines. Overall, other indirect and package sorting costs remained relatively flat for the quarter and year to date.

Substantially all of our operations in Russia, Belarus and Ukraine remain suspended, which actions have not had a material impact on us. We are continuing to monitor the evolving impact of Russia’s invasion of Ukraine on the global economy and evaluating our long-term strategy in the region.

Operating Profit and Margin

As a result of the factors described above, operating profit increased $9 million for the second quarter (up $40 million year to date), with operating margin decreasing 110 basis points to 23.5% (down 90 basis points to 23.2% year to date). Excluding the year-over-year impact of transformation and other charges, adjusted operating profit increased $14 million in the quarter (up $43 million year to date), while adjusted operating margin decreased 100 basis points to 23.7% (down 80 basis points to 23.4% year to date).

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Supply Chain Solutions

	Three Months Ended  June 30,						Change				Six Months Ended  June 30,						Change
	2022			2021			$		%		2022			2021			$		%
Revenue (in millions):
Forwarding	$	2,389		$	2,309		$	80	3.5	%	$	4,978		$	4,381		$	597	13.6	%
Logistics	1,290			1,162			128		11.0	%	2,541			2,266			275		12.1	%
Freight	—			297			(297)		(100.0)	%	—			1,064			(1,064)		(100.0)	%
Other	555			437			118		27.0	%	1,093			785			308		39.2	%
Total Revenue	$	4,234		$	4,205		$	29	0.7	%	$	8,612		$	8,496		$	116	1.4	%
Operating Expenses (in millions):
Operating Expenses	$	3,721		$	3,698		$	23	0.6	%	$	7,626		$	7,668		$	(42)	(0.5)	%
Transformation Strategy Costs	(4)			(2)			(2)		100.0	%	(12)			(10)			(2)		20.0	%
Asset Impairment Charges and Divestitures	—			101			(101)		(100.0)	%	—			35			(35)		(100.0)	%
Adjusted Operating Expenses:	$	3,717		$	3,797		$	(80)	(2.1)	%	$	7,614		$	7,693		$	(79)	(1.0)	%
Operating Profit (in millions) and Operating Margin:
Operating Profit	$	513		$	507		$	6	1.2	%	$	986		$	828		$	158	19.1	%
Adjusted Operating Profit	$	517		$	408		$	109	26.7	%	$	998		$	803		$	195	24.3	%
Operating Margin	12.1		%	12.1		%					11.4		%	9.7		%
Adjusted Operating Margin	12.2		%	9.7		%					11.6		%	9.5		%
Currency Benefit / (Cost) – (in millions)*:
Revenue							$	(62)									$	(99)
Operating Expenses							77										117
Operating Profit							$	15									$	18
* Amount represents the change in currency translation compared to the prior year.

	Three Months Ended  June 30,				Change				Six Months Ended  June 30,				Change
	2022		2021		$		%		2022		2021		$		%
Transformation Strategy Costs (in millions):
Forwarding	$	2	$	1	$	1	100.0	%	$	8	$	6	$	2	33.3	%
Logistics	1		1		—		—	%	2		3		(1)		(33.3)	%
Freight	—		—		—		N/A		—		1		(1)		(100.0)	%
Other	1		—		1		N/A		2		—		2		N/A
Total Transformation Strategy Costs	$	4	$	2	$	2	100.0	%	$	12	$	10	$	2	20.0	%

Revenue

Total revenue for Supply Chain Solutions increased $29 million in the second quarter (up $116 million year to date) as strong revenue growth across a number of our businesses offset a $297 million decrease ($1.1 billion year-to-date decrease) attributable to the divestiture of UPS Freight in the second quarter of 2021.

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Forwarding revenue increased for both the quarter and year to date. In our international airfreight business, both volume and revenue declined in the second quarter, driven by the impacts of COVID restrictions in Asia and lower market demand. Year-to-date volume also declined, but was more than offset by the impact of elevated market rates and demand-related surcharges in the first quarter. Ocean freight forwarding revenue increased for both the quarter and year to date as market rates remained elevated due to capacity constraints, while volume declined. We expect rates to moderate during the remainder of 2022 in both the air and ocean freight markets as capacity returns to the market. While volume in our truckload brokerage business declined in the quarter and year-to-date periods, revenue remained relatively flat for the quarter, and increased $140 million year to date, driven by revenue quality initiatives.

Within Logistics, our healthcare operations experienced strong revenue growth for the quarter and year to date, driven by pharmaceuticals, clinical trials and lab customers. Revenue in our mail services business increased for both the quarter and year to date, driven by rate increases and a favorable shift in product characteristics, partially offset by lower volumes. Our other distribution operations experienced year-over-year revenue growth for both the quarter and year to date, driven by service expansion, revenue quality initiatives and strong demand for warehouse space.

Revenue from the other businesses within Supply Chain Solutions increased for both the quarter and year to date, driven by services provided to the acquirer of UPS Freight under certain transition services agreements, and by the acquisition of Roadie, Inc. in the fourth quarter of 2021.

Operating Expenses

Total operating expenses in Supply Chain Solutions increased for the quarter but decreased year to date. This included a decrease of $168 million ($952 million year to date) due to the divestiture of UPS Freight. Operating expenses, excluding the year-over-year impact of transformation and other charges, decreased for both the quarter and year to date.

Forwarding operating expenses decreased $50 million for the quarter, driven by a reduction in purchased transportation expense resulting from lower volumes in truckload brokerage and international airfreight. The impact of volume declines in the quarter was partially offset by elevated ocean freight forwarding and truckload brokerage rates. Year to date, operating expenses increased $342 million, primarily due to higher purchased transportation expense in our international airfreight and ocean freight forwarding businesses.

Logistics operating expenses increased $109 million for the quarter (up $235 million year to date) resulting from increases in third-party transportation and compensation and benefits expenses as a result of business growth and inflationary pressures. We anticipate that inflation and labor market pressures may continue to drive higher costs throughout the remainder of the year.

Expenses in the other businesses within Supply Chain Solutions increased for the quarter and year to date, largely due to transportation and other costs incurred in providing transition services to the acquirer of UPS Freight and the acquisition of Roadie, Inc..

Operating Profit and Margin

As a result of the factors described above, operating profit increased $6 million for the quarter (up $158 million year to date), with operating margin remaining unchanged at 12.1% (up 170 basis points to 11.4% year to date). Excluding the year-over-year impact of transformation strategy costs, goodwill and asset impairments, and divestitures, adjusted operating profit increased $109 million for the quarter (up $195 million year to date), with adjusted operating margin increasing 250 basis points to 12.2% (up 210 basis points to 11.6% year to date).

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Consolidated Operating Expenses

	Three Months Ended  June 30,				Change				Six Months Ended  June 30,				Change
	2022		2021		$		%		2022		2021		$		%
Operating Expenses (in millions):
Compensation and benefits	$	11,358	$	11,327	$	31	0.3	%	$	22,974	$	22,810	$	164	0.7	%
Transformation and Other Charges	(23)		(55)		$	32	(58.2)	%	(56)		(131)		75		(57.3)	%
Adjusted Compensation and benefits	$	11,335	$	11,272	$	63	0.6	%	$	22,918	$	22,679	$	239	1.1	%
Repairs and maintenance	$	643	$	599	$	44	7.3	%	$	1,269	$	1,218	$	51	4.2	%
Depreciation and amortization	762		739		23		3.1	%	1,526		1,461		65		4.4	%
Purchased transportation	4,385		4,446		(61)		(1.4)	%	8,985		8,689		296		3.4	%
Fuel	1,697		915		782		85.5	%	2,917		1,722		1,195		69.4	%
Other occupancy	420		402		18		4.5	%	911		868		43		5.0	%
Other expenses	1,966		1,738		228		13.1	%	3,776		3,541		235		6.6	%
Total Other expenses	9,873		8,839		1,034		11.7	%	19,384		17,499		1,885		10.8	%
Transformation and Other Charges	(18)		(61)		43		(70.5)	%	(40)		(103)		63		(61.2)	%
Asset impairment charges and divestitures	—		101		(101)		(100.0)	%	—		35		(35)		(100.0)	%
Adjusted Total Other expenses	$	9,855	$	8,879	$	976	11.0	%	$	19,344	$	17,431	1,913		11.0	%
Total Operating Expenses	$	21,231	$	20,166	$	1,065	5.3	%	$	42,358	$	40,309	$	2,049	5.1	%
Adjusted Total Operating Expenses	$	21,190	$	20,151	$	1,039	5.2	%	$	42,262	$	40,110	$	2,152	5.4	%
Currency (Benefit) / Cost - (in millions)*					$	(278)							$	(433)
* Amount represents the change in currency translation compared to the prior year.

	Three Months Ended  June 30,				Change				Six Months Ended  June 30,				Change
	2022		2021		$		%		2022		2021		$		%
Adjustments to Operating Expenses (in millions):
Transformation Strategy Costs:
Compensation	$	8	$	8	$	—	—	%	$	24	$	14	$	10	71.4	%
Benefits	15		47		(32)		(68.1)	%	32		117		(85)		(72.6)	%
Other occupancy	—		2		(2)		(100.0)	%	—		3		(3)		(100.0)	%
Other expenses	18		59		(41)		(69.5)	%	40		100		(60)		(60.0)	%
Total Transformation Strategy Costs	$	41	$	116	$	(75)	(64.7)	%	$	96	$	234	$	(138)	(59.0)	%
Asset impairment charges and divestitures:
Other expenses	$	—	$	(101)	$	101	(100.0)	%	$	—	$	(35)	$	35	(100.0)	%
Total Adjustments to Operating Expenses	$	41	$	15	$	26	173.3	%	$	96	$	199	$	(103)	(51.8)	%

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Compensation and Benefits

Total compensation and benefits, and total compensation and benefits excluding the year-over-year impact of transformation and other charges, increased for the quarter and year to date.

Total compensation costs and total compensation costs excluding transformation and other charges decreased $100 million in the quarter. For the year-to-date period, total compensation costs and total compensation costs excluding transformation and other charges decreased $69 million and $79 million, respectively. U.S. Domestic direct labor costs increased for both the quarter and year to date, driven by increases in wage rates and additional headcount in our line-haul network operations. These increases were partially offset by a reduction in labor hours due to decreases in average daily volume. Management compensation decreased for both the quarter and year to date, driven by decreases in commissions and incentive compensation awards, partially offset by increases in part-time management wages and headcount. The divestiture of UPS Freight reduced compensation costs by $93 million for the quarter ($328 million reduction year to date).

Benefits costs increased $131 million for the quarter (up $233 million year to date). Excluding the year-over-year impact of transformation and other charges, adjusted benefits costs increased $163 million for the quarter (up $318 million year to date). The primary drivers were:

•Health and welfare costs increased $59 million for the quarter (up $99 million year to date), due to increased contributions to multiemployer plans as a result of contractual rate increases. This was partly offset by the impact of divesting UPS Freight, which reduced our costs by $16 million for the quarter ($65 million reduction year to date).

•Pension and other postretirement benefits costs increased by $57 million for the quarter (up $20 million year to date), due to higher service costs for company-sponsored plans and increased contributions to multiemployer plans as a result of contractually-mandated contribution increases. The divestiture of UPS Freight drove a reduction in expense of $10 million for the quarter ($46 million reduction year to date).

•Vacation, excused absence, payroll taxes and other costs increased $22 million for the quarter (up $131 million year to date), primarily due to wage growth.

•Workers' compensation costs decreased $32 million for the quarter (up $3 million year to date), driven by changes in claims development trends relative to the prior year.

Repairs and Maintenance

Expense increased for both the quarter and year to date, due to an increase in planned building maintenance as well as increases in the cost of materials and supplies. We also incurred higher costs for aircraft engine and airframe maintenance in both the quarter and year-to-date periods due to the timing of scheduled maintenance events.

Depreciation and Amortization

Depreciation and amortization expense increased as a result of facility automation and expansion projects coming into service, investments in internally developed software and the amortization of intangible assets acquired as part of the Roadie, Inc. acquisition in the fourth quarter of 2021.

Purchased Transportation

Third-party transportation expense charged to us by air, ocean and ground carriers decreased for the second quarter but increased year to date. The changes were primarily driven by:

•Supply Chain Solutions expense decreased by $19 million for the quarter, resulting from volume declines in our international airfreight and truckload brokerage businesses that were largely offset by increases in ocean freight rates and growth in our logistics operations. Year to date, this expense increased $326 million, due to rate increases in international airfreight, ocean freight and truckload brokerage, slightly offset by the impact of volume reductions within these businesses.

•The divestiture of UPS Freight resulted in a $73 million decrease in expense for the quarter ($260 million decrease year to date) within Supply Chain Solutions, which was somewhat offset by the cost of transportation procured under transition service agreements with the acquirer of the business.

•U.S. Domestic expense decreased $41 million (down $42 million year to date), driven by a reduction in ground volume handled by third-party carriers and network optimization initiatives.

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Fuel

The increase in fuel expense for both the quarter and year to date was primarily driven by higher prices for jet fuel, diesel and gasoline. Market prices and the manner in which we purchase fuel may influence the impact on our costs. The majority of our fuel purchases utilize index-based pricing formulas plus or minus a fixed locational/supplier differential. While many of the indices are correlated, each index may respond differently to changes in underlying prices, which in turn can drive variability in our costs.

Other Occupancy

Other occupancy expense increased for both the quarter and year to date as a result of additional operating facilities coming into service, higher utilities costs and increases in rental rates.

Other Expenses

Other expenses, and other expenses excluding the year-over-year impact of transformation and other charges, increased for both the quarter and year to date, primarily as a result of:

•An increase of $56 million in the quarter ($70 million increase year to date) in commissions paid for certain online shipments.

•An increase of $23 million in the quarter ($36 million increase year to date) in our allowance for credit losses, primarily resulting from a deterioration in economic forecasts relative to the prior year.

•Hosted software application fees and other technology costs increased $21 million in the quarter (up $52 million year to date), in support of ongoing investments in our digital transformation.

•Professional fees increased $20 million in the quarter (up $23 million year to date) as a result of an increase in services provided to various business units.

•The cost of goods provided under transition service agreements to the acquirer of UPS Freight increased $13 million in the quarter ($41 million year to date).

Other increases for the quarter and year to date included costs related to the lease and purchase of additional vehicles for our network and self-insured automobile liability expense driven by increases in the frequency and severity of claims. These increases were partially offset by favorable developments in certain legal and tax contingencies and a reduction in asset impairment charges.

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Other Income and (Expense)

The following table sets forth investment income and other and interest expense for the three and six months ended June 30, 2022 and 2021 (in millions):

	Three Months Ended  June 30,				Change				Six Months Ended  June 30,				Change
	2022		2021		$		%		2022		2021		$		%
Investment Income and Other	$	333	$	345	$	(12)	(3.5)	%	$	648	$	3,961	$	(3,313)	(83.6)	%
Defined Benefit Plan (Gains) and Losses	—		—		—		N/A		(33)		(3,290)		3,257		(99.0)	%
Adjusted Investment Income and Other	$	333	$	345	$	(12)	(3.5)	%	$	615	$	671	$	(56)	(8.3)	%
Interest Expense	(171)		(167)		(4)		2.4	%	(345)		(344)		(1)		0.3	%
Total Other Income and (Expense)	$	162	$	178	$	(16)	(9.0)	%	$	303	$	3,617	$	(3,314)	(91.6)	%
Adjusted Other Income and (Expense)	$	162	$	178	$	(16)	(9.0)	%	$	270	$	327	$	(57)	(17.4)	%

Investment Income and Other

The decrease in investment income and other for the quarter was primarily due to changes in the fair value of certain non-current investments and a decrease in other pension income. These losses were partially offset by foreign currency gains and higher yields on invested assets.

Year to date, investment income and other decreased $3.3 billion due to year-over-year changes in defined benefit plan adjustments. We recognized a $3.3 billion defined benefit plan mark-to-market gain in 2021 compared to a $33 million defined benefit plan curtailment gain in 2022. Excluding the impact of these defined benefit plan gains, adjusted investment income and other decreased $56 million, primarily due to year-over-year changes in the fair value of certain non-current investments, as well as a decrease in other pension income.

Other pension income decreased $4 million for the quarter (down $20 million year to date) due to the following:

•Lower expected returns on pension assets as a result of a reduction in our rate of return assumption, partially offset by a higher asset base due to contributions and positive asset returns in 2021.

•Higher pension interest cost due to an increase in projected benefit obligations and changes in demographic assumptions, partially offset by the impact of lower discount rates for the quarter. Year to date, pension interest cost increased due to the impact of changes in demographic data.

•Prior service cost decreased as the cost base from certain plan amendments became fully amortized during 2021.

Interest Expense

The increase in interest expense for both the quarter and year to date was primarily due to higher effective interest rates on floating rate debt and a reduction in capitalized interest, partially offset by lower average outstanding debt balances and a positive impact from currency exchange rates on foreign currency denominated debt.

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Income Tax Expense

The following table sets forth our income tax expense and effective tax rate for the three and six months ended June 30, 2022 and 2021 (in millions):

	Three Months Ended  June 30,						Change				Six Months Ended  June 30,						Change
	2022			2021			$		%		2022			2021			$		%
Income Tax Expense	$	848		$	760		$	88	11.6	%	$	1,578		$	2,172		$	(594)	(27.3)	%
Income Tax Impact of:
Transformation Strategy Costs	10			28			(18)		(64.3)	%	22			56			(34)		(60.7)	%
Asset Impairment Charges and Divestitures	—			(24)			24		(100.0)	%	—			(8)			8		(100.0)	%
Defined Benefit Plan (Gains) and Losses	—			—			—		N/A		(9)			(788)			779		(98.9)	%
Adjusted Income Tax Expense	$	858		$	764		$	94	12.3	%	$	1,591		$	1,432		$	159	11.1	%
Effective Tax Rate	22.9		%	22.1		%					22.3		%	22.5		%
Adjusted Effective Tax Rate	22.9		%	22.1		%					22.2		%	21.9		%

For additional information on our income tax expense and effective tax rate, see note 16 to the unaudited, consolidated financial statements.

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Liquidity and Capital Resources

As of June 30, 2022, we had $12.1 billion in cash, cash equivalents and marketable securities. We believe that these positions, expected cash from operations, access to commercial paper programs and capital markets and other available liquidity options will be adequate to fund our material short- and long-term cash requirements, including our business operations, planned capital expenditures and pension contributions, transformation strategy costs, debt obligations and planned shareowner returns. We regularly evaluate opportunities to optimize our capital structure, including through issuances of debt to refinance existing debt and to fund operations. We deploy a disciplined and balanced approach to capital allocation, including returns to shareowners through dividends and share repurchases.

Cash Flows From Operating Activities

The following is a summary of the significant sources (uses) of cash from operating activities (in millions):

	Six Months Ended June 30,
	2022		2021
Net income	$	5,511	$	7,468
Non-cash operating activities (a)	3,059		400
Pension and postretirement benefit plan contributions (company-sponsored plans)	(123)		(276)
Hedge margin receivables and payables	286		(25)
Income tax receivables and payables	14		258
Changes in working capital and other non-current assets and liabilities	(376)		631
Other operating activities	(78)		(2)
Net cash from operating activities	$	8,293	$	8,454

___________________ 

(a)Represents depreciation and amortization, gains and losses on derivative transactions and foreign currency exchange, deferred income taxes, allowances for expected credit losses, amortization of operating lease assets, pension and postretirement benefit plan (income) expense, stock compensation expense, changes in casualty self-insurance reserves, goodwill and other asset impairment charges and other non-cash items.

Net cash from operating activities decreased $161 million in the 2022 period, primarily due to:

•An unfavorable change in working capital due to the timing of payroll and other compensation-related items, as well as the settlement of duties and taxes on behalf of our customers.

•A reduction in income taxes payable due to the timing of tax payments relative to accruals.

•A decrease in contributions to our company-sponsored pension and U.S. postretirement medical benefit plans, driven by the timing of contributions to our U.S. postretirement medical plan.

•An increase in our net hedge margin collateral position due to changes in the fair value of derivative contracts used in our currency and interest rate hedging programs.

As part of our ongoing efforts to improve our working capital efficiency, certain financial institutions offer a Supply Chain Finance ("SCF") program to certain of our suppliers. We agree to commercial terms with our suppliers, including prices, quantities and payment terms, regardless of whether the supplier elects to participate in the SCF program. Suppliers issue invoices to us based on the agreed-upon contractual terms. If they participate in the SCF program, our suppliers, at their sole discretion, determine which invoices, if any, to sell to the financial institutions. Our suppliers’ voluntary inclusion of invoices in the SCF program has no bearing on our payment terms. No guarantees are provided by us under the SCF program. We have no economic interest in a supplier’s decision to participate, and we have no direct financial relationship with the financial institutions, as it relates to the SCF program.

Amounts due to our suppliers that participate in the SCF program are included in Accounts payable in our consolidated balance sheets. We have been informed by the participating financial institutions that as of June 30, 2022 and 2021, suppliers sold them $599 and $412 million, respectively, of our outstanding payment obligations. Amounts due to suppliers that participate in the SCF program may be reflected in cash flows from operating activities or cash flows from investing activities in our consolidated statements of cash flows. The amounts settled through the SCF program were approximately $712 and $578 million for the six months ended June 30, 2022 and 2021, respectively.

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As of June 30, 2022, approximately $3.6 billion of our total worldwide holdings of cash, cash equivalents and marketable securities were held by foreign subsidiaries. The amount of cash, cash equivalents and marketable securities held by our U.S. and foreign subsidiaries fluctuates throughout the year due to a variety of factors, including the timing of cash receipts and disbursements in the normal course of business. Cash provided by operating activities in the U.S. continues to be our primary source of funds to finance domestic operating needs, capital expenditures, share repurchases, pension contributions and dividend payments to shareowners. All cash, cash equivalents and marketable securities held by foreign subsidiaries are generally available for distribution to the U.S. without any U.S. federal income taxes. Any such distributions may be subject to foreign withholding and U.S. state taxes. When amounts earned by foreign subsidiaries are expected to be indefinitely reinvested, no accrual for taxes is provided.

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Cash Flows From Investing Activities

Our primary sources (uses) of cash from investing activities were as follows (in millions):

	Six Months Ended June 30,
	2022			2021
Net cash used in investing activities	$	(1,499)		$	(734)
Capital Expenditures:
Buildings, facilities and plant equipment	$	(524)		$	(719)
Aircraft and parts	(406)			(438)
Vehicles	(129)			(261)
Information technology	(329)			(252)
Total Capital Expenditures	$	(1,388)		$	(1,670)
Capital Expenditures as a % of revenue	2.8		%	3.6		%
Other Investing Activities:
Proceeds from disposal of businesses, property, plant and equipment	$	9		$	863
Net change in finance receivables	$	7		$	16
Net (purchases), sales and maturities of marketable securities	$	(2)		$	73
Cash paid for business acquisitions, net of cash and cash equivalents acquired	$	(99)		$	(5)
Other investing activities	$	(26)		$	(11)

We have commitments for the purchase of aircraft, vehicles, equipment and real estate to provide for the replacement of existing capacity and anticipated future growth. Future capital spending for anticipated growth and replacement assets will depend on a variety of factors, including economic and industry conditions. Our current investment program anticipates investments in technology initiatives and enhanced network capabilities, including over $1 billion of projects to support our environmental sustainability goals in 2022. It also provides for the maintenance of buildings, facilities and plant equipment and replacement of certain aircraft within our fleet. We currently expect that our capital expenditures will total approximately $5.5 billion in 2022, of which approximately 60 percent will be allocated to expansion projects.

Total capital expenditures decreased in the 2022 period, primarily due to:

•Spending on buildings, facilities and plant equipment in our global small package business decreased as supply chain disruptions resulted in delays in certain projects.

•Aircraft expenditures decreased due to fewer payments associated with the delivery of aircraft, partially offset by increases in contract deposits on open aircraft orders.

•Vehicle expenditures decreased as supply chain disruptions impacted delivery schedules.

•Information technology expenditures increased due to additional deployments of technology equipment and capitalized software projects.

The net change in finance receivables was primarily due to reductions in outstanding balances within our finance portfolios. Purchases and sales of marketable securities are largely determined by liquidity needs and the periodic rebalancing of investment types, and will fluctuate from period to period.

The increase in cash paid for business acquisitions in 2022 was primarily due to the acquisition of Delivery Solutions, as well as the purchase of additional development areas for The UPS Store relative to the 2021 period. Other investing activities were impacted by changes in our non-current investments, purchase contract deposits and various other items.

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Cash Flows From Financing Activities

Our primary sources (uses) of cash from financing activities were as follows (amounts in millions, except per share data):

	Six Months Ended June 30,
	2022		2021
Net cash used in financing activities	$	(5,286)	$	(4,038)
Share Repurchases:
Cash paid to repurchase shares	(1,242)		—
Number of shares repurchased	6.7		—
Shares outstanding at period end	870		872
Dividends:
Dividends declared per share	$	3.04	$	2.04
Cash paid for dividends	$	(2,567)	$	(1,718)
Borrowings:
Net borrowings (repayments) of debt principal	$	(1,105)	$	(2,101)
Other Financing Activities:
Cash received for common stock issuances	$	136	$	141
Other financing activities	$	(508)	$	(360)
Capitalization:
Total debt outstanding at period end	20,576		22,591
Total shareowners’ equity at period end	16,310		10,822
Total capitalization	$	36,886	$	33,413

We repurchased 6.7 million shares of class B common stock for $1.2 billion under our stock repurchase program during the six months ended June 30, 2022. We did not repurchase any shares during the six months ended June 30, 2021. In July 2022, we announced that we anticipate our share repurchases will total approximately $3.0 billion for all of 2022. For additional information on our share repurchase activities, see note 12 to the unaudited, consolidated financial statements.

We increased our quarterly cash dividend to $1.52 per share in 2022, compared to $1.02 in 2021. The declaration of dividends is subject to the discretion of the Board and depends on various factors, including our net income, financial condition, cash requirements, future prospects and other relevant factors.

There were no issuances of debt during the six months ended June 30, 2022. Repayments of debt in 2022 included our $600 million 2.350% senior notes, our $400 million floating rate senior notes and scheduled principal payments on our finance lease obligations. In the prior year-to-date period, issuances of debt consisted of borrowings under our commercial paper program. Repayments included $2.6 billion of fixed-rate senior notes, commercial paper and scheduled principal payments on our finance lease obligations.

We have $1.0 billion of fixed rate senior notes outstanding that mature in 2022. We currently expect to repay these notes at maturity with cash from operations. We consider the overall fixed and floating interest rate mix of our portfolio and the related overall cost of borrowing when planning for future issuances and non-scheduled repayments of debt.

The amount of commercial paper outstanding fluctuates throughout the year based on daily liquidity needs. As of June 30, 2022, we had no outstanding balances under our commercial paper programs.

Cash flows from other financing activities were attributable to the repurchase of shares to satisfy tax withholding obligations on vested employee stock awards. Cash outflows for this purpose were $512 and $359 million for the six months ended June 30, 2022 and 2021, respectively. The increase was driven by changes in required repurchase amounts.

Except as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2021, we do not have guarantees or other off-balance sheet financing arrangements, including variable interest entities, which we believe could have a material impact on our financial condition or liquidity.

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Sources of Credit

See note 9 to the unaudited, consolidated financial statements for a discussion of our available credit and the financial covenants that we are subject to as part of our credit agreements.

Contractual Commitments

There have been no material changes to the contractual commitments described in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2021.

Legal Proceedings and Contingencies

See note 7 and note 11 to the unaudited, consolidated financial statements for a discussion of judicial proceedings and other matters arising from the conduct of our business activities, and note 16 for a discussion of income tax related matters.

Collective Bargaining Agreements

Status of Collective Bargaining Agreements

See note 7 to the unaudited, consolidated financial statements for a discussion of the status of our collective bargaining agreements.

Multiemployer Benefit Plans

See note 7 to the unaudited, consolidated financial statements for a discussion of our participation in multiemployer benefit plans.

Recent Accounting Pronouncements

Adoption of New Accounting Standards

See note 2 to the unaudited, consolidated financial statements for a discussion of recently adopted accounting standards.

Accounting Standards Issued But Not Yet Effective

See note 2 to the unaudited, consolidated financial statements for a discussion of accounting standards issued, but not yet effective.

64

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

Rate Adjustments

From time to time we adjust published rates applicable to our services. These rates, when published, are made available on our website at www.ups.com. We provide the address to our internet site solely for information. We do not intend for this address to be an active link or to otherwise incorporate the contents of any website into this or any other report we file with the Securities and Exchange Commission.

65

Item 3.Quantitative and Qualitative Disclosures About Market Risk

We are exposed to market risk from changes in certain commodity prices, foreign currency exchange rates, interest rates and equity prices. All of these market risks arise in the normal course of business, as we do not engage in speculative trading activities. In order to manage the risk arising from these exposures, we utilize a variety of commodity, foreign currency exchange and interest rate forward contracts, options and swaps. A discussion of our accounting policies for derivative instruments and further disclosures are provided in note 15 to the unaudited, consolidated financial statements.

The total net fair value asset (liability) of our derivative financial instruments is summarized in the following table (in millions):

	June 30, 2022		December 31, 2021
Currency Derivatives	$	529	$	173
Interest Rate Derivatives	(7)		1
	$	522	$	174

As of June 30, 2022 and December 31, 2021, we had no outstanding commodity hedge positions.

Our market risks, hedging strategies and financial instrument positions as of June 30, 2022 have not materially changed from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2021. In 2022, we entered into several foreign currency exchange forward contracts on the Euro, British Pound Sterling, Canadian Dollar and Hong Kong Dollar, and had forward contracts expire. The fair value changes between December 31, 2021 and June 30, 2022 in the preceding table are primarily due to interest rate and foreign currency exchange rate fluctuations between those dates.

The foreign currency exchange forward contracts, swaps and options previously discussed contain an element of risk that the counterparties may be unable to meet the terms of the agreements; however, we minimize such risk exposures for these instruments by limiting the counterparties to banks and financial institutions that meet established credit guidelines and by monitoring counterparty credit risk to prevent concentrations of credit risk with any single counterparty.

We have agreements with all of our active counterparties (covering all of our derivative positions) containing early termination rights and/or zero threshold bilateral collateral provisions whereby cash is required based on the net fair value of derivatives associated with those counterparties. Events such as a credit rating downgrade (depending on the ultimate rating level) could also allow us to take additional protective measures such as the early termination of trades. As of June 30, 2022, we held cash collateral of $546 million and were not required to post cash collateral with our counterparties under these agreements.

We have not historically incurred, and do not expect to incur in the future, any losses as a result of counterparty default.

The information concerning market risk in Item 7A under the caption “Quantitative and Qualitative Disclosures about Market Risk” of our Annual Report on Form 10-K for the year ended December 31, 2021 is hereby incorporated by reference.

66

Item 4.Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this report, management, including our Principal Executive Officer and Principal Financial and Accounting Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 ("Exchange Act")). Based upon, and as of the date of, the evaluation, our Principal Executive Officer and Principal Financial and Accounting Officer concluded that the disclosure controls and procedures were effective to ensure that information required to be disclosed in the reports we file and submit under the Exchange Act is recorded, processed, summarized and reported as and when required and is accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial and Accounting Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended June 30, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. We continue to monitor and assess the effects of remote work on our internal controls to minimize the impact on their design and operating effectiveness.

67

PART II. OTHER INFORMATION

Item 1.Legal Proceedings

For a discussion of material legal proceedings affecting the Company, see note 11 to the unaudited, consolidated financial statements included in this report.

Item 1A.Risk Factors

There have been no material changes to the risk factors described in Part 1, Item 1A in our Annual Report on Form 10-K for the year ended December 31, 2021 and Part II, Item 1A in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2022. The occurrence of any of the risks described therein could materially affect us, including impacting our business, financial condition, results of operations, stock price or credit rating, as well as our reputation. These risks are not the only ones we face. We could also be materially adversely affected by other events, factors or uncertainties that are unknown to us, or that we do not currently consider to be material.

68

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds

(c) A summary of repurchases of our class A and class B common stock during the second quarter of 2022 is as follows (in millions, except per share amounts):

	Total Number of Shares Purchased (1)	Average Price Paid Per Share		Total Number of Shares Purchased as Part of a Publicly Announced Program	Approximate Dollar Value of Shares that May Yet be Purchased Under the Program
April 1 - April 30, 2022	0.4	$	193.31	0.4	$	4,155
May 1 - May 31, 2022	3.7	177.00		3.7	3,503
June 1 - June 30, 2022	1.4	178.21		1.4	$	3,256
Total May 1 - June 30, 2022	5.5	$	178.60	5.5

___________________ 

(1)Includes shares repurchased through our publicly announced share repurchase programs and shares tendered to pay the exercise price and tax withholding on employee stock options.

In August 2021, the Board of Directors authorized the company to repurchase up to $5.0 billion of class A and class B common stock. We repurchased 5.5 and 6.7 million shares of class B common stock for $983 million and $1.2 billion under this program during the three and six months ended June 30, 2022, respectively. As of June 30, 2022, we had $3.3 billion of our share repurchase authorization available. In July 2022, we announced that we anticipate our share repurchases will total approximately $3.0 billion for all of 2022.

For additional information on our share repurchase activities, see note 12 to the unaudited, consolidated financial statements.

69

Item 6. Exhibits

3.1	—	Restated Certificate of Incorporation of United Parcel Service, Inc. (incorporated by reference to Exhibit 3.3 to Form 8-K filed on May 12, 2010).
3.2	—	Amended and Restated Bylaws of United Parcel Service, Inc. as of November 17, 2017 (incorporated by reference to Exhibit 3.1 to Form 8-K, filed on November 17, 2017).
10.1	—	Key Employee Severance Plan (incorporated by reference to Exhibit 10.1 to Form 8-K filed on May 10, 2022).
31.1	—	Certification of the Principal Executive Officer Pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	—	Certification of the Principal Financial and Accounting Officer Pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	—	Certification of the Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	—	Certification of the Principal Financial and Accounting Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	—	The following unaudited financial information from this Quarterly Report on Form 10-Q for the quarter ended June 30, 2022 is formatted in Inline XBRL (Inline Extensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Statements of Consolidated Income, (iii) the Statements of Consolidated Comprehensive Income (Loss), (iv) the Statements of Consolidated Cash Flows, and (v) the Notes to the Consolidated Financial Statements.
104	—	Cover Page Interactive Data File - The cover page from this Quarterly Report on Form 10-Q for the quarter ended June 30, 2022 is formatted in Inline XBRL (included as Exhibit 101).

70

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		UNITED PARCEL SERVICE, INC. (Registrant)
Date:	August 3, 2022	By:	/S/    BRIAN O. NEWMAN
			Brian O. Newman
			Executive Vice President and Chief Financial Officer
			(Principal Financial and Accounting Officer)

71

EX-31.1

Exhibit 31.1

CERTIFICATE OF PRINCIPAL EXECUTIVE OFFICER

I, Carol B. Tomé, certify that:

1.I have reviewed this quarterly report on Form 10-Q of United Parcel Service, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

/S/   CAROL B. TOMÉ

Carol B. Tomé

Chief Executive Officer

(Principal Executive Officer)

August 3, 2022

EX-31.2

Exhibit 31.2

CERTIFICATE OF PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER

I, Brian O. Newman, certify that:

1.I have reviewed this quarterly report on Form 10-Q of United Parcel Service, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that hasmaterially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

/S/    BRIAN O. NEWMAN

Brian O. Newman

Executive Vice President and Chief Financial Officer

(Principal Financial and Accounting Officer)

August 3, 2022

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and in connection with the Quarterly Report on Form 10-Q of United Parcel Service, Inc. (the “Corporation”) for the period ended June 30, 2022, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, the Chief Executive Officer of the Corporation, certifies that:

(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

/S/   CAROL B. TOMÉ

Carol B. Tomé

Chief Executive Officer

(Principal Executive Officer)

August 3, 2022

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and in connection with the Quarterly Report on Form 10-Q of United Parcel Service, Inc. (the “Corporation”) for the period ended June 30, 2022, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, the Executive Vice President and Chief Financial Officer of the Corporation, certifies that:

(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

/S/    BRIAN O. NEWMAN

Brian O. Newman

Executive Vice President and Chief Financial Officer

(Principal Financial and Accounting Officer)

August 3, 2022

XML

Cover - shares	6 Months Ended
	Jun. 30, 2022	Jul. 22, 2022
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2022
Document Transition Report	false
Entity File Number	001-15451
Entity Registrant Name	United Parcel Service, Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	58-2480149
Entity Address, Street Address	55 Glenlake Parkway N.E. ,
Entity Address, City	Atlanta,
Entity Address, State	GA
Entity Address, Postal Zip Code	30328
City Area Code	404
Local Phone Number	828-6000
Title of 12(b) Security	Class B common stock, par value $0.01 per share
Trading Symbol	UPS
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Central Index Key	0001090727
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q2
Amendment Flag	false
0.375% Senior Notes due 2023
Title of 12(b) Security	0.375% Senior Notes due 2023
Trading Symbol	UPS23A
Security Exchange Name	NYSE
1.625% Senior Notes due 2025
Title of 12(b) Security	1.625% Senior Notes due 2025
Trading Symbol	UPS25
Security Exchange Name	NYSE
1% Senior Notes due 2028
Title of 12(b) Security	1% Senior Notes due 2028
Trading Symbol	UPS28
Security Exchange Name	NYSE
1.500% Senior Notes due 2032
Title of 12(b) Security	1.500% Senior Notes due 2032
Trading Symbol	UPS32
Security Exchange Name	NYSE
Class A common stock
Entity Common Stock, Shares Outstanding		136,813,849
Class B common stock
Entity Common Stock, Shares Outstanding		731,854,184

XML

CONSOLIDATED BALANCE SHEETS - USD ($) shares in Millions, $ in Millions	Jun. 30, 2022	Dec. 31, 2021
Current Assets:
Cash and cash equivalents	$ 11,735	$ 10,255
Marketable securities	336	338
Accounts receivable	11,541	12,669
Less: Allowance for credit losses	(145)	(128)
Accounts receivable, net	11,396	12,541
Other current assets	2,104	1,800
Total Current Assets	25,571	24,934
Property, Plant and Equipment, Net	33,487	33,475
Operating Lease Right-Of-Use Assets	3,436	3,562
Goodwill	3,675	3,692
Intangible Assets, Net	2,476	2,486
Investments and Restricted Cash	21	26
Deferred Income Tax Assets	158	176
Other Non-Current Assets	1,265	1,054
Total Assets	70,089	69,405
Current Liabilities:
Current maturities of long-term debt, commercial paper and finance leases	2,579	2,131
Current maturities of operating leases	562	580
Accounts payable	7,168	7,523
Accrued wages and withholdings	3,376	3,819
Self-insurance reserves	1,079	1,048
Accrued group welfare and retirement plan contributions	945	1,038
Other current liabilities	1,628	1,430
Total Current Liabilities	17,337	17,569
Long-Term Debt and Finance Leases	17,997	19,784
Non-Current Operating Leases	2,962	3,033
Pension and Postretirement Benefit Obligations	8,343	8,047
Deferred Income Tax Liabilities	3,577	3,125
Other Non-Current Liabilities	3,563	3,578
Shareowners’ Equity:
Additional paid-in capital	573	1,343
Retained earnings	18,958	16,179
Accumulated other comprehensive loss	(3,251)	(3,278)
Deferred compensation obligations	12	16
Less: Treasury stock (0.2 shares in 2022 and 0.3 shares in 2021)	(12)	(16)
Total Equity for Controlling Interests	16,289	14,253
Noncontrolling interests	21	16
Total Shareowners’ Equity	16,310	14,269
Total Liabilities and Shareowners’ Equity	$ 70,089	$ 69,405
Treasury stock (in shares)	0.2	0.3
Class A common stock
Shareowners’ Equity:
Common stock	$ 2	$ 2
Common stock, shares issued (in shares)	138.0	138.0
Class B common stock
Shareowners’ Equity:
Common stock	$ 7	$ 7
Common stock, shares issued (in shares)	732.0	732.0

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) - shares shares in Millions	Jun. 30, 2022	Dec. 31, 2021
Treasury stock (in shares)	0.2	0.3
Class A common stock
Common stock, shares issued (in shares)	138.0	138.0
Class B common stock
Common stock, shares issued (in shares)	732.0	732.0

XML

STATEMENTS OF CONSOLIDATED INCOME - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Income Statement [Abstract]
Revenue	$ 24,766	$ 23,424	$ 49,144	$ 46,332
Operating Expenses:
Compensation and benefits	11,358	11,327	22,974	22,810
Repairs and maintenance	643	599	1,269	1,218
Depreciation and amortization	762	739	1,526	1,461
Purchased transportation	4,385	4,446	8,985	8,689
Fuel	1,697	915	2,917	1,722
Other occupancy	420	402	911	868
Other expenses	1,966	1,738	3,776	3,541
Total Operating Expenses	21,231	20,166	42,358	40,309
Operating Profit	3,535	3,258	6,786	6,023
Other Income and (Expense):
Investment income and other	333	345	648	3,961
Interest expense	(171)	(167)	(345)	(344)
Total Other Income and (Expense)	162	178	303	3,617
Income Before Income Taxes	3,697	3,436	7,089	9,640
Income Tax Expense	848	760	1,578	2,172
Net Income	$ 2,849	$ 2,676	$ 5,511	$ 7,468
Basic Earnings Per Share (in dollars per share)	$ 3.26	$ 3.06	$ 6.31	$ 8.54
Diluted Earnings Per Share (in dollars per share)	$ 3.25	$ 3.05	$ 6.28	$ 8.51

XML

STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Statement of Comprehensive Income [Abstract]
Net Income	$ 2,849	$ 2,676	$ 5,511	$ 7,468
Change in foreign currency translation adjustment, net of tax	(245)	48	(285)	(34)
Change in unrealized gain (loss) on marketable securities, net of tax	(1)	(1)	(7)	(5)
Change in unrealized gain (loss) on cash flow hedges, net of tax	234	(46)	277	68
Change in unrecognized pension and postretirement benefit costs, net of tax	18	1,594	42	4,020
Comprehensive Income (Loss)	$ 2,855	$ 4,271	$ 5,538	$ 11,517

XML

STATEMENTS OF CONSOLIDATED CASH FLOWS - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Cash Flows From Operating Activities:
Net income	$ 5,511	$ 7,468
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization	1,526	1,461
Pension and postretirement benefit (income) expense	433	(2,839)
Pension and postretirement benefit contributions	(123)	(276)
Self-insurance reserves	112	130
Deferred tax (benefit) expense	360	1,127
Stock compensation expense	617	521
Other (gains) losses	11	0
Changes in assets and liabilities, net of effects of business acquisitions:
Accounts receivable	820	439
Other assets	(62)	169
Accounts payable	(508)	56
Accrued wages and withholdings	(348)	227
Other liabilities	22	(27)
Other operating activities	(78)	(2)
Net cash from operating activities	8,293	8,454
Cash Flows From Investing Activities:
Capital expenditures	(1,388)	(1,670)
Proceeds from disposal of businesses, property, plant and equipment		863
Proceeds from disposal of businesses, property, plant and equipment	9
Purchases of marketable securities	(132)	(141)
Sales and maturities of marketable securities	130	214
Net change in finance receivables	7	16
Cash paid for business acquisitions, net of cash and cash equivalents acquired	(99)	(5)
Other investing activities	(26)	(11)
Net cash used in investing activities	(1,499)	(734)
Cash Flows From Financing Activities:
Net change in short-term debt	0	498
Proceeds from long-term borrowings	0	0
Repayments of long-term borrowings	(1,105)	(2,599)
Purchases of common stock	(1,242)	0
Issuances of common stock	136	141
Dividends	(2,567)	(1,718)
Other financing activities	(508)	(360)
Net cash used in financing activities	(5,286)	(4,038)
Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash	(28)	16
Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash	1,480	3,698
Cash, Cash Equivalents and Restricted Cash:
Beginning of period	10,255	5,910
End of period	$ 11,735	$ 9,608

XML

BASIS OF PRESENTATION

6 Months Ended

Jun. 30, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

BASIS OF PRESENTATION

BASIS OF PRESENTATION AND ACCOUNTING POLICIES

Principles of Consolidation

The accompanying interim unaudited, consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. These interim unaudited, consolidated financial statements contain all adjustments (consisting of normal recurring accruals) necessary to present fairly our financial position as of June 30, 2022, our results of operations for the three and six months ended June 30, 2022 and 2021, and our cash flows for the six months ended June 30, 2022 and 2021. The results reported in these interim unaudited, consolidated financial statements should not be regarded as indicative of results that may be expected for any other period or the entire year. The interim unaudited, consolidated financial statements should be read in conjunction with the audited, consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2021.

Fair Value of Financial Instruments

The carrying amounts of our cash and cash equivalents, accounts receivable, finance receivables and accounts payable approximate fair value as of June 30, 2022 and December 31, 2021. The fair values of our investment securities are disclosed in note 5, our recognized multiemployer pension withdrawal liabilities in note 7, our short- and long-term debt in note 9 and our derivative instruments in note 15. We apply a fair value hierarchy (Levels 1, 2 and 3) when measuring and reporting items at fair value. Fair values are based on listed market prices (Level 1), when such prices are available. To the extent that listed market prices are not available, fair value is determined based on other relevant factors, including dealer price quotations (Level 2). If listed market prices or other relevant factors are not available, inputs are developed from unobservable data reflecting our own assumptions and include situations where there is little or no market activity for the asset or liability (Level 3). We utilized Level 1 inputs in the fair value hierarchy to determine the fair value of our cash and cash equivalents, and Level 2 inputs to determine the fair value of our accounts receivable, finance receivables and accounts payable.

Use of Estimates

The preparation of the accompanying interim unaudited, consolidated financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingencies at the date of these financial statements, as well as the reported amounts of revenues and expenses during the reporting period.

Although our estimates contemplate current and expected future conditions, as applicable, it is reasonably possible that actual conditions could differ from our expectations, which could materially affect our results of operations and financial position. As a result, our accounting estimates and assumptions may change significantly over time.

XML

RECENT ACCOUNTING PRONOUNCEMENTS

6 Months Ended

Jun. 30, 2022

Accounting Changes and Error Corrections [Abstract]

RECENT ACCOUNTING PRONOUNCEMENTS

RECENT ACCOUNTING PRONOUNCEMENTS

Adoption of New Accounting Standards

Accounting pronouncements adopted during the periods covered by the unaudited, consolidated financial statements did not have a material impact on our consolidated financial position, results of operations or cash flows. For accounting standards adopted in the period ended June 30, 2021, refer to note 1 to our audited, consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2021.

Accounting Standards Issued But Not Yet Effective

Accounting pronouncements issued before, but not effective until after, June 30, 2022, are not expected to have a material impact on our consolidated financial position, results of operations or cash flows.

XML

Revenue Recognition

6 Months Ended

Jun. 30, 2022

Revenue from Contract with Customer [Abstract]

Revenue Recognition

REVENUE RECOGNITION

Revenue Recognition

Substantially all of our revenues are from contracts associated with the pickup, transportation and delivery of packages and freight (“transportation services”) domestically or internationally. These services may be carried out by or arranged by us, and generally occur over a short period of time. We also provide value-added logistics services to customers, both domestically and internationally, through our global network of distribution centers and field stocking locations.

The majority of our contracts with customers for transportation services include only one performance obligation: the transportation services themselves. We generally recognize revenue over time as we perform the services in the contract because of the continuous transfer of control to the customer. Our remaining performance obligations are primarily comprised of transportation services started but not completed as of the reporting date and we expect to complete these remaining performance obligations within a short period of time. All of our major businesses act as a principal in their revenue arrangements and as such, we report revenue and the associated purchased transportation costs on a gross basis within our statements of consolidated income.

Disaggregation of Revenue

	Three Months Ended  June 30,				Six Months Ended  June 30,
	2022		2021		2022		2021
Revenue:
Next Day Air	$	2,656	$	2,456	$	5,250	$	4,787
Deferred	1,392		1,313		2,812		2,573
Ground	11,411		10,633		22,521		21,052
U.S. Domestic Package	15,459		14,402		30,583		28,412
Domestic	829		936		1,680		1,864
Export	3,976		3,674		7,754		7,167
Cargo & Other	268		207		515		393
International Package	5,073		4,817		9,949		9,424
Forwarding	2,389		2,309		4,978		4,381
Logistics	1,290		1,162		2,541		2,266
Freight	—		297		—		1,064
Other	555		437		1,093		785
Supply Chain Solutions	4,234		4,205		8,612		8,496
Consolidated revenue	$	24,766	$	23,424	$	49,144	$	46,332

Contract Assets and Liabilities

Contract assets include billed and unbilled amounts resulting from in-transit packages, as we have an unconditional right to payment only once all performance obligations have been completed (i.e. packages have been delivered) and our right to payment is not solely based on the passage of time. Amounts may not exceed their net realizable value. Contract assets are generally classified as current and the full balance is converted each quarter based on the short-term nature of the transactions.

Contract liabilities consist of advance payments and billings in excess of revenue as well as deferred revenue. Advance payments and billings in excess of revenue represent payments received from our customers that will be earned over the contract term. Deferred revenue represents the amount of consideration due from customers related to in-transit shipments that has not yet been recognized as revenue based on our selected measure of progress. We classify advance payments and billings in excess of revenue as either current or long-term, depending on the period over which the advance payment will be earned. We classify deferred revenue as current based on the timing of when we expect to recognize revenue, which typically occurs within a short window after period-end. The full balance of deferred revenue is converted each quarter based on the short-term nature of the transactions. Our contract assets and liabilities are reported in a net position on a contract-by-contract basis at the end of each reporting period. In order to determine revenue recognized in the period from contract liabilities, we first allocate revenue to the individual contract liability balance outstanding at the beginning of the period until the revenue exceeds that deferred revenue balance.

Contract assets related to in-transit packages were $350 and $304 million as of June 30, 2022 and December 31, 2021, respectively, net of deferred revenue related to in-transit packages of $339 and $314 million as of June 30, 2022 and December 31, 2021, respectively, and are included within Other current assets in the consolidated balance sheets. Short-term contract liabilities related to advance payments from customers were $10 and $27 million as of June 30, 2022 and December 31, 2021, respectively, and are included within Other current liabilities in the consolidated balance sheets. Long-term contract liabilities related to advance payments from customers were $26 and $25 million as of June 30, 2022 and December 31, 2021, respectively, and are included within Other Non-Current Liabilities in the consolidated balance sheets.

Accounts Receivable, Net

Accounts receivable, net, include amounts billed and currently due from customers. The amounts due are stated at their net estimated realizable value. Losses on accounts receivable are recognized when reasonable and supportable forecasts affect the expected collectability. This requires us to make our best estimate of the current expected losses inherent in our accounts receivable at each balance sheet date. This estimate requires consideration of historical loss experience, adjusted for current conditions, forward looking indicators, trends in customer payment frequency and judgments about the probable effects of relevant observable data, including present and future economic conditions and the financial health of specific customers and market sectors. Our risk management process includes standards and policies for reviewing major account exposures and concentrations of risk.

Our allowance for credit losses as of June 30, 2022 and December 31, 2021 was $145 and $128 million, respectively. Amounts for credit losses charged to expense, before recoveries, during the three months ended June 30, 2022 and 2021 were $52 and $39 million, respectively, and for six months ended June 30, 2022 and 2021, were $106 and $80 million, respectively.

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STOCK-BASED COMPENSATION

6 Months Ended

Jun. 30, 2022

Share-Based Payment Arrangement [Abstract]

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION

We issue share-based awards under various incentive compensation plans, including non-qualified and incentive stock options, stock appreciation rights, restricted stock and stock units ("RSUs") and restricted performance shares and performance units ("RPUs", collectively with RSUs, "Restricted Units"). Upon vesting, Restricted Units result in the issuance of the equivalent number of UPS class A common shares after required tax withholdings. Dividends accrued on Restricted Units are reinvested in additional Restricted Units at each dividend payable date and are subject to the same vesting and forfeiture conditions as the underlying Restricted Units.

Our primary equity compensation programs are the UPS Management Incentive Award program (the "MIP"), the UPS Long-Term Incentive Performance Award program (the "LTIP") and the UPS Stock Option program. We also maintain an employee stock purchase plan which allows eligible employees to purchase shares of UPS class A common stock at a discount. Our matching contributions to our primary employee defined contribution savings plan are made in shares of UPS class A common stock.

Management Incentive Award Program

RPUs issued under the MIP vest one year following the grant date based on continued employment with the Company (except in the case of death, disability or retirement, in which case immediate vesting occurs). The grant value is expensed on a straight-line basis (less estimated forfeitures) over the requisite service period (except in the case of death, disability or retirement, in which case immediate expensing occurs).

Based on the date of Compensation Committee approval of the 2021 MIP award, we determined the award measurement dates to be February 9, 2022 (for U.S.-based employees and executive management) and March 21, 2022 (for international employees). The RPUs issued under the MIP were valued using the closing New York Stock Exchange ("NYSE") prices of $225.07 and $218.56 on those dates.

Long-Term Incentive Performance Award Program

RPUs issued under the LTIP vest at the end of a three-year performance period, assuming continued employment with the Company (except in the case of death, disability or retirement, in which case immediate vesting occurs on a prorated basis). The actual number of RPUs earned is based on achievement of the performance targets established on the grant date.

The performance targets are equally weighted between adjusted earnings per share and adjusted cumulative free cash flow. The actual number of RPUs earned is subject to adjustment based on total shareholder return relative to the Standard & Poors 500 Index ("S&P 500"). We determine the grant date fair value of the RPUs using a Monte Carlo model and recognize compensation expense (less estimated forfeitures) ratably over the vesting period, based on the number of awards expected to be earned.

Based on the date of Compensation Committee approval of the 2022 LTIP award performance targets, we determined March 23, 2022 to be the award measurement date and the target RPUs awarded were valued at $230.67.

The weighted-average assumptions used and the weighted-average fair values of the LTIP awards granted in 2022 and 2021 are as follows:

	2022			2021
Risk-free interest rate	2.29		%	0.19		%
Expected volatility	31.90		%	30.70		%
Weighted-average fair value of RPUs granted	$	230.67		$	168.05
Share payout	107.50		%	102.39		%

There is no expected dividend yield as units earn dividend equivalents.

Non-Qualified Stock Options

We grant non-qualified stock options to a limited group of eligible senior management employees under the UPS Stock Option program. Stock option awards vest over a five-year period with approximately 20% of the award vesting at each anniversary of the grant date (except in the case of death, disability or retirement, in which case immediate vesting occurs). The option grants expire 10 years after the date of the grant. On March 23, 2022, we granted 0.1 million stock options at an exercise price of $214.58, the NYSE closing price on that date.

The fair value of each option grant is estimated using the Black-Scholes option pricing model. The weighted-average assumptions used and the weighted-average fair values of options granted in 2022 and 2021 are as follows:

	2022			2021
Expected dividend yield	2.35		%	3.31		%
Risk-free interest rate	2.39		%	0.84		%
Expected life (in years)	7.5			7.5
Expected volatility	25.04		%	23.15		%
Weighted-average fair value of options granted	$	48.45		$	23.71

Pre-tax compensation expense for share-based awards recognized in Compensation and benefits on the statements of consolidated income for the three months ended June 30, 2022 and 2021 was $231 and $206 million, respectively, and for the six months ended June 30, 2022 and 2021 was $617 and $521 million, respectively.

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CASH AND INVESTMENTS

6 Months Ended

Jun. 30, 2022

Marketable Securities [Abstract]

CASH AND INVESTMENTS

CASH AND INVESTMENTS

The following is a summary of marketable securities classified as trading and available-for-sale as of June 30, 2022 and December 31, 2021 (in millions):

	Cost		Unrealized Gains		Unrealized Losses		Estimated Fair Value
June 30, 2022:
Current trading marketable securities:
Equity securities	$	2	$	—	$	—	$	2
Total trading marketable securities	2		—		—		2
Current available-for-sale securities:
U.S. government and agency debt securities	200		—		(5)		195
Mortgage and asset-backed debt securities	12		—		—		12
Corporate debt securities	125		—		(3)		122
U.S. state and local municipal debt securities	5		—		—		5
Non-U.S. government debt securities	—		—		—		—
Total available-for-sale marketable securities	342		—		(8)		334
Total current marketable securities	$	344	$	—	$	(8)	$	336
	Cost		Unrealized Gains		Unrealized Losses		Estimated Fair Value
December 31, 2021:
Current trading marketable securities:
Equity securities	$	2	$	—	$	—	$	2
Total trading marketable securities	2		—		—		2
Current available-for-sale securities:
U.S. government and agency debt securities	199		2		(1)		200
Mortgage and asset-backed debt securities	7		—		—		7
Corporate debt securities	121		—		—		121
U.S. state and local municipal debt securities	5		—		—		5
Non-U.S. government debt securities	3		—		—		3
Total available-for-sale marketable securities	335		2		(1)		336
Total current marketable securities	$	337	$	2	$	(1)	$	338

    

Investment Impairments

We have concluded that no material impairment losses existed as of June 30, 2022. In making this determination, we considered the financial condition and prospects of each issuer, the magnitude of the losses compared with the cost, the probability that we will be unable to collect all amounts due according to the contractual terms of the security, the credit rating of the security and our ability and intent to hold these investments until the anticipated recovery in market value occurs.

Maturity Information

The amortized cost and estimated fair value of marketable securities as of June 30, 2022 by contractual maturity are shown below (in millions). Actual maturities may differ from contractual maturities because the issuers of the securities may have the right to prepay obligations with or without prepayment penalties.

	Cost		Estimated Fair Value
Due in one year or less	$	30	$	29
Due after one year through three years	312		305
Due after three years through five years	—		—
Due after five years	—		—
	342		334
Equity securities	2		2
	$	344	$	336

Non-Current Investments and Restricted Cash

We hold an investment in a variable life insurance policy to fund benefits for the UPS Excess Coordinating Benefit Plan. The investment had a fair market value of $19 and $23 million as of June 30, 2022 and December 31, 2021, respectively. Changes in fair value are recognized in Investment income and other in the statements of consolidated income. Additionally, we held cash in escrow related to the acquisition and disposition of certain assets of $2 and $3 million as of June 30, 2022 and December 31, 2021, respectively. These amounts are classified as Investments and Restricted Cash in the consolidated balance sheets.

A reconciliation of cash and cash equivalents and restricted cash from the consolidated balance sheets to the statements of consolidated cash flows is shown below (in millions):

	June 30, 2022		December 31, 2021		June 30, 2021
Cash and cash equivalents	$	11,735	$	10,255	$	9,608
Restricted cash	—		—		—
Total cash, cash equivalents and restricted cash	$	11,735	$	10,255	9,608

Fair Value Measurements

Marketable securities valued utilizing Level 1 inputs include active exchange-traded equity securities and equity index funds, and most U.S. government debt securities, as these securities all have quoted prices in active markets. Marketable securities valued utilizing Level 2 inputs include asset-backed securities, corporate bonds and municipal bonds. These securities are valued using market corroborated pricing, matrix pricing or other models that utilize observable inputs such as yield curves.

The following table presents information about our investments measured at fair value on a recurring basis as of June 30, 2022 and December 31, 2021, and indicates the fair value hierarchy of the valuation techniques utilized to determine such fair value (in millions):

	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance
June 30, 2022:
Marketable securities:
U.S. government and agency debt securities	$	195	$	—	$	—	$	195
Mortgage and asset-backed debt securities	—		12		—		12
Corporate debt securities	—		122		—		122
U.S. state and local municipal debt securities	—		5		—		5
Equity securities	—		2		—		2
Non-U.S. government debt securities	—		—		—		—
Total marketable securities	195		141		—		336
Other non-current investments	19		—		—		19
Total	$	214	$	141	$	—	$	355

December 31, 2021:
Marketable securities:
U.S. government and agency debt securities	$	200	$	—	$	—	$	200
Mortgage and asset-backed debt securities	—		7		—		7
Corporate debt securities	—		121		—		121
U.S. state and local municipal debt securities	—		5		—		5
Equity securities	—		2		—		2
Non-U.S. government debt securities	—		3		—		3
Total marketable securities	200		138		—		338
Other non-current investments	23		—		—		23
Total	$	223	$	138	$	—	$	361

There were no transfers of investments between Level 1 and Level 2 during the six months ended June 30, 2022 or 2021.

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PROPERTY, PLANT AND EQUIPMENT

6 Months Ended

Jun. 30, 2022

Property, Plant and Equipment [Abstract]

PROPERTY, PLANT AND EQUIPMENT

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment as of June 30, 2022 and December 31, 2021 consisted of the following (in millions):

	2022		2021
Vehicles	$	10,181	$	10,018
Aircraft	22,507		21,973
Land	2,106		2,140
Buildings	5,794		5,802
Building and leasehold improvements	5,027		5,010
Plant equipment	15,629		15,650
Technology equipment	2,858		2,798
Construction-in-progress	1,520		1,418
	65,622		64,809
Less: Accumulated depreciation and amortization	(32,135)		(31,334)
Property, Plant and Equipment, Net	$	33,487	$	33,475

Property, plant and equipment purchased on account was $477 and $248 million as of June 30, 2022 and December 31, 2021, respectively. 

We continually monitor our aircraft fleet utilization in light of current and projected volume levels, aviation fuel prices and other factors. Additionally, we monitor all other property, plant and equipment categories for any indicators that the carrying value of the assets may not be recoverable. For the three months ended June 30, 2022 and 2021, and for the six months ended June 30, 2022, there were no material impairment charges. We recorded impairment charges of $24 million for the six months ended June 30, 2021, due to the reevaluation of certain facility projects.

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EMPLOYEE BENEFIT PLANS

6 Months Ended

Jun. 30, 2022

Retirement Benefits [Abstract]

EMPLOYEE BENEFIT PLANS

EMPLOYEE BENEFIT PLANS

Company-Sponsored Benefit Plans

Information about the net periodic benefit cost (income) for our company-sponsored pension and postretirement benefit plans for the three and six months ended June 30, 2022 and 2021 is as follows (in millions):

	U.S. Pension Benefits				U.S. Postretirement Medical Benefits				International Pension Benefits
	2022		2021		2022		2021		2022		2021
Three Months Ended June 30:
Service cost	$	506	$	461	$	7	$	7	$	17	$	19
Interest cost	487		481		21		20		11		10
Expected return on assets	(820)		(831)		(1)		(1)		(20)		(17)
Amortization of prior service cost	23		34		—		1		1		1
Net periodic benefit cost	$	196	$	145	$	27	$	27	$	9	$	13
	U.S. Pension Benefits				U.S. Postretirement Medical Benefits				International Pension Benefits
	2022		2021		2022		2021		2022		2021
Six Months Ended June 30:
Service cost	$	1,012	$	1,014	$	15	$	14	$	35	$	38
Interest cost	975		969		41		39		23		20
Expected return on assets	(1,640)		(1,677)		(2)		(3)		(40)		(34)
Amortization of prior service cost	46		67		—		3		1		1
Actuarial (gain) loss	—		(3,290)		—		—		—		—
Settlement and curtailment (gain) loss	—		—		—		—		(33)		—
Net periodic benefit (income) cost	$	393	$	(2,917)	$	54	$	53	$	(14)	$	25

The components of net periodic benefit cost (income) other than current service cost are presented within Investment income and other in the statements of consolidated income.

During the six months ended June 30, 2022, we amended the UPS Canada Ltd. Retirement Plan to cease future benefit accruals effective December 31, 2023. We remeasured plan assets and benefit obligations for this plan, which resulted in a curtailment gain of $33 million ($24 million after tax) during the six month period. The gain is included in Investment income and other in the statement of consolidated income for the six months ended June 30, 2022.

On April 30, 2021, we divested our UPS Freight business, which triggered an interim remeasurement of the plan assets and benefit obligations of the UPS Pension Plan, UPS Retirement Plan and UPS Retired Employee Health Care Plan as of this date. The interim remeasurement resulted in an actuarial gain of $2.1 billion, reflecting updated actuarial assumptions and was recorded in other comprehensive income within the equity section of the consolidated balance sheet. An actuarial gain of $69 million ($52 million after tax) for a prior service credit related to the divested group and a $66 million loss ($50 million after tax) for certain plan amendments to the UPS Pension Plan were immediately recognized within Other expenses in the statement of consolidated income for the six months ended June 30, 2021.

During the six months ended June 30, 2021, we remeasured the UPS/IBT Full Time Employee Pension Plan following the enactment into law of the American Rescue Plan Act, which is discussed below. The interim remeasurement resulted in a pre-tax mark-to-market gain of $3.3 billion ($2.5 billion after tax) during the six month period. The gain was included within Investment income and other in the statement of consolidated income for the six months ended June 30, 2021.

Contributions to our company-sponsored pension and U.S. postretirement medical benefit plans for the first six months of 2022 were $66 and $57 million, respectively. We expect to contribute approximately $1.9 billion and $221 million over the remainder of the year to our pension and U.S. postretirement medical benefit plans, respectively.

Multiemployer Benefit Plans

We contribute to a number of multiemployer defined benefit and health and welfare plans under the terms of collective bargaining agreements that cover our union-represented employees. Our current collective bargaining agreements set forth the annual contribution increases allotted to the plans that we participate in, and we are in compliance with these contribution rates. These limitations on annual contribution rates will remain in effect throughout the terms of the existing collective bargaining agreements.

As of June 30, 2022 and December 31, 2021, we had $826 and $830 million, respectively, recorded in Other Non-Current Liabilities on our consolidated balance sheets and $8 million as of June 30, 2022 and December 31, 2021, recorded in Other current liabilities on our consolidated balance sheets associated with our previous withdrawal from the New England Teamsters and Trucking Industry Pension Fund. This liability is payable in equal monthly installments over a remaining term of approximately 40 years. Based on the borrowing rates currently available to us for long-term financing of a similar maturity, the fair value of this withdrawal liability as of June 30, 2022 and December 31, 2021 was $744 and $963 million, respectively. We utilized Level 2 inputs in the fair value hierarchy of valuation techniques to determine the fair value of this liability.

UPS was a contributing employer to the Central States Pension Fund (“CSPF”) until 2007 at which time UPS withdrew from the CSPF and paid a $6.1 billion withdrawal liability to satisfy our allocable share of unfunded vested benefits. Under a collective bargaining agreement with the International Brotherhood of Teamsters (“IBT”), UPS agreed to provide coordinating benefits in the UPS/IBT Full Time Employee Pension Plan (“UPS/IBT Plan”) for UPS participants whose last employer was UPS and who had not retired as of January 1, 2008 (“the UPS Transfer Group”) in the event that benefits are lawfully reduced by the CSPF in the future consistent with the terms of our withdrawal agreement with the CSPF. Under this withdrawal agreement, benefits to the UPS Transfer Group cannot be reduced without our consent and can only be reduced in accordance with applicable law. The financial crisis of 2008 created extensive asset losses at the CSPF, contributing to the plan’s projected insolvency, at which time benefits would be reduced to the legally permitted Pension Benefit Guaranty Corporation ("PBGC") limits, triggering the coordination of benefits provision in the collective bargaining agreement.

In 2014, Congress passed the Multiemployer Pension Reform Act (“MPRA”). This change in law for the first time permitted multiemployer pension plans to reduce benefit payments to retirees, subject to specific guidelines in the statute and government approval. In 2015, the CSPF submitted a proposed pension benefit reduction plan to the U.S. Department of the Treasury (“Treasury”). In 2016, Treasury rejected the proposed plan submitted by the CSPF. In light of its financial difficulties, the CSPF had stated that it believed a legislative solution to its funded status would be necessary or that it would become insolvent in 2025, at which time benefits would be reduced to the applicable PBGC benefit levels.

We account for the potential obligation to pay coordinating benefits to the UPS Transfer Group under ASC 715, which requires us to provide a best estimate of various actuarial assumptions, including the eventual outcome of this matter, in measuring our pension benefit obligation at the December 31st measurement date and at interim periods when a significant event occurs. ASC 715 does not permit anticipation of changes in law when developing a best estimate.

At the December 31, 2020 measurement date, we developed our best estimate for the potential obligation to pay coordinating benefits to the UPS Transfer Group using a deterministic cash flow projection that reflected estimated CSPF cash flows and investment earnings, the lack of legislative action having been taken, the expectation of payment of guaranteed benefits by the PBGC and the lack of a benefit reduction plan under MPRA having been filed by the CSPF. As a result, our best estimate at that time of the obligation for coordinating benefits that may have been required to be directly provided by the UPS/IBT Plan to the UPS Transfer Group was $5.5 billion.

In March 2021, the American Rescue Plan Act (“ARPA”) was enacted into law. The ARPA contains provisions that allow for qualifying financially distressed multiemployer pension plans to apply for special financial assistance ("SFA") from the PBGC, which will be funded by Treasury. Following approval of an application, a qualifying multiemployer pension plan will receive a lump sum payment to enable it to continue paying unreduced benefits through 2051. The multiemployer plan is not obligated to repay the SFA. The ARPA is intended to prevent both the PBGC and certain financially distressed multiemployer pension plans, including the CSPF, from becoming insolvent through 2051. On July 9, 2021, the PBGC issued interim final regulations implementing the SFA program established under the ARPA. On April 28, 2022, the CSPF submitted an application to the PBGC for SFA. The PBGC has up to 120 days from the date of submission to review the application.

The passage of the ARPA and the expected receipt of SFA by the CSPF currently suspends our obligation to provide additional coordinating benefits to the UPS Transfer Group through 2051. These matters also triggered a plan remeasurement under ASC 715. Accordingly, we remeasured the plan assets and pension benefit obligation of the UPS/IBT Plan as of March 31, 2021 resulting in an actuarial gain of $6.4 billion, reflecting a reduction of the liability for coordinating benefits of $5.1 billion and a gain from other updated actuarial assumptions of $1.3 billion.

The future value of this estimate will continue to be influenced by a number of factors, including interpretations of the ARPA, future legislative actions, actuarial assumptions and the ability of the PBGC to sustain its commitments. Actual events may result in a change in our best estimate of the projected benefit obligation. We will continue to assess the impact of these uncertainties in accordance with ASC 715.

Collective Bargaining Agreements

We have approximately 327,000 employees employed under a national master agreement and various supplemental agreements with local unions affiliated with the IBT. These agreements run through July 31, 2023.

We have approximately 3,200 pilots who are employed under a collective bargaining agreement with the Independent Pilots Association ("IPA"). This collective bargaining agreement becomes amendable September 1, 2023. In the second quarter of 2022, we reached a tentative agreement on a two-year contract extension with the IPA. If ratified, the new agreement will extend the amendable date to September 1, 2025.

We have approximately 1,700 airline mechanics who are covered by a collective bargaining agreement with Teamsters Local 2727 which becomes amendable November 1, 2023. In addition, approximately 3,300 of our auto and maintenance mechanics who are not employed under agreements with the IBT are employed under collective bargaining agreements with the International Association of Machinists and Aerospace Workers (“IAM”). The collective bargaining agreement with the IAM runs through July 31, 2024.

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GOODWILL AND INTANGIBLE ASSETS

6 Months Ended

Jun. 30, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND INTANGIBLE ASSETS

GOODWILL AND INTANGIBLE ASSETS

The following table indicates the allocation of goodwill as of June 30, 2022 and December 31, 2021 (in millions):

	U.S. Domestic Package		International Package		Supply Chain Solutions		Consolidated
December 31, 2021:	$	847	$	403	$	2,442	$	3,692
Acquired	—		—		61		61
Currency / Other	—		(21)		(57)		(78)
June 30, 2022:	$	847	$	382	$	2,446	$	3,675

The goodwill balances for both International Package and Supply Chain Solutions decreased due to the impact of changes in the value of the U.S. Dollar on the translation of non-U.S. Dollar goodwill balances. In May 2022, we acquired Delivery Solutions, a digital platform that optimizes customer deliveries across multiple networks. The acquisition was funded with cash from operations and was not material to our consolidated financial position or results of operations. The goodwill associated with the acquisition is included within Supply Chain Solutions.

The following is a summary of intangible assets as of June 30, 2022 and December 31, 2021 (in millions):

	Gross Carrying Amount		Accumulated Amortization		Net Carrying Value
June 30, 2022:
Capitalized software	$	5,048	$	(3,406)	$	1,642
Licenses	48		(22)		26
Franchise rights	138		(36)		102
Customer relationships	720		(435)		285
Trade name	67		(5)		62
Trademarks, patents and other	169		(14)		155
Amortizable intangible assets	$	6,190	$	(3,918)	$	2,272
Indefinite-lived intangible assets	204		—		204
Total Intangible Assets, Net	$	6,394	$	(3,918)	$	2,476
December 31, 2021:
Capitalized software	$	4,910	$	(3,275)	$	1,635
Licenses	58		(27)		31
Franchise rights	119		(37)		82
Customer relationships	733		(408)		325
Trade name	67		(1)		66
Trademarks, patents and other	158		(15)		143
Amortizable intangible assets	$	6,045	$	(3,763)	$	2,282
Indefinite-lived intangible assets	204		—		204
Total Intangible Assets, Net	$	6,249	$	(3,763)	$	2,486

As of June 30, 2022, we had a trade name with a carrying value of $200 million and licenses with a current carrying value of $4 million, which are deemed to be indefinite-lived intangible assets and are included in the table above. Our 2021 annual impairment testing of these assets indicated that the fair value of the trade name, which is associated with our truckload brokerage business, remained greater than its carrying value as of our testing date, although this excess was less than 10 percent. There were no events or changes in circumstances during the six months ended June 30, 2022 that would indicate the carrying amount of our indefinite-lived intangible assets may be impaired as of the date of this report.

Impairment tests for finite-lived intangible assets are performed when a triggering event occurs that may indicate that the carrying value of the intangible asset may not be recoverable. There were no impairment charges for finite-lived intangible assets during the three or six months ended June 30, 2022. We recorded $1 and $7 million in impairment charges for finite-lived intangible assets during the three and six months ended June 30, 2021, respectively.

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DEBT AND FINANCING ARRANGEMENTS

6 Months Ended

Jun. 30, 2022

Debt Disclosure [Abstract]

DEBT AND FINANCING ARRANGEMENTS

DEBT AND FINANCING ARRANGEMENTS The carrying value of our outstanding debt obligations as of June 30, 2022 and December 31, 2021 consists of the following (in millions):

	Principal Amount			Carrying Value
			Maturity	2022		2021
Fixed-rate senior notes:
2.450% senior notes	1,000		2022	999		1,010
2.350% senior notes	—		2022	—		600
2.500% senior notes	1,000		2023	999		998
2.800% senior notes	500		2024	498		498
2.200% senior notes	400		2024	399		399
3.900% senior notes	1,000		2025	997		996
2.400% senior notes	500		2026	499		498
3.050% senior notes	1,000		2027	994		994
3.400% senior notes	750		2029	746		746
2.500% senior notes	400		2029	397		397
4.450% senior notes	750		2030	744		744
6.200% senior notes	1,500		2038	1,484		1,484
5.200% senior notes	500		2040	494		494
4.875% senior notes	500		2040	491		491
3.625% senior notes	375		2042	368		368
3.400% senior notes	500		2046	492		492
3.750% senior notes	1,150		2047	1,137		1,137
4.250% senior notes	750		2049	743		743
3.400% senior notes	700		2049	688		688
5.300% senior notes	1,250		2050	1,231		1,231
Floating-rate senior notes:
Floating-rate senior notes	—		2022	—		400
Floating-rate senior notes	500		2023	500		500
Floating-rate senior notes	1,039		2049-2067	1,027		1,027
Debentures:
7.620% debentures	276		2030	280		280
Pound Sterling notes:
5.500% notes	81		2031	80		89
5.125% notes	553		2050	525		583
Euro senior notes:
0.375% senior notes	728		2023	727		791
1.625% senior notes	728		2025	726		791
1.000% senior notes	520		2028	518		564
1.500% senior notes	520		2032	517		564
Canadian senior notes:
2.125% senior notes	582		2024	580		585
Finance lease obligations	372		2022-2046	372		408
Facility notes and bonds	320		2029-2045	320		320
Other debt	4		2022-2025	4		5
Total debt	$	20,748		20,576		21,915
Less: current maturities				(2,579)		(2,131)
Long-term debt				$	17,997	$	19,784

Commercial Paper

We are authorized to borrow up to $10.0 billion under a U.S. commercial paper program and €5.0 billion (in a variety of currencies) under a European commercial paper program. As of June 30, 2022, we had no outstanding balances under our commercial paper programs.

Debt Classification

We have classified certain floating-rate senior notes that are redeemable at the option of the note holder as long-term liabilities on our consolidated balance sheets, due to our intent and ability to refinance the debt if the put option is exercised.

Debt Repayments

During the quarter ended June 30, 2022, our 2.350% senior notes with a principal balance of $600 million and our floating rate senior notes with a principal balance of $400 million matured and were repaid in full.

Reference Rate Reform

Our floating-rate senior notes with maturities ranging from 2049 through 2067 bear interest at rates that reference the London Interbank Offer Rate ("LIBOR") for U.S. Dollars. As part of a broader program of reference rate reform, it is expected that U.S. Dollar LIBOR rates will cease to be published after June 2023. We are currently working to transition these notes to an alternative reference rate, and we anticipate that the Secured Overnight Financing Rate ("SOFR") will be adopted in accordance with recommendations of the Alternative Reference Rates Committee.

Sources of Credit

We maintain two credit agreements with a consortium of banks. The first of these agreements provides revolving credit facilities of $1.0 billion, and expires on December 6, 2022. Amounts outstanding under this agreement bear interest at a periodic fixed rate equal to the term SOFR rate, plus 0.10% per annum and an applicable margin based on our then-current credit rating. The applicable margin from the credit pricing grid as of June 30, 2022 was 0.875%. Alternatively, a fluctuating rate of interest equal to the highest of (1) the rate of interest last quoted by The Wall Street Journal as the prime rate in the United States; (2) the Federal Funds effective rate plus 0.50%; or (3) the Adjusted Term SOFR Rate for a one-month interest period plus 1.00%, may be used at our discretion.

The second agreement provides revolving credit facilities of $2.0 billion, and expires on December 7, 2026. Amounts outstanding under this facility bear interest at a periodic fixed rate equal to the term SOFR rate plus 0.10% per annum and an applicable margin based on our then-current credit rating. The applicable margin from the credit pricing grid as of June 30, 2022 was 0.875%. Alternatively, a fluctuating rate of interest equal to the highest of (1) the rate of interest last quoted by The Wall Street Journal as the prime rate in the United States; (2) the Federal Funds effective rate plus 0.50%; or (3) the Adjusted Term SOFR Rate for a one-month interest period plus 1.00%, plus an applicable margin, may be used at our discretion.

If the credit ratings established by Standard & Poors and Moody's differ, the higher rating will be used, except in cases where the lower rating is two or more levels lower. In these circumstances, the rating one step below the higher rating will be used. We are also able to request advances under these facilities based on competitive bids for the applicable interest rate. There were no amounts outstanding under these facilities as of June 30, 2022.

Debt Covenants

Our existing debt instruments and credit facilities subject us to certain financial covenants. As of June 30, 2022, and for all prior periods presented, we have satisfied these financial covenants. These covenants limit the amount of secured indebtedness that we may incur, and limit the amount of attributable debt in sale-leaseback transactions, to 10% of net tangible assets. As of June 30, 2022, 10% of net tangible assets was equivalent to $4.7 billion and we had no covered sale-leaseback transactions or secured indebtedness outstanding. We do not expect these covenants to have a material impact on our financial condition or liquidity.

Fair Value of Debt

Based on the borrowing rates currently available to us for long-term debt with similar terms and maturities, the fair value of long-term debt, including current maturities, was approximately $20.4 and $25.1 billion as of June 30, 2022 and December 31, 2021, respectively. We utilized Level 2 inputs in the fair value hierarchy of valuation techniques to determine the fair value of all of our debt instruments.

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LEASES

6 Months Ended

Jun. 30, 2022

Leases [Abstract]

LEASES

LEASES

We have finance and operating leases for real estate, aircraft and engines, information technology equipment (primarily mainframes, servers and copiers), vehicles and various other equipment used in operating our business. Certain leases for real estate and aircraft contain options to purchase, extend or terminate the lease.

We recognize a right-of-use ("ROU") asset and lease obligation for all leases greater than twelve months. Some of our leases contain both lease and non-lease components, which we have elected to treat as a single lease component. We have also elected not to recognize leases that have an original lease term, including reasonably certain renewal or purchase options, of twelve months or less in our consolidated balance sheets for all classes of underlying assets. Lease costs for short-term leases are recognized on a straight-line basis over the lease term.

Determining the lease term and amount of lease payments to include in the calculation of the ROU asset and lease obligation for leases containing options requires the use of judgment to determine whether the exercise of an option is reasonably certain and whether the optional period and payments should be included in the calculation of the associated ROU asset and lease obligation. In making this determination, we consider all relevant economic factors that would compel us to exercise or not exercise an option.

When our leases contain future payments that are dependent on an index or rate, such as the consumer price index, we initially measure the lease obligation and ROU asset using the index or rate at the commencement date. In subsequent periods, lease payments dependent on an index or rate are not remeasured. Rather, changes to payments due to a change in an index or rate are recognized in our statements of consolidated income in the period of the change.

When available, we use the rate implicit in the lease to discount lease payments; however, the rate implicit in the lease is not readily determinable for substantially all of our leases. For these leases, we use an estimate of our incremental borrowing rate to discount lease payments based on information available at lease commencement. The incremental borrowing rate is derived using multiple inputs including our credit rating, the impact of full collateralization, lease term and denominated currency. Our remaining lease terms vary from 1 month to 138 years.

Aircraft

In addition to the aircraft that we own, we have leases for 311 aircraft. Of these leased aircraft, 19 are classified as finance leases, 18 are classified as operating leases and the remaining 274 are classified as short-term leases. A majority of the obligations associated with the aircraft classified as finance leases have been legally defeased. A majority of our long-term aircraft operating leases are operated by a third party to handle package and cargo volume in geographic regions where, due to government regulations, we are restricted from operating an airline.

In order to meet customers' needs, we charter aircraft to handle package and cargo volume on certain international trade lanes and domestic routes. Due to the nature of these agreements, primarily being that either party can cancel the agreement with short notice, we have classified these as short-term leases. Additionally, the lease payments associated with these charter agreements are variable in nature based on the number of hours flown.

Real Estate

We have operating and finance leases for package centers, airport facilities, warehouses, office space and expansion facilities utilized during peak shipping periods. Many of our leases contain charges for common area maintenance or other expenses that are updated based on landlord estimates. Due to this variability, the cash flows associated with these charges are not included in the minimum lease payments used in determining the ROU asset and associated lease obligation.

Some of our real estate leases contain options to renew or extend the lease or terminate the lease before the expiration date. These options are factored into the determination of the lease term and lease payments when their exercise is considered to be reasonably certain.

We also enter into real estate leases that contain lease incentives, such as tenant improvement allowances or move-in allowances, that are received or receivable at lease commencement. These incentives reduce lease payments for classification purposes and reduce the initial ROU asset. When lease incentives are receivable at lease commencement, these also reduce the initial lease obligation.

From time to time, we enter into leases with the intention of purchasing the underlying property, either through purchase options with a fixed price or a purchase agreement negotiated contemporaneously with the lease agreement. We classify these leases as finance leases and include the purchase date and purchase price in the determination of the lease term and lease payments, respectively, when the option to exercise or purchase is reasonably certain.

Transportation equipment and other equipment

We enter into both long-term and short-term leases for transportation equipment to supplement our capacity or meet contractual demands. Some of these assets are leased on a month-to-month basis and the leases can be terminated without penalty. The lease term for these types of leases is determined by the length of the underlying customer contract or based on the judgment of the business unit. We also enter into multi-year leases for trailers to increase capacity during periods of high demand, which are typically only used for 90-120 days during the year. These leases are treated as short-term as the cumulative right of use is less than 12 months over the term of the contract.

The remainder of our leases are primarily related to equipment used in our air operations, vehicles required to meet capacity needs during periods of higher demand for our shipping services, technology equipment and office equipment used in our facilities.

Some of our transportation and technology equipment leases require us to make additional lease payments based on the underlying usage of the assets. Due to the variable nature of these costs, these are expensed as incurred and are not included in the ROU asset and associated lease obligation.

The components of lease expense for the three and six months ended June 30, 2022 and 2021 are as follows (in millions):

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Operating lease costs	$	184	$	179	$	367	$	354
Finance lease costs:
Amortization of assets	28		23		56		46
Interest on lease liabilities	3		3		7		7
Total finance lease costs	31		26		63		53
Variable lease costs	64		62		132		127
Short-term lease costs	323		251		625		530
Total lease costs	$	602	$	518	$	1,187	$	1,064

In addition to the lease costs disclosed in the table above, we monitor all lease categories for any indicators that the carrying value of the assets may not be recoverable. There were no material impairments recognized during the three or six months ended June 30, 2022 or 2021.

Supplemental information related to leases and location within our consolidated balance sheets is as follows (in millions, except lease term and discount rate):

	June 30, 2022			December 31, 2021
Operating Leases:
Operating lease right-of-use assets	$	3,436		$	3,562
Current maturities of operating leases	$	562		$	580
Non-current operating leases	2,962			3,033
Total operating lease obligations	$	3,524		$	3,613
Finance Leases:
Property, plant and equipment, net	$	1,008		$	1,225
Current maturities of long-term debt, commercial paper and finance leases	$	79		$	129
Long-term debt and finance leases	293			279
Total finance lease obligations	$	372		$	408
Weighted average remaining lease term (in years):
Operating leases	11.3			11.7
Finance leases	8.6			8.0
Weighted average discount rate:
Operating leases	2.06		%	1.94		%
Finance leases	3.06		%	2.79		%

Supplemental cash flow information related to leases is as follows (in millions):

	Six Months Ended June 30,
	2022		2021
Cash paid for amounts included in measurement of obligations:
Operating cash flows from operating leases	$	354	$	364
Operating cash flows from finance leases	2		7
Financing cash flows from finance leases	105		33
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	345	$	854
Finance leases	72		113

Maturities of lease obligations as of June 30, 2022 are as follows (in millions):

	Finance Leases		Operating Leases
2022	$	49	$	304
2023	80		620
2024	54		521
2025	40		461
2026	33		415
Thereafter	196		1,748
Total lease payments	452		4,069
Less: Imputed interest	(80)		(545)
Total lease obligations	372		3,524
Less: Current obligations	(79)		(562)
Long-term lease obligations	$	293	$	2,962

As of June 30, 2022, we had $808 million of additional leases which had not commenced. These leases will commence between 2022 and 2023 when we are granted access to the property, such as when leasehold improvements are completed by the lessor or a certificate of occupancy is obtained.

LEASES

LEASES

We have finance and operating leases for real estate, aircraft and engines, information technology equipment (primarily mainframes, servers and copiers), vehicles and various other equipment used in operating our business. Certain leases for real estate and aircraft contain options to purchase, extend or terminate the lease.

We recognize a right-of-use ("ROU") asset and lease obligation for all leases greater than twelve months. Some of our leases contain both lease and non-lease components, which we have elected to treat as a single lease component. We have also elected not to recognize leases that have an original lease term, including reasonably certain renewal or purchase options, of twelve months or less in our consolidated balance sheets for all classes of underlying assets. Lease costs for short-term leases are recognized on a straight-line basis over the lease term.

Determining the lease term and amount of lease payments to include in the calculation of the ROU asset and lease obligation for leases containing options requires the use of judgment to determine whether the exercise of an option is reasonably certain and whether the optional period and payments should be included in the calculation of the associated ROU asset and lease obligation. In making this determination, we consider all relevant economic factors that would compel us to exercise or not exercise an option.

When our leases contain future payments that are dependent on an index or rate, such as the consumer price index, we initially measure the lease obligation and ROU asset using the index or rate at the commencement date. In subsequent periods, lease payments dependent on an index or rate are not remeasured. Rather, changes to payments due to a change in an index or rate are recognized in our statements of consolidated income in the period of the change.

When available, we use the rate implicit in the lease to discount lease payments; however, the rate implicit in the lease is not readily determinable for substantially all of our leases. For these leases, we use an estimate of our incremental borrowing rate to discount lease payments based on information available at lease commencement. The incremental borrowing rate is derived using multiple inputs including our credit rating, the impact of full collateralization, lease term and denominated currency. Our remaining lease terms vary from 1 month to 138 years.

Aircraft

In addition to the aircraft that we own, we have leases for 311 aircraft. Of these leased aircraft, 19 are classified as finance leases, 18 are classified as operating leases and the remaining 274 are classified as short-term leases. A majority of the obligations associated with the aircraft classified as finance leases have been legally defeased. A majority of our long-term aircraft operating leases are operated by a third party to handle package and cargo volume in geographic regions where, due to government regulations, we are restricted from operating an airline.

In order to meet customers' needs, we charter aircraft to handle package and cargo volume on certain international trade lanes and domestic routes. Due to the nature of these agreements, primarily being that either party can cancel the agreement with short notice, we have classified these as short-term leases. Additionally, the lease payments associated with these charter agreements are variable in nature based on the number of hours flown.

Real Estate

We have operating and finance leases for package centers, airport facilities, warehouses, office space and expansion facilities utilized during peak shipping periods. Many of our leases contain charges for common area maintenance or other expenses that are updated based on landlord estimates. Due to this variability, the cash flows associated with these charges are not included in the minimum lease payments used in determining the ROU asset and associated lease obligation.

Some of our real estate leases contain options to renew or extend the lease or terminate the lease before the expiration date. These options are factored into the determination of the lease term and lease payments when their exercise is considered to be reasonably certain.

We also enter into real estate leases that contain lease incentives, such as tenant improvement allowances or move-in allowances, that are received or receivable at lease commencement. These incentives reduce lease payments for classification purposes and reduce the initial ROU asset. When lease incentives are receivable at lease commencement, these also reduce the initial lease obligation.

From time to time, we enter into leases with the intention of purchasing the underlying property, either through purchase options with a fixed price or a purchase agreement negotiated contemporaneously with the lease agreement. We classify these leases as finance leases and include the purchase date and purchase price in the determination of the lease term and lease payments, respectively, when the option to exercise or purchase is reasonably certain.

Transportation equipment and other equipment

We enter into both long-term and short-term leases for transportation equipment to supplement our capacity or meet contractual demands. Some of these assets are leased on a month-to-month basis and the leases can be terminated without penalty. The lease term for these types of leases is determined by the length of the underlying customer contract or based on the judgment of the business unit. We also enter into multi-year leases for trailers to increase capacity during periods of high demand, which are typically only used for 90-120 days during the year. These leases are treated as short-term as the cumulative right of use is less than 12 months over the term of the contract.

The remainder of our leases are primarily related to equipment used in our air operations, vehicles required to meet capacity needs during periods of higher demand for our shipping services, technology equipment and office equipment used in our facilities.

Some of our transportation and technology equipment leases require us to make additional lease payments based on the underlying usage of the assets. Due to the variable nature of these costs, these are expensed as incurred and are not included in the ROU asset and associated lease obligation.

The components of lease expense for the three and six months ended June 30, 2022 and 2021 are as follows (in millions):

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Operating lease costs	$	184	$	179	$	367	$	354
Finance lease costs:
Amortization of assets	28		23		56		46
Interest on lease liabilities	3		3		7		7
Total finance lease costs	31		26		63		53
Variable lease costs	64		62		132		127
Short-term lease costs	323		251		625		530
Total lease costs	$	602	$	518	$	1,187	$	1,064

In addition to the lease costs disclosed in the table above, we monitor all lease categories for any indicators that the carrying value of the assets may not be recoverable. There were no material impairments recognized during the three or six months ended June 30, 2022 or 2021.

Supplemental information related to leases and location within our consolidated balance sheets is as follows (in millions, except lease term and discount rate):

	June 30, 2022			December 31, 2021
Operating Leases:
Operating lease right-of-use assets	$	3,436		$	3,562
Current maturities of operating leases	$	562		$	580
Non-current operating leases	2,962			3,033
Total operating lease obligations	$	3,524		$	3,613
Finance Leases:
Property, plant and equipment, net	$	1,008		$	1,225
Current maturities of long-term debt, commercial paper and finance leases	$	79		$	129
Long-term debt and finance leases	293			279
Total finance lease obligations	$	372		$	408
Weighted average remaining lease term (in years):
Operating leases	11.3			11.7
Finance leases	8.6			8.0
Weighted average discount rate:
Operating leases	2.06		%	1.94		%
Finance leases	3.06		%	2.79		%

Supplemental cash flow information related to leases is as follows (in millions):

	Six Months Ended June 30,
	2022		2021
Cash paid for amounts included in measurement of obligations:
Operating cash flows from operating leases	$	354	$	364
Operating cash flows from finance leases	2		7
Financing cash flows from finance leases	105		33
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	345	$	854
Finance leases	72		113

Maturities of lease obligations as of June 30, 2022 are as follows (in millions):

	Finance Leases		Operating Leases
2022	$	49	$	304
2023	80		620
2024	54		521
2025	40		461
2026	33		415
Thereafter	196		1,748
Total lease payments	452		4,069
Less: Imputed interest	(80)		(545)
Total lease obligations	372		3,524
Less: Current obligations	(79)		(562)
Long-term lease obligations	$	293	$	2,962

As of June 30, 2022, we had $808 million of additional leases which had not commenced. These leases will commence between 2022 and 2023 when we are granted access to the property, such as when leasehold improvements are completed by the lessor or a certificate of occupancy is obtained.

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LEGAL PROCEEDINGS AND CONTINGENCIES

6 Months Ended

Jun. 30, 2022

Commitments and Contingencies Disclosure [Abstract]

LEGAL PROCEEDINGS AND CONTINGENCIES

LEGAL PROCEEDINGS AND CONTINGENCIES

We are involved in a number of judicial proceedings and other matters arising from the conduct of our business.

Although there can be no assurances as to the ultimate outcome, we have generally denied, or believe we have meritorious defenses and will deny, liability in all pending matters, including (except as otherwise noted herein) the matters described below, and we intend to vigorously defend each matter. We accrue amounts associated with legal proceedings when and to the extent a loss becomes probable and can be reasonably estimated. The actual costs of resolving legal proceedings may be substantially higher or lower than the amounts accrued on those claims.

For matters as to which we are not able to estimate a possible loss or range of losses, we are not able to determine whether any such loss will have a material impact on our operations or financial condition. For these matters, we have described the reasons that we are unable to estimate a possible loss or range of losses.

Judicial Proceedings

We are a defendant in a number of lawsuits filed in state and federal courts containing various class action allegations under state wage-and-hour laws. At this time, we do not believe that any loss associated with any such matter will have a material impact on our operations or financial condition. One of these matters, Hughes v. UPS Supply Chain Solutions, Inc. and United Parcel Service, Inc. had previously been certified as a class action in Kentucky state court. In the second quarter of 2019, the court granted our motion for judgment on the pleadings related to the wage-and-hour claims. The plaintiffs' appeal of this decision was denied; however, in the second quarter of 2022 the plaintiffs were granted discretionary review of these claims by the Kentucky Supreme Court.

Other Matters

In August 2016, Spain’s National Markets and Competition Commission ("CNMC") announced an investigation into 10 companies in the commercial delivery and parcel industry, including UPS, related to alleged nonaggression agreements to allocate customers. In May 2017, we received a Statement of Objections issued by the CNMC. In July 2017, we received a Proposed Decision from the CNMC. On March 8, 2018, the CNMC adopted a final decision, finding an infringement and imposing an immaterial fine on UPS. We appealed the decision and, in September 2018, obtained a suspension of the implementation of the decision (including payment of the fine). The appeal is pending. We do not believe that any loss from this matter would have a material impact on our operations or financial condition. We are vigorously defending ourselves and believe that we have a number of meritorious legal defenses. There are also unresolved questions of law and fact that could be important to the ultimate resolution of this matter.

In November 2021, the Environmental Protection Agency (the "EPA") sent us an information request related to hazardous waste regulatory compliance at certain of our facilities. The EPA has indicated that it is investigating potential recordkeeping violations of the Resource Conservation and Recovery Act at those facilities. We are cooperating with the EPA. An immaterial accrual with respect to this matter is included in our consolidated balance sheets. We do not believe that any loss from this matter would have a material impact on our operations or financial condition, although we are unable to predict what action, if any, might be taken in the future by the EPA as a result of this request.

We are a party in various other matters that arose in the normal course of business. We do not believe that the eventual resolution of these other matters (either individually or in the aggregate), including any reasonably possible losses in excess of current accruals, will have a material impact on our operations or financial condition.

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SHAREOWNERS' EQUITY

6 Months Ended

Jun. 30, 2022

Stockholders' Equity Note [Abstract]

SHAREOWNERS' EQUITY

SHAREOWNERS' EQUITY

Capital Stock, Additional Paid-In Capital, Retained Earnings and Non-Controlling Minority Interests

We are authorized to issue two classes of common stock, which are distinguished from each other primarily by their respective voting rights. Class A shares of UPS are entitled to 10 votes per share, whereas class B shares are entitled to one vote per share. Class A shares are primarily held by UPS employees and retirees, as well as trusts and descendants of the Company's founders, and these shares are fully convertible into class B shares at any time. Class B shares are publicly traded on the NYSE under the symbol “UPS”. Class A and B shares both have a $0.01 par value, and as of June 30, 2022, there were 4.6 billion class A shares and 5.6 billion class B shares authorized to be issued. Additionally, there are 200 million preferred shares authorized to be issued, with a par value of $0.01 per share. As of June 30, 2022, no preferred shares had been issued.

The following is a rollforward of our common stock, additional paid-in capital, retained earnings and non-controlling minority interests accounts for the three and six months ended June 30, 2022 and 2021 (in millions, except per share amounts):

Three Months Ended June 30:	2022			2021
	Shares	Dollars		Shares	Dollars
Class A Common Stock
Balance at beginning of period	140	$	2	148	$	2
Stock award plans	2	—		2	—
Conversions of class A to class B common stock	(4)	—		(6)	—
Class A shares issued at end of period	138	$	2	144	$	2
Class B Common Stock
Balance at beginning of period	734	$	7	722	$	7
Common stock purchases	(6)	—		—	—
Conversions of class A to class B common stock	4	—		6	—
Class B shares issued at end of period	732	$	7	728	$	7
Additional Paid-In Capital
Balance at beginning of period		$	1,231		$	1,049
Common stock purchases		(983)			—
Stock award plans		212			193
Common stock issuances		113			87
Balance at end of period		$	573		$	1,329
Retained Earnings
Balance at beginning of period		$	17,433		$	10,748
Net income attributable to common shareowners		2,849			2,676
Dividends ($1.52 and $1.02 per share) (1)		(1,327)			(893)
Other		3			—
Balance at end of period		$	18,958		$	12,531
Non-Controlling Minority Interest
Balance at beginning of period		$	18		$	12
Change in non-controlling minority interest		3			5
Balance at end of period		$	21		$	17
(1) The dividend per share amount is the same for both class A and class B common stock. Dividends include $44 and $33 million as of June 30, 2022 and 2021, respectively, that were settled in shares of class A common stock.

Six Months Ended June 30:	2022			2021
	Shares	Dollars		Shares	Dollars
Class A Common Stock:
Balance at beginning of period	138	$	2	147	$	2
Stock award plans	6	—		6	—
Common stock issuances	1	—		1	—
Conversions of class A to class B common stock	(7)	—		(10)	—
Class A shares outstanding at end of period	138	$	2	144	$	2
Class B Common Stock:
Balance at beginning of period	732	$	7	718	$	7
Common stock purchases	(7)	—		—	—
Conversions of class A to class B common stock	7	—		10	—
Class B shares outstanding at end of period	732	$	7	728	$	7
Additional Paid-In Capital:
Balance at beginning of period		$	1,343		$	865
Common stock purchases		(1,243)			—
Stock award plans		177			223
Common stock issuances		296			241
Balance at end of period		$	573		$	1,329
Retained Earnings:
Balance at beginning of period		$	16,179		$	6,896
Net income attributable to controlling interests		5,511			7,468
Dividends ($3.04 and $2.04 per share) (1)		(2,733)			(1,831)
Other		1			(2)
Balance at end of period		$	18,958		$	12,531
Non-Controlling Interests:
Balance at beginning of period		$	16		$	12
Change in non-controlling interest		5			5
Balance at end of period		$	21		$	17
(1) The dividend per share amount is the same for both class A and class B common stock. Dividends include $166 and $113 million as of June 30, 2022 and 2021, respectively, that were settled in shares of class A common stock.

In August 2021, the Board of Directors authorized the company to repurchase up to $5.0 billion of class A and class B common stock. We repurchased 5.5 and 6.7 million shares of class B common stock for $983 million and $1.2 billion under this program during the three and six months ended June 30, 2022, respectively. As of June 30, 2022, we had $3.3 billion of our share repurchase authorization available. In July 2022, we announced that we anticipate our share repurchases will total approximately $3.0 billion for all of 2022.

Future share repurchases may be in the form of accelerated share repurchase programs, open market purchases or other methods we deem appropriate. The timing of share repurchases will depend upon market conditions. Unless terminated earlier by the Board of Directors, this program will expire when we have purchased all shares authorized for repurchase under the program.

Movements in additional paid-in capital in respect of stock award plans comprise accruals for unvested awards, offset by adjustments for awards that vest during the period.

Accumulated Other Comprehensive Income (Loss)

We recognize activity in other comprehensive income for foreign currency translation adjustments, unrealized holding gains and losses on available-for-sale securities, unrealized gains and losses from derivatives that qualify as hedges of cash flows and unrecognized pension and postretirement benefit costs. The activity in accumulated other comprehensive income for the three and six months ended June 30, 2022 and 2021 was as follows (in millions):

Three Months Ended June 30:	2022		2021
Foreign Currency Translation Gain (Loss), Net of Tax:
Balance at beginning of period	$	(1,202)	$	(1,063)
Translation adjustment (net of tax effect of $7 and $(1))	(245)		48
Balance at end of period	(1,447)		(1,015)
Unrealized Gain (Loss) on Marketable Securities, Net of Tax:
Balance at beginning of period	(7)		2
Current period changes in fair value (net of tax effect of $0 and $0)	(1)		—
Reclassification to earnings (net of tax effect of $0 and $0)	—		(1)
Balance at end of period	(8)		1
Unrealized Gain (Loss) on Cash Flow Hedges, Net of Tax:
Balance at beginning of period	26		(109)
Current period changes in fair value (net of tax effect of $89 and $(14))	283		(43)
Reclassification to earnings (net of tax effect of $(16) and $(1))	(49)		(3)
Balance at end of period	260		(155)
Unrecognized Pension and Postretirement Benefit Costs, Net of Tax:
Balance at beginning of period	(2,074)		(3,489)
Net actuarial gain (loss) resulting from remeasurements of plan assets and liabilities (net of tax effect of $0 and $495)	—		1,569
Reclassification to earnings (net of tax effect of $6 and $8)	18		25
Balance at end of period	(2,056)		(1,895)
Accumulated other comprehensive income (loss) at end of period	$	(3,251)	$	(3,064)

Six Months Ended June 30:	2022		2021
Foreign currency translation gain (loss), net of tax:
Balance at beginning of period	$	(1,162)	$	(981)
Translation adjustment (net of tax effect of $7 and $29)	(285)		(34)
Balance at end of period	(1,447)		(1,015)
Unrealized gain (loss) on marketable securities, net of tax:
Balance at beginning of period	(1)		6
Current period changes in fair value (net of tax effect of $(2) and $0)	(7)		(1)
Reclassification to earnings (net of tax effect of $0 and $0)	—		(4)
Balance at end of period	(8)		1
Unrealized gain (loss) on cash flow hedges, net of tax:
Balance at beginning of period	(17)		(223)
Current period changes in fair value (net of tax effect of $112 and $25)	355		81
Reclassification to earnings (net of tax effect of $(25) and $(4))	(78)		(13)
Balance at end of period	260		(155)
Unrecognized pension and postretirement benefit costs, net of tax:
Balance at beginning of period	(2,098)		(5,915)
Net actuarial gain (loss) resulting from remeasurements of plan assets and liabilities (net of tax effect of $11 and $2,039)	31		6,470
Reclassification to earnings (net of tax effect of $3 and $(772))	11		(2,450)
Balance at end of period	(2,056)		(1,895)
Accumulated other comprehensive income (loss) at end of period	$	(3,251)	$	(3,064)

Detail of the gains (losses) reclassified from AOCI to the statements of consolidated income for the three and six months ended June 30, 2022 and 2021 is as follows (in millions):

	Amount Reclassified from AOCI				Affected Line Item in the Income Statement
Three Months Ended June 30:	2022		2021
Unrealized Gain (Loss) on Marketable Securities:
Realized gain (loss) on sale of securities	$	—	$	1	Investment income and other
Income tax (expense) benefit	—		—		Income tax expense
Impact on net income	—		1		Net income
Unrealized Gain (Loss) on Cash Flow Hedges:
Interest rate contracts	(2)		(3)		Interest expense
Foreign currency exchange contracts	67		7		Revenue
Income tax (expense) benefit	(16)		(1)		Income tax expense
Impact on net income	49		3		Net income
Unrecognized Pension and Postretirement Benefit Costs:
Prior service costs	(24)		(36)		Investment income and other
Prior service credit for divested business	—		69		Other expenses
Plan amendments for divested business	—		(66)		Other expenses
Income tax (expense) benefit	6		8		Income tax expense
Impact on net income	(18)		(25)		Net income
Total amount reclassified for the period	$	31	$	(21)	Net income

	Amount Reclassified from AOCI				Affected Line Item in the Income Statement
Six Months Ended June 30:	2022		2021
Unrealized gain (loss) on marketable securities:
Realized gain (loss) on sale of securities	$	—	$	4	Investment income and other
Income tax (expense) benefit	—		—		Income tax expense
Impact on net income	—		4		Net income
Unrealized gain (loss) on cash flow hedges:
Interest rate contracts	(5)		(5)		Interest expense
Foreign currency exchange contracts	108		22		Revenue
Income tax (expense) benefit	(25)		(4)		Income tax expense
Impact on net income	78		13		Net income
Unrecognized pension and postretirement benefit costs:
Prior service costs	(47)		(71)		Investment income and other
Prior service credit for divested business	—		69		Other expenses
Plan amendments for divested business	—		(66)		Other expenses
Remeasurement of benefit obligation	—		3,290		Investment income and other
Curtailment of benefit obligation	33		—		Investment income and other
Income tax (expense) benefit	3		(772)		Income tax expense
Impact on net income	(11)		2,450		Net income
Total amount reclassified for the period	$	67	$	2,467	Net income

Deferred Compensation Obligations and Treasury Stock

We maintain a deferred compensation plan whereby certain employees were previously able to elect to defer the gains on stock option exercises by deferring the shares received upon exercise into a rabbi trust. The shares held in this trust are classified as treasury stock, and the liability to participating employees is classified as Deferred compensation obligations in the Shareowners’ Equity section of the consolidated balance sheets. The number of shares needed to settle the liability for deferred compensation obligations is included in the denominator in both the basic and diluted earnings per share calculations. Employees are generally no longer able to defer the gains from stock options exercised subsequent to December 31, 2004.

Activity in the deferred compensation program for the three and six months ended June 30, 2022 and 2021 was as follows (in millions):

	2022			2021
Three Months Ended June 30:	Shares	Dollars		Shares	Dollars
Deferred Compensation Obligations:
Balance at beginning of period		$	12		$	15
Reinvested dividends		1			1
Benefit payments		(1)			—
Balance at end of period		$	12		$	16
Treasury Stock:
Balance at beginning of period	—	$	(12)	—	$	(15)
Reinvested dividends	—	(1)		—	(1)
Benefit payments	—	1		—	—
Balance at end of period	—	$	(12)	—	$	(16)

	2022			2021
Six Months Ended June 30:	Shares	Dollars		Shares	Dollars
Deferred Compensation Obligations:
Balance at beginning of period		$	16		$	20
Reinvested dividends		1			1
Benefit payments		(5)			(5)
Balance at end of period		$	12		$	16
Treasury Stock:
Balance at beginning of period	—	$	(16)	—	$	(20)
Reinvested dividends	—	(1)		—	(1)
Benefit payments	—	5		—	5
Balance at end of period	—	$	(12)	—	$	(16)

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SEGMENT INFORMATION

6 Months Ended

Jun. 30, 2022

Segment Reporting [Abstract]

SEGMENT INFORMATION

SEGMENT INFORMATION

We have two reportable segments: U.S. Domestic Package and International Package, which are together referred to as our global small package operations. Our remaining businesses are reported as Supply Chain Solutions. Global small package operations represent our most significant business and are broken down into regional operations around the world. Regional operations managers are responsible for both domestic and export products within their geographic area. Supply Chain Solutions comprises the results of non-reportable operating segments that do not meet the quantitative and qualitative criteria of a reportable segment as defined under ASC Topic 280 – Segment Reporting.

U.S. Domestic Package

U.S. Domestic Package operations include the time-definite delivery of letters, documents and packages throughout the United States.

International Package

International Package operations include delivery to more than 220 countries and territories worldwide, including shipments wholly outside the United States, as well as shipments with either origin or destination outside the United States. Our International Package reporting segment includes our operations in Europe, Asia, Americas and Indian Sub-Continent, Middle East and Africa.

Supply Chain Solutions

Supply Chain Solutions includes our Forwarding, Logistics, Coyote, Marken, UPS Mail Innovations and other businesses. Our Forwarding, Logistics and UPS Mail Innovations units provide services in more than 200 countries and territories worldwide and include international air and ocean freight forwarding, customs brokerage, distribution and post-sales services, mail and consulting services. Coyote offers truckload brokerage services primarily in the United States. Marken is a global provider of supply chain solutions to the healthcare and life sciences industry, specializing in clinical trials logistics. Our other businesses include The UPS Store, UPS Capital, Roadie and Delivery Solutions. UPS Freight was included within this segment until its divestiture in the second quarter of 2021.

In evaluating financial performance, we focus on operating profit as a segment’s measure of profit or loss. Operating profit is before investment income and other, interest expense and income tax expense. Certain expenses are allocated between the segments using activity-based costing methods that require us to make estimates that impact the amount of each expense category that is attributed to each segment. Changes in these estimates would directly impact the expense allocated to each segment, and therefore the operating profit of each reporting segment. We periodically refine our allocation methodologies to reflect changes in our business. There were no significant changes to our allocation methodologies in the second quarter or year-to-date periods.

Results of operations for the three and six months ended June 30, 2022 and 2021 are as follows (in millions):

	Three Months Ended  June 30,				Six Months Ended  June 30,
	2022		2021		2022		2021
Revenue:
U.S. Domestic Package	$	15,459	$	14,402	$	30,583	$	28,412
International Package	5,073		4,817		9,949		9,424
Supply Chain Solutions	4,234		4,205		8,612		8,496
Consolidated revenue	$	24,766	$	23,424	$	49,144	$	46,332
Operating Profit:
U.S. Domestic Package	$	1,829	$	1,567	$	3,491	$	2,926
International Package	1,193		1,184		2,309		2,269
Supply Chain Solutions	513		507		986		828
Consolidated operating profit	$	3,535	$	3,258	$	6,786	$	6,023

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EARNINGS PER SHARE

6 Months Ended

Jun. 30, 2022

Earnings Per Share [Abstract]

EARNINGS PER SHARE

EARNINGS PER SHARE

The earnings per share amounts are the same for class A and class B common shares as the holders of each class are legally entitled to equal per-share distributions whether through dividends or in liquidation.

The following table sets forth the computation of basic and diluted earnings per share for the three and six months ended June 30, 2022 and 2021 (in millions, except per share amounts):

	Three Months Ended  June 30,				Six Months Ended  June 30,
	2022		2021		2022		2021
Numerator:
Net income attributable to common shareowners	$	2,849	$	2,676	$	5,511	$	7,468
Denominator:
Weighted average shares	871		870		871		869
Vested portion of restricted units	3		5		3		5
Denominator for basic earnings per share	874		875		874		874
Effect of dilutive securities:
Restricted units	1		2		3		3
Stock options	1		1		1		1
Denominator for diluted earnings per share	876		878		878		878
Basic earnings per share	$	3.26	$	3.06	$	6.31	$	8.54
Diluted earnings per share	$	3.25	$	3.05	$	6.28	$	8.51

Diluted earnings per share for the three months ended June 30, 2022 excluded the effect of 0.1 million shares of common stock that may be issued upon the exercise of employee stock options because such effect would be antidilutive. There were no antidilutive shares for the three months ended June 30, 2021. Antidilutive shares for the six months ended June 30, 2022 and 2021 were 0.1 million

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DERIVATIVE INSTRUMENTS AND RISK MANAGEMENT

6 Months Ended

Jun. 30, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE INSTRUMENTS AND RISK MANAGEMENT

DERIVATIVE INSTRUMENTS AND RISK MANAGEMENT

Risk Management Policies

Changes in fuel prices, interest rates and foreign currency exchange rates impact our results of operations and we actively monitor these exposures. To manage the impact of these exposures, we may enter into a variety of derivative financial instruments. Our objective is to manage, where it is deemed appropriate to do so, fluctuations in earnings and cash flows associated with changes in foreign currency exchange rates, commodity prices and interest rates. It is our policy and practice to use derivative financial instruments only to the extent necessary to manage exposures. As we use price-sensitive instruments to hedge a certain portion of our existing and anticipated transactions, we expect that any loss in value from those instruments generally would be offset by increases in the value of those hedged transactions. We do not hold or issue derivative financial instruments for trading or speculative purposes.

Credit Risk Management

The forward contracts, swaps and options discussed below contain an element of risk that the counterparties may be unable to meet the terms of the agreements; however, we seek to minimize such risk exposures for these instruments by limiting the counterparties to banks and financial institutions that meet established credit guidelines and by monitoring counterparties to prevent concentrations of credit risk with any single counterparty.

 As of June 30, 2022 and December 31, 2021, we had agreements with all of our active counterparties (covering all of our derivative positions) which contained early termination rights and/or zero threshold bilateral collateral provisions whereby cash is required based on the net fair value of derivatives associated with those counterparties.

As of June 30, 2022 and December 31, 2021, we held cash collateral of $546 and $260 million, respectively, under these agreements. This collateral is included in Cash and cash equivalents in the consolidated balance sheets and our use of it is not restricted. As of June 30, 2022 and December 31, 2021, no collateral was required to be posted with our counterparties.

Events such as a counterparty credit rating downgrade (depending on the ultimate rating level) could also allow us to take additional protective measures such as the early termination of trades. Alternatively, we could be required to provide additional collateral or terminate transactions with certain counterparties in the event of a downgrade of our credit rating. The amount of collateral required would be determined by the net fair value of the associated derivatives with each counterparty. We have not historically incurred, and do not expect to incur in the future, any losses as a result of counterparty default.

Types of Hedges

Commodity Risk Management

Currently, the fuel surcharges that we apply to our domestic and international package services are the primary means of reducing the risk of adverse fuel price changes on our business. In order to mitigate the impact of fuel surcharges imposed on us by outside carriers, we regularly adjust the rates we charge for our freight brokerage services.

Foreign Currency Risk Management

To protect against the reduction in value of forecasted foreign currency cash flows from our international package business, we maintain a foreign currency cash flow hedging program. Our most significant foreign currency exposures relate to the Euro, British Pound Sterling, Canadian Dollar, Chinese Renminbi and Hong Kong Dollar. We hedge portions of our forecasted revenue denominated in foreign currencies with forward contracts. We normally designate and account for these contracts as cash flow hedges of anticipated foreign currency denominated revenue and, therefore, the resulting gains and losses from these hedges are recognized as a component of international package revenue when the underlying sales transactions occur.

We also hedge portions of our anticipated cash settlements of intercompany transactions and interest payments on certain debt subject to foreign currency remeasurement using foreign currency forward contracts. We normally designate and account for these contracts as cash flow hedges of forecasted foreign currency denominated transactions; therefore, the resulting gains and losses from these hedges are recognized as a component of Investment income and other when the underlying transactions are subject to currency remeasurement.

We hedge our net investment in certain foreign operations with foreign currency denominated debt instruments. The use of foreign denominated debt as the hedging instrument allows the debt to be remeasured to foreign currency translation adjustment within other comprehensive income to offset the translation risk from those investments. Balances in the foreign currency translation adjustment account remain until the sale or substantially complete liquidation of the foreign entity, upon which we recognize these balances as a component of Investment income and other in the statements of consolidated income.

Interest Rate Risk Management

Our indebtedness under our various financing arrangements creates interest rate risk. We use a combination of derivative instruments as part of our program to manage the fixed and floating interest rate mix of our total debt portfolio and related overall cost of borrowing. Interest rate swaps allow us to maintain a target range of floating-rate debt within our capital structure. The notional amount, interest payment date and maturity date of the swaps match the terms of the associated debt being hedged.

We have designated and account for the majority of our interest rate swaps that convert fixed-rate interest payments into floating-rate interest payments as fair value hedges of the associated debt instruments. Therefore, the gains and losses resulting from fair value adjustments to the interest rate swaps and fair value adjustments to the associated debt instruments are recorded to interest expense in the period in which the gains and losses occur. We have designated and account for interest rate swaps that convert floating-rate interest payments into fixed-rate interest payments as cash flow hedges of the forecasted payment obligations. The gains and losses resulting from fair value adjustments to these interest rate swaps are recorded to other comprehensive income.

We periodically hedge the forecasted fixed-coupon interest payments associated with anticipated debt offerings by using forward starting interest rate swaps, interest rate locks or similar derivatives. These agreements effectively lock a portion of our interest rate exposure between the time the agreement is entered into and the date when the debt offering is completed, thereby mitigating the impact of interest rate changes on future interest expense. These derivatives are settled commensurate with the issuance of the debt, and any gain or loss upon settlement is amortized as an adjustment to the effective interest yield on the debt.

Outstanding Positions

As of June 30, 2022 and December 31, 2021, the notional amounts of our outstanding derivative positions were as follows (in millions):

		June 30, 2022	December 31, 2021
Currency hedges:
Euro	EUR	4,279	4,257
British Pound Sterling	GBP	1,421	1,402
Canadian Dollar	CAD	1,655	1,633
Hong Kong Dollar	HKD	4,327	4,033
Interest rate hedges:
Fixed to Floating Interest Rate Swaps	USD	1,000	1,000
Floating to Fixed Interest Rate Swaps	USD	28	28

As of June 30, 2022 and December 31, 2021, we had no outstanding commodity hedge positions.

Our fixed to floating interest rate swaps are designated as a fair value hedge of our 2.450% fixed rate notes that mature in October 2022. These instruments utilize LIBOR as the reference rate to determine the floating interest rate to be paid. As these instruments will settle before the applicable U.S. Dollar LIBOR rate ceases to be published in June 2023, we have not evaluated the application of ASC Topic 848 to these instruments.

Balance Sheet Recognition

The following table indicates the location in the consolidated balance sheets where our derivative assets and liabilities have been recognized, the fair value hierarchy level applicable to each derivative type and the related fair values of those derivatives.

We have master netting arrangements with substantially all of our counterparties giving us the right of offset for our derivative positions. However, we have not elected to offset the fair value positions of our derivative contracts recorded in the consolidated balance sheets. The columns labeled Net Amounts if Right of Offset had been Applied indicate the potential net fair value positions by type of contract and location in the consolidated balance sheets had we elected to apply the right of offset as of June 30, 2022 and December 31, 2021 (in millions):

		Fair Value Hierarchy Level	Gross Amounts Presented in Consolidated Balance Sheets				Net Amounts if Right of Offset had been Applied
Asset Derivatives	Balance Sheet Location		June 30, 2022		December 31, 2021		June 30, 2022		December 31, 2021
Derivatives designated as hedges:
Foreign currency exchange contracts	Other current assets	Level 2	$	214	$	100	$	207	$	82
Interest rate contracts	Other current assets	Level 2	—		11		—		11
Foreign currency exchange contracts	Other non-current assets	Level 2	328		123		320		90
Derivatives not designated as hedges:
Foreign currency exchange contracts	Other current assets	Level 2	2		2		2		2
Total Asset Derivatives			$	544	$	236	$	529	$	185

		Fair Value Hierarchy Level	Gross Amounts Presented in Consolidated Balance Sheets				Net Amounts if Right of Offset had been Applied
Liability Derivatives	Balance Sheet Location		June 30, 2022		December 31, 2021		June 30, 2022		December 31, 2021
Derivatives designated as hedges:
Foreign currency exchange contracts	Other current liabilities	Level 2	$	7	$	19	$	—	$	1
Interest rate contracts	Other current liabilities	Level 2	1		—		1		—
Foreign currency exchange contracts	Other non-current liabilities	Level 2	8		33		—		—
Interest rate contracts	Other non-current liabilities	Level 2	6		10		6		10
Total Liability Derivatives			$	22	$	62	$	7	$	11

Our foreign currency exchange, interest rate and investment market price derivatives are largely comprised of over-the-counter derivatives, which are primarily valued using pricing models that rely on market observable inputs such as yield curves, currency exchange rates and investment forward prices. These derivatives are classified as Level 2. As of June 30, 2022 and December 31, 2021 we did not have any derivatives that were classified as Level 1 or Level 3 within the fair value hierarchy.

Balance Sheet Location of Hedged Item in Fair Value Hedges    

The following table indicates the amounts that were recorded in the consolidated balance sheets related to cumulative basis adjustments for fair value hedges as of June 30, 2022 and December 31, 2021 (in millions):

Line Item in the Consolidated Balance Sheets in Which the Hedged Item is Included	Carrying Amount of Hedged Liabilities		Cumulative Amount of Fair Value Hedge Adjustments		Carrying Amount of Hedged Liabilities		Cumulative Amount  of Fair Value Hedge Adjustments
	June 30, 2022		June 30, 2022		December 31, 2021		December 31, 2021
Current maturities of long-term debt, commercial paper and finance leases	$	999	$	(1)	$	1,010	$	11
Long-term debt and finance leases	$	280	$	5	$	280	$	5

The cumulative amount of fair value hedging losses remaining for any hedged assets and liabilities for which hedge accounting has been discontinued as of June 30, 2022 is $5 million. These amounts will be recognized over the next 8 years.

Income Statement and AOCI Recognition

The following table indicates the amount of gains and (losses) that have been recognized in the statements of consolidated income for fair value and cash flow hedges, as well as the associated gain or (loss) for the underlying hedged item for fair value hedges for the three and six months ended June 30, 2022 and 2021 (in millions):

	Three Months Ended June 30,
Location and Amount of Gain (Loss) Recognized in Income on Fair Value and Cash Flow Hedging Relationships	2022						2021
	Revenue		Interest Expense		Investment Income and Other		Revenue		Interest Expense		Investment Income and Other
Gain or (loss) on fair value hedging relationships:
Interest Contracts:
Hedged items	$	—	$	3	$	—	$	—	$	4	$	—
Derivatives designated as hedging instruments	—		(3)		—		—		(4)		—
Gain or (loss) on cash flow hedging relationships:
Interest Contracts:
Amount of gain or (loss) reclassified from accumulated other comprehensive income	—		(2)		—		—		(3)		—
Foreign Currency Exchange Contracts:
Amount of gain or (loss) reclassified from accumulated other comprehensive income	67		—				7				—
Total amounts of income and expense line items presented in the statement of income in which the effects of fair value or cash flow hedges are recorded	$	67	$	(2)	$	—	$	7	$	(3)	$	—

	Six Months Ended June 30,
	2022						2021
Location and Amount of Gain (Loss) Recognized in Income on Fair Value and Cash Flow Hedging Relationships	Revenue		Interest Expense		Investment Income and Other		Revenue		Interest Expense		Investment Income and Other
Gain or (loss) on fair value hedging relationships:
Interest Contracts:
Hedged items	$	—	$	11	$	—	$	—	$	10	$	—
Derivatives designated as hedging instruments	—		(11)		—		—		(10)		—
Gain or (loss) on cash flow hedging relationships:
Interest Contracts:
Amount of gain or (loss) reclassified from accumulated other comprehensive income	—		(5)		—		—		(5)		—
Foreign Currency Exchange Contracts:
Amount of gain or (loss) reclassified from accumulated other comprehensive income	108		—		—		22		—		—
Total amounts of income and expense line items presented in the statement of income in which the effects of fair value or cash flow hedges are recorded	$	108	$	(5)	$	—	$	22	$	(5)	$	—

The following table indicates the amount of gains and (losses) that have been recognized in AOCI for the three and six months ended June 30, 2022 and 2021 for those derivatives designated as cash flow hedges (in millions):

Three Months Ended June 30:
Derivative Instruments in Cash Flow Hedging Relationships	Amount of Gain (Loss) Recognized in AOCI on Derivatives
	2022		2021
Interest rate contracts	$	1	$	(3)
Foreign currency exchange contracts	371		(54)
Total	$	372	$	(57)
Six Months Ended June 30:
Derivative Instruments in Cash Flow Hedging Relationships	Amount of Gain (Loss) Recognized in AOCI on Derivatives
	2022		2021
Interest rate contracts	$	4	$	—
Foreign currency exchange contracts	463		106
Total	$	467	$	106

As of June 30, 2022, there were $199 million of unrealized pre-tax gains related to cash flow hedges deferred in AOCI that are expected to be reclassified to income over the 12 month period ending June 30, 2023. The actual amounts that will be reclassified to income over the next 12 months will vary from this amount as a result of changes in market conditions. The maximum term over which we are hedging exposures to the variability of cash flows is approximately 10 years.

The following table indicates the amount of gains and (losses) that have been recognized in AOCI within foreign currency translation adjustment for the three and six months ended June 30, 2022 and 2021 for those instruments designated as net investment hedges (in millions):

Three Months Ended June 30:
Non-derivative Instruments in Net Investment Hedging Relationships	Amount of Gain (Loss) Recognized in AOCI on Debt
	2022		2021
Foreign denominated debt	$	181	$	(47)
Total	$	181	$	(47)
Six Months Ended June 30:
Non-derivative Instruments in Net Investment Hedging Relationships	Amount of Gain (Loss) Recognized in AOCI on Debt
	2022		2021
Foreign denominated debt	$	227	$	77
Total	$	227	$	77

Additionally, we maintain foreign currency exchange forward contracts that are not designated as hedges. These foreign currency exchange forward contracts are intended to provide an economic offset to foreign currency remeasurement and settlement risk for certain assets and liabilities in our consolidated balance sheets.

We also periodically terminate foreign currency exchange forward contracts by entering into offsetting foreign currency exchange positions with different counterparties. As part of this process, we de-designate our original foreign currency exchange contracts. These transactions provide an economic offset that effectively eliminates the effects of changes in market valuation.

The following is a summary of the amounts recorded in the statements of consolidated income related to fair value changes and settlements of foreign currency exchange forward contracts not designated as hedges for the three and six months ended June 30, 2022 and 2021 (in millions):

Derivative Instruments Not Designated in Hedging Relationships	Location of Gain (Loss) Recognized in Income	Amount of Gain (Loss) Recognized in Income
		2022		2021
Three Months Ended June 30:
Foreign currency exchange contracts	Investment income and other	$	(58)	$	3
Total		$	(58)	$	3
Six Months Ended June 30:
Foreign currency exchange contracts	Investment income and other	$	(86)	$	(3)
Total		$	(86)	$	(3)

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INCOME TAXES

6 Months Ended

Jun. 30, 2022

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

Our effective tax rate increased to 22.9% in the second quarter from 22.1% in the same period of 2021 (22.3% year to date compared to 22.5% in 2021). The recognition in income tax of excess tax benefits related to share-based compensation reduced our effective rate by 0.1% in the second quarter compared to 0.3% in the same period of 2021 (1.2% year to date compared to 0.8% in 2021). Other items that impacted our effective tax rate in the second quarter compared to 2021 included favorable changes in uncertain tax positions and unfavorable changes in our jurisdictional earnings mix.

As discussed in our Annual Report on Form 10-K for the year ended December 31, 2021, we have recognized liabilities for uncertain tax positions and we reevaluate these uncertain tax positions on a quarterly basis. A number of years may elapse before an uncertain tax position is audited and ultimately settled. It is difficult to predict the ultimate outcome or the timing of resolution for uncertain tax positions. It is reasonably possible that the amount of unrecognized tax benefits could significantly increase or decrease within the next twelve months, however, an estimate of the range of reasonably possible outcomes cannot be made. Items that may cause changes to unrecognized tax benefits include the timing of interest deductions and the allocation of income and expense between tax jurisdictions. These changes could result from the settlement of ongoing litigation, the completion of ongoing examinations, the expiration of statutes of limitations or other unforeseen circumstances.

In the first six months of 2022, we recognized an immaterial income tax expense related to a pre-tax curtailment gain of $33 million on the UPS Canada Ltd. Retirement Plan. This income tax expense was generated at a higher average tax rate than the U.S. federal statutory tax rate because it included the effect of foreign taxes.

In the first six months of 2021, we recognized an income tax expense of $788 million related to a pre-tax mark-to-market gain of $3.3 billion on the UPS/IBT Full-Time Employee Pension Plan. This income tax expense was generated at a higher average tax rate than the U.S. federal statutory tax rate because it included the effect of U.S. state and local taxes.

As discussed in note 17, we recognized pre-tax transformation strategy costs of $41 million in the second quarter of 2022 compared to $116 million in the same period of 2021 ($96 million year to date compared to $234 million in the prior year). As a result, we recorded an income tax benefit of $10 million in the second quarter compared to $28 million in the same period of 2021 ($22 million year to date compared to $56 million in the prior year). The income tax benefit was generated at a higher average tax rate than the U.S. federal statutory tax rate primarily due to the effect of U.S. state and local taxes and foreign taxes.

We recorded a pre-tax valuation allowance against assets held for sale of $66 million during the first quarter of 2021, resulting in an additional income tax benefit of $16 million. This income tax benefit was generated at a higher average tax rate than the U.S. federal statutory tax rate due to the effect of U.S. state and local taxes. In the second quarter of 2021, we completed the divestiture of UPS Freight and recorded a pre-tax gain of $101 million. As a result, we recorded additional income tax expense of $24 million. The 2021 expense was generated at a higher average tax rate than the U.S. federal statutory tax rate due to the effect of U.S. state and local taxes.

Beginning in 2012, we were granted a tax incentive for certain of our non-U.S. operations, which was effective through December 31, 2021. During the first six months of 2022, the tax incentive was renegotiated and extended. The tax incentive is conditioned upon our meeting specific employment and investment thresholds, which we expect to meet. The impact of the tax incentive did not significantly change our effective tax rate for the first six months of 2022 compared to 2021.

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TRANSFORMATION STRATEGY (Notes)

6 Months Ended

Jun. 30, 2022

Restructuring and Related Activities [Abstract]

TRANSFORMATION STRATEGY

TRANSFORMATION STRATEGY COSTS

In 2018, we launched a multi-year, enterprise-wide transformation strategy impacting our organization. The program includes investments, as well as changes in processes and technology, that impact global direct and indirect operating costs.

The table below presents transformation strategy costs for the three and six months ended June 30, 2022 and 2021 (in millions):

	Three Months Ended  June 30,				Six Months Ended  June 30,
	2022		2021		2022		2021
Transformation Strategy Costs:
Compensation and benefits	$	23	$	55	$	56	$	131
Total other expenses	18		61		40		103
Total Transformation Strategy Costs	$	41	$	116	$	96	$	234
Income Tax Benefit from Transformation Strategy Costs	(10)		(28)		(22)		(56)
After Tax Transformation Strategy Costs	$	31	$	88	$	74	$	178

The income tax effects of transformation strategy costs are calculated by multiplying the amount of the adjustments by the statutory tax rates applicable in each tax jurisdiction.

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BASIS OF PRESENTATION (Policies)

6 Months Ended

Jun. 30, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Principles of Consolidation

Principles of Consolidation

The accompanying interim unaudited, consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. These interim unaudited, consolidated financial statements contain all adjustments (consisting of normal recurring accruals) necessary to present fairly our financial position as of June 30, 2022, our results of operations for the three and six months ended June 30, 2022 and 2021, and our cash flows for the six months ended June 30, 2022 and 2021. The results reported in these interim unaudited, consolidated financial statements should not be regarded as indicative of results that may be expected for any other period or the entire year. The interim unaudited, consolidated financial statements should be read in conjunction with the audited, consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2021.

Fair Value of Financial Instruments

Fair Value of Financial InstrumentsThe carrying amounts of our cash and cash equivalents, accounts receivable, finance receivables and accounts payable approximate fair value as of June 30, 2022 and December 31, 2021. The fair values of our investment securities are disclosed in note 5, our recognized multiemployer pension withdrawal liabilities in note 7, our short- and long-term debt in note 9 and our derivative instruments in note 15. We apply a fair value hierarchy (Levels 1, 2 and 3) when measuring and reporting items at fair value. Fair values are based on listed market prices (Level 1), when such prices are available. To the extent that listed market prices are not available, fair value is determined based on other relevant factors, including dealer price quotations (Level 2). If listed market prices or other relevant factors are not available, inputs are developed from unobservable data reflecting our own assumptions and include situations where there is little or no market activity for the asset or liability (Level 3). We utilized Level 1 inputs in the fair value hierarchy to determine the fair value of our cash and cash equivalents, and Level 2 inputs to determine the fair value of our accounts receivable, finance receivables and accounts payable.

Accounting Estimates

Use of Estimates

The preparation of the accompanying interim unaudited, consolidated financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingencies at the date of these financial statements, as well as the reported amounts of revenues and expenses during the reporting period.

Although our estimates contemplate current and expected future conditions, as applicable, it is reasonably possible that actual conditions could differ from our expectations, which could materially affect our results of operations and financial position. As a result, our accounting estimates and assumptions may change significantly over time.

Adoption of New Accounting Standards

Adoption of New Accounting Standards

Accounting pronouncements adopted during the periods covered by the unaudited, consolidated financial statements did not have a material impact on our consolidated financial position, results of operations or cash flows. For accounting standards adopted in the period ended June 30, 2021, refer to note 1 to our audited, consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2021.

Accounting Standards Issued But Not Yet Effective

Accounting pronouncements issued before, but not effective until after, June 30, 2022, are not expected to have a material impact on our consolidated financial position, results of operations or cash flows.

Investment Impairments

Investment Impairments

We have concluded that no material impairment losses existed as of June 30, 2022. In making this determination, we considered the financial condition and prospects of each issuer, the magnitude of the losses compared with the cost, the probability that we will be unable to collect all amounts due according to the contractual terms of the security, the credit rating of the security and our ability and intent to hold these investments until the anticipated recovery in market value occurs.

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Cash and Cash Equivalents (Policies)

6 Months Ended

Jun. 30, 2022

Cash and Cash Equivalents [Abstract]

Investment Impairments

Investment Impairments

We have concluded that no material impairment losses existed as of June 30, 2022. In making this determination, we considered the financial condition and prospects of each issuer, the magnitude of the losses compared with the cost, the probability that we will be unable to collect all amounts due according to the contractual terms of the security, the credit rating of the security and our ability and intent to hold these investments until the anticipated recovery in market value occurs.

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Revenue Recognition (Tables)

6 Months Ended

Jun. 30, 2022

Revenue from Contract with Customer [Abstract]

Disaggregation of Revenue

Disaggregation of Revenue

	Three Months Ended  June 30,				Six Months Ended  June 30,
	2022		2021		2022		2021
Revenue:
Next Day Air	$	2,656	$	2,456	$	5,250	$	4,787
Deferred	1,392		1,313		2,812		2,573
Ground	11,411		10,633		22,521		21,052
U.S. Domestic Package	15,459		14,402		30,583		28,412
Domestic	829		936		1,680		1,864
Export	3,976		3,674		7,754		7,167
Cargo & Other	268		207		515		393
International Package	5,073		4,817		9,949		9,424
Forwarding	2,389		2,309		4,978		4,381
Logistics	1,290		1,162		2,541		2,266
Freight	—		297		—		1,064
Other	555		437		1,093		785
Supply Chain Solutions	4,234		4,205		8,612		8,496
Consolidated revenue	$	24,766	$	23,424	$	49,144	$	46,332

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STOCK-BASED COMPENSATION (Tables)

6 Months Ended

Jun. 30, 2022

Share-Based Payment Arrangement [Abstract]

Weighted-Average Assupmtions and Fair Values Used of Performance Units Granted

The weighted-average assumptions used and the weighted-average fair values of the LTIP awards granted in 2022 and 2021 are as follows:

	2022			2021
Risk-free interest rate	2.29		%	0.19		%
Expected volatility	31.90		%	30.70		%
Weighted-average fair value of RPUs granted	$	230.67		$	168.05
Share payout	107.50		%	102.39		%

Fair Value of Employee Stock Options Granted and Determined by Black-Scholes Valuation Model Assumptions

The fair value of each option grant is estimated using the Black-Scholes option pricing model. The weighted-average assumptions used and the weighted-average fair values of options granted in 2022 and 2021 are as follows:

	2022			2021
Expected dividend yield	2.35		%	3.31		%
Risk-free interest rate	2.39		%	0.84		%
Expected life (in years)	7.5			7.5
Expected volatility	25.04		%	23.15		%
Weighted-average fair value of options granted	$	48.45		$	23.71

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CASH AND INVESTMENTS (Tables)

6 Months Ended

Jun. 30, 2022

Marketable Securities [Abstract]

Available-for-sale Securities

The following is a summary of marketable securities classified as trading and available-for-sale as of June 30, 2022 and December 31, 2021 (in millions):

	Cost		Unrealized Gains		Unrealized Losses		Estimated Fair Value
June 30, 2022:
Current trading marketable securities:
Equity securities	$	2	$	—	$	—	$	2
Total trading marketable securities	2		—		—		2
Current available-for-sale securities:
U.S. government and agency debt securities	200		—		(5)		195
Mortgage and asset-backed debt securities	12		—		—		12
Corporate debt securities	125		—		(3)		122
U.S. state and local municipal debt securities	5		—		—		5
Non-U.S. government debt securities	—		—		—		—
Total available-for-sale marketable securities	342		—		(8)		334
Total current marketable securities	$	344	$	—	$	(8)	$	336
	Cost		Unrealized Gains		Unrealized Losses		Estimated Fair Value
December 31, 2021:
Current trading marketable securities:
Equity securities	$	2	$	—	$	—	$	2
Total trading marketable securities	2		—		—		2
Current available-for-sale securities:
U.S. government and agency debt securities	199		2		(1)		200
Mortgage and asset-backed debt securities	7		—		—		7
Corporate debt securities	121		—		—		121
U.S. state and local municipal debt securities	5		—		—		5
Non-U.S. government debt securities	3		—		—		3
Total available-for-sale marketable securities	335		2		(1)		336
Total current marketable securities	$	337	$	2	$	(1)	$	338

Investments Classified by Contractual Maturity Date

The amortized cost and estimated fair value of marketable securities as of June 30, 2022 by contractual maturity are shown below (in millions). Actual maturities may differ from contractual maturities because the issuers of the securities may have the right to prepay obligations with or without prepayment penalties.

	Cost		Estimated Fair Value
Due in one year or less	$	30	$	29
Due after one year through three years	312		305
Due after three years through five years	—		—
Due after five years	—		—
	342		334
Equity securities	2		2
	$	344	$	336

Cash and Cash Equivalents and Restricted Cash

A reconciliation of cash and cash equivalents and restricted cash from the consolidated balance sheets to the statements of consolidated cash flows is shown below (in millions):

	June 30, 2022		December 31, 2021		June 30, 2021
Cash and cash equivalents	$	11,735	$	10,255	$	9,608
Restricted cash	—		—		—
Total cash, cash equivalents and restricted cash	$	11,735	$	10,255	9,608

Fair Value, Assets Measured on Recurring Basis

The following table presents information about our investments measured at fair value on a recurring basis as of June 30, 2022 and December 31, 2021, and indicates the fair value hierarchy of the valuation techniques utilized to determine such fair value (in millions):

	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance
June 30, 2022:
Marketable securities:
U.S. government and agency debt securities	$	195	$	—	$	—	$	195
Mortgage and asset-backed debt securities	—		12		—		12
Corporate debt securities	—		122		—		122
U.S. state and local municipal debt securities	—		5		—		5
Equity securities	—		2		—		2
Non-U.S. government debt securities	—		—		—		—
Total marketable securities	195		141		—		336
Other non-current investments	19		—		—		19
Total	$	214	$	141	$	—	$	355

December 31, 2021:
Marketable securities:
U.S. government and agency debt securities	$	200	$	—	$	—	$	200
Mortgage and asset-backed debt securities	—		7		—		7
Corporate debt securities	—		121		—		121
U.S. state and local municipal debt securities	—		5		—		5
Equity securities	—		2		—		2
Non-U.S. government debt securities	—		3		—		3
Total marketable securities	200		138		—		338
Other non-current investments	23		—		—		23
Total	$	223	$	138	$	—	$	361

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PROPERTY, PLANT AND EQUIPMENT (Tables)

6 Months Ended

Jun. 30, 2022

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment

Property, plant and equipment as of June 30, 2022 and December 31, 2021 consisted of the following (in millions):

	2022		2021
Vehicles	$	10,181	$	10,018
Aircraft	22,507		21,973
Land	2,106		2,140
Buildings	5,794		5,802
Building and leasehold improvements	5,027		5,010
Plant equipment	15,629		15,650
Technology equipment	2,858		2,798
Construction-in-progress	1,520		1,418
	65,622		64,809
Less: Accumulated depreciation and amortization	(32,135)		(31,334)
Property, Plant and Equipment, Net	$	33,487	$	33,475

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EMPLOYEE BENEFIT PLANS (Tables)

6 Months Ended

Jun. 30, 2022

Retirement Benefits [Abstract]

Schedule of Defined Benefit Plans Disclosures

Information about the net periodic benefit cost (income) for our company-sponsored pension and postretirement benefit plans for the three and six months ended June 30, 2022 and 2021 is as follows (in millions):

	U.S. Pension Benefits				U.S. Postretirement Medical Benefits				International Pension Benefits
	2022		2021		2022		2021		2022		2021
Three Months Ended June 30:
Service cost	$	506	$	461	$	7	$	7	$	17	$	19
Interest cost	487		481		21		20		11		10
Expected return on assets	(820)		(831)		(1)		(1)		(20)		(17)
Amortization of prior service cost	23		34		—		1		1		1
Net periodic benefit cost	$	196	$	145	$	27	$	27	$	9	$	13
	U.S. Pension Benefits				U.S. Postretirement Medical Benefits				International Pension Benefits
	2022		2021		2022		2021		2022		2021
Six Months Ended June 30:
Service cost	$	1,012	$	1,014	$	15	$	14	$	35	$	38
Interest cost	975		969		41		39		23		20
Expected return on assets	(1,640)		(1,677)		(2)		(3)		(40)		(34)
Amortization of prior service cost	46		67		—		3		1		1
Actuarial (gain) loss	—		(3,290)		—		—		—		—
Settlement and curtailment (gain) loss	—		—		—		—		(33)		—
Net periodic benefit (income) cost	$	393	$	(2,917)	$	54	$	53	$	(14)	$	25

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GOODWILL AND INTANGIBLE ASSETS (Tables)

6 Months Ended

Jun. 30, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Goodwill

The following table indicates the allocation of goodwill as of June 30, 2022 and December 31, 2021 (in millions):

	U.S. Domestic Package		International Package		Supply Chain Solutions		Consolidated
December 31, 2021:	$	847	$	403	$	2,442	$	3,692
Acquired	—		—		61		61
Currency / Other	—		(21)		(57)		(78)
June 30, 2022:	$	847	$	382	$	2,446	$	3,675

Schedule of Intangible Assets (Excluding Goodwill)

The following is a summary of intangible assets as of June 30, 2022 and December 31, 2021 (in millions):

	Gross Carrying Amount		Accumulated Amortization		Net Carrying Value
June 30, 2022:
Capitalized software	$	5,048	$	(3,406)	$	1,642
Licenses	48		(22)		26
Franchise rights	138		(36)		102
Customer relationships	720		(435)		285
Trade name	67		(5)		62
Trademarks, patents and other	169		(14)		155
Amortizable intangible assets	$	6,190	$	(3,918)	$	2,272
Indefinite-lived intangible assets	204		—		204
Total Intangible Assets, Net	$	6,394	$	(3,918)	$	2,476
December 31, 2021:
Capitalized software	$	4,910	$	(3,275)	$	1,635
Licenses	58		(27)		31
Franchise rights	119		(37)		82
Customer relationships	733		(408)		325
Trade name	67		(1)		66
Trademarks, patents and other	158		(15)		143
Amortizable intangible assets	$	6,045	$	(3,763)	$	2,282
Indefinite-lived intangible assets	204		—		204
Total Intangible Assets, Net	$	6,249	$	(3,763)	$	2,486

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DEBT AND FINANCING ARRANGEMENTS (Tables)

6 Months Ended

Jun. 30, 2022

Debt Disclosure [Abstract]

Schedule of Long-term Debt Instruments

The carrying value of our outstanding debt obligations as of June 30, 2022 and December 31, 2021 consists of the following (in millions):

	Principal Amount			Carrying Value
			Maturity	2022		2021
Fixed-rate senior notes:
2.450% senior notes	1,000		2022	999		1,010
2.350% senior notes	—		2022	—		600
2.500% senior notes	1,000		2023	999		998
2.800% senior notes	500		2024	498		498
2.200% senior notes	400		2024	399		399
3.900% senior notes	1,000		2025	997		996
2.400% senior notes	500		2026	499		498
3.050% senior notes	1,000		2027	994		994
3.400% senior notes	750		2029	746		746
2.500% senior notes	400		2029	397		397
4.450% senior notes	750		2030	744		744
6.200% senior notes	1,500		2038	1,484		1,484
5.200% senior notes	500		2040	494		494
4.875% senior notes	500		2040	491		491
3.625% senior notes	375		2042	368		368
3.400% senior notes	500		2046	492		492
3.750% senior notes	1,150		2047	1,137		1,137
4.250% senior notes	750		2049	743		743
3.400% senior notes	700		2049	688		688
5.300% senior notes	1,250		2050	1,231		1,231
Floating-rate senior notes:
Floating-rate senior notes	—		2022	—		400
Floating-rate senior notes	500		2023	500		500
Floating-rate senior notes	1,039		2049-2067	1,027		1,027
Debentures:
7.620% debentures	276		2030	280		280
Pound Sterling notes:
5.500% notes	81		2031	80		89
5.125% notes	553		2050	525		583
Euro senior notes:
0.375% senior notes	728		2023	727		791
1.625% senior notes	728		2025	726		791
1.000% senior notes	520		2028	518		564
1.500% senior notes	520		2032	517		564
Canadian senior notes:
2.125% senior notes	582		2024	580		585
Finance lease obligations	372		2022-2046	372		408
Facility notes and bonds	320		2029-2045	320		320
Other debt	4		2022-2025	4		5
Total debt	$	20,748		20,576		21,915
Less: current maturities				(2,579)		(2,131)
Long-term debt				$	17,997	$	19,784

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LEASES (Tables)

6 Months Ended

Jun. 30, 2022

Leases [Abstract]

Lease Cost

The components of lease expense for the three and six months ended June 30, 2022 and 2021 are as follows (in millions):

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Operating lease costs	$	184	$	179	$	367	$	354
Finance lease costs:
Amortization of assets	28		23		56		46
Interest on lease liabilities	3		3		7		7
Total finance lease costs	31		26		63		53
Variable lease costs	64		62		132		127
Short-term lease costs	323		251		625		530
Total lease costs	$	602	$	518	$	1,187	$	1,064

Supplemental cash flow information related to leases is as follows (in millions):

	Six Months Ended June 30,
	2022		2021
Cash paid for amounts included in measurement of obligations:
Operating cash flows from operating leases	$	354	$	364
Operating cash flows from finance leases	2		7
Financing cash flows from finance leases	105		33
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	345	$	854
Finance leases	72		113

Supplemental Balance Sheet

Supplemental information related to leases and location within our consolidated balance sheets is as follows (in millions, except lease term and discount rate):

	June 30, 2022			December 31, 2021
Operating Leases:
Operating lease right-of-use assets	$	3,436		$	3,562
Current maturities of operating leases	$	562		$	580
Non-current operating leases	2,962			3,033
Total operating lease obligations	$	3,524		$	3,613
Finance Leases:
Property, plant and equipment, net	$	1,008		$	1,225
Current maturities of long-term debt, commercial paper and finance leases	$	79		$	129
Long-term debt and finance leases	293			279
Total finance lease obligations	$	372		$	408
Weighted average remaining lease term (in years):
Operating leases	11.3			11.7
Finance leases	8.6			8.0
Weighted average discount rate:
Operating leases	2.06		%	1.94		%
Finance leases	3.06		%	2.79		%

Operating Leases Maturity Schedule

Maturities of lease obligations as of June 30, 2022 are as follows (in millions):

	Finance Leases		Operating Leases
2022	$	49	$	304
2023	80		620
2024	54		521
2025	40		461
2026	33		415
Thereafter	196		1,748
Total lease payments	452		4,069
Less: Imputed interest	(80)		(545)
Total lease obligations	372		3,524
Less: Current obligations	(79)		(562)
Long-term lease obligations	$	293	$	2,962

Finance Leases Maturity Schedule

Maturities of lease obligations as of June 30, 2022 are as follows (in millions):

	Finance Leases		Operating Leases
2022	$	49	$	304
2023	80		620
2024	54		521
2025	40		461
2026	33		415
Thereafter	196		1,748
Total lease payments	452		4,069
Less: Imputed interest	(80)		(545)
Total lease obligations	372		3,524
Less: Current obligations	(79)		(562)
Long-term lease obligations	$	293	$	2,962

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SHAREOWNERS' EQUITY (Tables)

6 Months Ended

Jun. 30, 2022

Stockholders' Equity Note [Abstract]

Schedule of Stockholders Equity

Three Months Ended June 30:	2022			2021
	Shares	Dollars		Shares	Dollars
Class A Common Stock
Balance at beginning of period	140	$	2	148	$	2
Stock award plans	2	—		2	—
Conversions of class A to class B common stock	(4)	—		(6)	—
Class A shares issued at end of period	138	$	2	144	$	2
Class B Common Stock
Balance at beginning of period	734	$	7	722	$	7
Common stock purchases	(6)	—		—	—
Conversions of class A to class B common stock	4	—		6	—
Class B shares issued at end of period	732	$	7	728	$	7
Additional Paid-In Capital
Balance at beginning of period		$	1,231		$	1,049
Common stock purchases		(983)			—
Stock award plans		212			193
Common stock issuances		113			87
Balance at end of period		$	573		$	1,329
Retained Earnings
Balance at beginning of period		$	17,433		$	10,748
Net income attributable to common shareowners		2,849			2,676
Dividends ($1.52 and $1.02 per share) (1)		(1,327)			(893)
Other		3			—
Balance at end of period		$	18,958		$	12,531
Non-Controlling Minority Interest
Balance at beginning of period		$	18		$	12
Change in non-controlling minority interest		3			5
Balance at end of period		$	21		$	17
(1) The dividend per share amount is the same for both class A and class B common stock. Dividends include $44 and $33 million as of June 30, 2022 and 2021, respectively, that were settled in shares of class A common stock.

Six Months Ended June 30:	2022			2021
	Shares	Dollars		Shares	Dollars
Class A Common Stock:
Balance at beginning of period	138	$	2	147	$	2
Stock award plans	6	—		6	—
Common stock issuances	1	—		1	—
Conversions of class A to class B common stock	(7)	—		(10)	—
Class A shares outstanding at end of period	138	$	2	144	$	2
Class B Common Stock:
Balance at beginning of period	732	$	7	718	$	7
Common stock purchases	(7)	—		—	—
Conversions of class A to class B common stock	7	—		10	—
Class B shares outstanding at end of period	732	$	7	728	$	7
Additional Paid-In Capital:
Balance at beginning of period		$	1,343		$	865
Common stock purchases		(1,243)			—
Stock award plans		177			223
Common stock issuances		296			241
Balance at end of period		$	573		$	1,329
Retained Earnings:
Balance at beginning of period		$	16,179		$	6,896
Net income attributable to controlling interests		5,511			7,468
Dividends ($3.04 and $2.04 per share) (1)		(2,733)			(1,831)
Other		1			(2)
Balance at end of period		$	18,958		$	12,531
Non-Controlling Interests:
Balance at beginning of period		$	16		$	12
Change in non-controlling interest		5			5
Balance at end of period		$	21		$	17
(1) The dividend per share amount is the same for both class A and class B common stock. Dividends include $166 and $113 million as of June 30, 2022 and 2021, respectively, that were settled in shares of class A common stock.

Schedule of Accumulated Other Comprehensive Income (Loss)

The activity in accumulated other comprehensive income for the three and six months ended June 30, 2022 and 2021 was as follows (in millions):

Three Months Ended June 30:	2022		2021
Foreign Currency Translation Gain (Loss), Net of Tax:
Balance at beginning of period	$	(1,202)	$	(1,063)
Translation adjustment (net of tax effect of $7 and $(1))	(245)		48
Balance at end of period	(1,447)		(1,015)
Unrealized Gain (Loss) on Marketable Securities, Net of Tax:
Balance at beginning of period	(7)		2
Current period changes in fair value (net of tax effect of $0 and $0)	(1)		—
Reclassification to earnings (net of tax effect of $0 and $0)	—		(1)
Balance at end of period	(8)		1
Unrealized Gain (Loss) on Cash Flow Hedges, Net of Tax:
Balance at beginning of period	26		(109)
Current period changes in fair value (net of tax effect of $89 and $(14))	283		(43)
Reclassification to earnings (net of tax effect of $(16) and $(1))	(49)		(3)
Balance at end of period	260		(155)
Unrecognized Pension and Postretirement Benefit Costs, Net of Tax:
Balance at beginning of period	(2,074)		(3,489)
Net actuarial gain (loss) resulting from remeasurements of plan assets and liabilities (net of tax effect of $0 and $495)	—		1,569
Reclassification to earnings (net of tax effect of $6 and $8)	18		25
Balance at end of period	(2,056)		(1,895)
Accumulated other comprehensive income (loss) at end of period	$	(3,251)	$	(3,064)

Six Months Ended June 30:	2022		2021
Foreign currency translation gain (loss), net of tax:
Balance at beginning of period	$	(1,162)	$	(981)
Translation adjustment (net of tax effect of $7 and $29)	(285)		(34)
Balance at end of period	(1,447)		(1,015)
Unrealized gain (loss) on marketable securities, net of tax:
Balance at beginning of period	(1)		6
Current period changes in fair value (net of tax effect of $(2) and $0)	(7)		(1)
Reclassification to earnings (net of tax effect of $0 and $0)	—		(4)
Balance at end of period	(8)		1
Unrealized gain (loss) on cash flow hedges, net of tax:
Balance at beginning of period	(17)		(223)
Current period changes in fair value (net of tax effect of $112 and $25)	355		81
Reclassification to earnings (net of tax effect of $(25) and $(4))	(78)		(13)
Balance at end of period	260		(155)
Unrecognized pension and postretirement benefit costs, net of tax:
Balance at beginning of period	(2,098)		(5,915)
Net actuarial gain (loss) resulting from remeasurements of plan assets and liabilities (net of tax effect of $11 and $2,039)	31		6,470
Reclassification to earnings (net of tax effect of $3 and $(772))	11		(2,450)
Balance at end of period	(2,056)		(1,895)
Accumulated other comprehensive income (loss) at end of period	$	(3,251)	$	(3,064)

Gains (Losses) Reclassified from AOCI

Detail of the gains (losses) reclassified from AOCI to the statements of consolidated income for the three and six months ended June 30, 2022 and 2021 is as follows (in millions):

	Amount Reclassified from AOCI				Affected Line Item in the Income Statement
Three Months Ended June 30:	2022		2021
Unrealized Gain (Loss) on Marketable Securities:
Realized gain (loss) on sale of securities	$	—	$	1	Investment income and other
Income tax (expense) benefit	—		—		Income tax expense
Impact on net income	—		1		Net income
Unrealized Gain (Loss) on Cash Flow Hedges:
Interest rate contracts	(2)		(3)		Interest expense
Foreign currency exchange contracts	67		7		Revenue
Income tax (expense) benefit	(16)		(1)		Income tax expense
Impact on net income	49		3		Net income
Unrecognized Pension and Postretirement Benefit Costs:
Prior service costs	(24)		(36)		Investment income and other
Prior service credit for divested business	—		69		Other expenses
Plan amendments for divested business	—		(66)		Other expenses
Income tax (expense) benefit	6		8		Income tax expense
Impact on net income	(18)		(25)		Net income
Total amount reclassified for the period	$	31	$	(21)	Net income

	Amount Reclassified from AOCI				Affected Line Item in the Income Statement
Six Months Ended June 30:	2022		2021
Unrealized gain (loss) on marketable securities:
Realized gain (loss) on sale of securities	$	—	$	4	Investment income and other
Income tax (expense) benefit	—		—		Income tax expense
Impact on net income	—		4		Net income
Unrealized gain (loss) on cash flow hedges:
Interest rate contracts	(5)		(5)		Interest expense
Foreign currency exchange contracts	108		22		Revenue
Income tax (expense) benefit	(25)		(4)		Income tax expense
Impact on net income	78		13		Net income
Unrecognized pension and postretirement benefit costs:
Prior service costs	(47)		(71)		Investment income and other
Prior service credit for divested business	—		69		Other expenses
Plan amendments for divested business	—		(66)		Other expenses
Remeasurement of benefit obligation	—		3,290		Investment income and other
Curtailment of benefit obligation	33		—		Investment income and other
Income tax (expense) benefit	3		(772)		Income tax expense
Impact on net income	(11)		2,450		Net income
Total amount reclassified for the period	$	67	$	2,467	Net income

Activity in Deferred Compensation Program

Activity in the deferred compensation program for the three and six months ended June 30, 2022 and 2021 was as follows (in millions):

	2022			2021
Three Months Ended June 30:	Shares	Dollars		Shares	Dollars
Deferred Compensation Obligations:
Balance at beginning of period		$	12		$	15
Reinvested dividends		1			1
Benefit payments		(1)			—
Balance at end of period		$	12		$	16
Treasury Stock:
Balance at beginning of period	—	$	(12)	—	$	(15)
Reinvested dividends	—	(1)		—	(1)
Benefit payments	—	1		—	—
Balance at end of period	—	$	(12)	—	$	(16)

	2022			2021
Six Months Ended June 30:	Shares	Dollars		Shares	Dollars
Deferred Compensation Obligations:
Balance at beginning of period		$	16		$	20
Reinvested dividends		1			1
Benefit payments		(5)			(5)
Balance at end of period		$	12		$	16
Treasury Stock:
Balance at beginning of period	—	$	(16)	—	$	(20)
Reinvested dividends	—	(1)		—	(1)
Benefit payments	—	5		—	5
Balance at end of period	—	$	(12)	—	$	(16)

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SEGMENT INFORMATION (Tables)

6 Months Ended

Jun. 30, 2022

Segment Reporting [Abstract]

Results of Operations

Results of operations for the three and six months ended June 30, 2022 and 2021 are as follows (in millions):

	Three Months Ended  June 30,				Six Months Ended  June 30,
	2022		2021		2022		2021
Revenue:
U.S. Domestic Package	$	15,459	$	14,402	$	30,583	$	28,412
International Package	5,073		4,817		9,949		9,424
Supply Chain Solutions	4,234		4,205		8,612		8,496
Consolidated revenue	$	24,766	$	23,424	$	49,144	$	46,332
Operating Profit:
U.S. Domestic Package	$	1,829	$	1,567	$	3,491	$	2,926
International Package	1,193		1,184		2,309		2,269
Supply Chain Solutions	513		507		986		828
Consolidated operating profit	$	3,535	$	3,258	$	6,786	$	6,023

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EARNINGS PER SHARE (Tables)

6 Months Ended

Jun. 30, 2022

Earnings Per Share [Abstract]

Schedule of Calculation of Numerator and Denominator in Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share for the three and six months ended June 30, 2022 and 2021 (in millions, except per share amounts):

	Three Months Ended  June 30,				Six Months Ended  June 30,
	2022		2021		2022		2021
Numerator:
Net income attributable to common shareowners	$	2,849	$	2,676	$	5,511	$	7,468
Denominator:
Weighted average shares	871		870		871		869
Vested portion of restricted units	3		5		3		5
Denominator for basic earnings per share	874		875		874		874
Effect of dilutive securities:
Restricted units	1		2		3		3
Stock options	1		1		1		1
Denominator for diluted earnings per share	876		878		878		878
Basic earnings per share	$	3.26	$	3.06	$	6.31	$	8.54
Diluted earnings per share	$	3.25	$	3.05	$	6.28	$	8.51

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DERIVATIVE INSTRUMENTS AND RISK MANAGEMENT (Tables)

6 Months Ended

Jun. 30, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Notional Amounts of Outstanding Derivative Positions

As of June 30, 2022 and December 31, 2021, the notional amounts of our outstanding derivative positions were as follows (in millions):

		June 30, 2022	December 31, 2021
Currency hedges:
Euro	EUR	4,279	4,257
British Pound Sterling	GBP	1,421	1,402
Canadian Dollar	CAD	1,655	1,633
Hong Kong Dollar	HKD	4,327	4,033
Interest rate hedges:
Fixed to Floating Interest Rate Swaps	USD	1,000	1,000
Floating to Fixed Interest Rate Swaps	USD	28	28

Schedule of Derivative Instruments in Statement of Financial Position, Fair Value

The following table indicates the location in the consolidated balance sheets where our derivative assets and liabilities have been recognized, the fair value hierarchy level applicable to each derivative type and the related fair values of those derivatives.

We have master netting arrangements with substantially all of our counterparties giving us the right of offset for our derivative positions. However, we have not elected to offset the fair value positions of our derivative contracts recorded in the consolidated balance sheets. The columns labeled Net Amounts if Right of Offset had been Applied indicate the potential net fair value positions by type of contract and location in the consolidated balance sheets had we elected to apply the right of offset as of June 30, 2022 and December 31, 2021 (in millions):

		Fair Value Hierarchy Level	Gross Amounts Presented in Consolidated Balance Sheets				Net Amounts if Right of Offset had been Applied
Asset Derivatives	Balance Sheet Location		June 30, 2022		December 31, 2021		June 30, 2022		December 31, 2021
Derivatives designated as hedges:
Foreign currency exchange contracts	Other current assets	Level 2	$	214	$	100	$	207	$	82
Interest rate contracts	Other current assets	Level 2	—		11		—		11
Foreign currency exchange contracts	Other non-current assets	Level 2	328		123		320		90
Derivatives not designated as hedges:
Foreign currency exchange contracts	Other current assets	Level 2	2		2		2		2
Total Asset Derivatives			$	544	$	236	$	529	$	185

		Fair Value Hierarchy Level	Gross Amounts Presented in Consolidated Balance Sheets				Net Amounts if Right of Offset had been Applied
Liability Derivatives	Balance Sheet Location		June 30, 2022		December 31, 2021		June 30, 2022		December 31, 2021
Derivatives designated as hedges:
Foreign currency exchange contracts	Other current liabilities	Level 2	$	7	$	19	$	—	$	1
Interest rate contracts	Other current liabilities	Level 2	1		—		1		—
Foreign currency exchange contracts	Other non-current liabilities	Level 2	8		33		—		—
Interest rate contracts	Other non-current liabilities	Level 2	6		10		6		10
Total Liability Derivatives			$	22	$	62	$	7	$	11

The following table indicates the amounts that were recorded in the consolidated balance sheets related to cumulative basis adjustments for fair value hedges as of June 30, 2022 and December 31, 2021 (in millions):

Line Item in the Consolidated Balance Sheets in Which the Hedged Item is Included	Carrying Amount of Hedged Liabilities		Cumulative Amount of Fair Value Hedge Adjustments		Carrying Amount of Hedged Liabilities		Cumulative Amount  of Fair Value Hedge Adjustments
	June 30, 2022		June 30, 2022		December 31, 2021		December 31, 2021
Current maturities of long-term debt, commercial paper and finance leases	$	999	$	(1)	$	1,010	$	11
Long-term debt and finance leases	$	280	$	5	$	280	$	5

Schedule of Derivatives Instruments Statements of Financial Performance and Financial Position, Location

The following table indicates the amount of gains and (losses) that have been recognized in the statements of consolidated income for fair value and cash flow hedges, as well as the associated gain or (loss) for the underlying hedged item for fair value hedges for the three and six months ended June 30, 2022 and 2021 (in millions):

	Three Months Ended June 30,
Location and Amount of Gain (Loss) Recognized in Income on Fair Value and Cash Flow Hedging Relationships	2022						2021
	Revenue		Interest Expense		Investment Income and Other		Revenue		Interest Expense		Investment Income and Other
Gain or (loss) on fair value hedging relationships:
Interest Contracts:
Hedged items	$	—	$	3	$	—	$	—	$	4	$	—
Derivatives designated as hedging instruments	—		(3)		—		—		(4)		—
Gain or (loss) on cash flow hedging relationships:
Interest Contracts:
Amount of gain or (loss) reclassified from accumulated other comprehensive income	—		(2)		—		—		(3)		—
Foreign Currency Exchange Contracts:
Amount of gain or (loss) reclassified from accumulated other comprehensive income	67		—				7				—
Total amounts of income and expense line items presented in the statement of income in which the effects of fair value or cash flow hedges are recorded	$	67	$	(2)	$	—	$	7	$	(3)	$	—

	Six Months Ended June 30,
	2022						2021
Location and Amount of Gain (Loss) Recognized in Income on Fair Value and Cash Flow Hedging Relationships	Revenue		Interest Expense		Investment Income and Other		Revenue		Interest Expense		Investment Income and Other
Gain or (loss) on fair value hedging relationships:
Interest Contracts:
Hedged items	$	—	$	11	$	—	$	—	$	10	$	—
Derivatives designated as hedging instruments	—		(11)		—		—		(10)		—
Gain or (loss) on cash flow hedging relationships:
Interest Contracts:
Amount of gain or (loss) reclassified from accumulated other comprehensive income	—		(5)		—		—		(5)		—
Foreign Currency Exchange Contracts:
Amount of gain or (loss) reclassified from accumulated other comprehensive income	108		—		—		22		—		—
Total amounts of income and expense line items presented in the statement of income in which the effects of fair value or cash flow hedges are recorded	$	108	$	(5)	$	—	$	22	$	(5)	$	—

Schedule of Derivative Instruments, Effect on Other Comprehensive Income (Loss)

The following table indicates the amount of gains and (losses) that have been recognized in AOCI for the three and six months ended June 30, 2022 and 2021 for those derivatives designated as cash flow hedges (in millions):

Three Months Ended June 30:
Derivative Instruments in Cash Flow Hedging Relationships	Amount of Gain (Loss) Recognized in AOCI on Derivatives
	2022		2021
Interest rate contracts	$	1	$	(3)
Foreign currency exchange contracts	371		(54)
Total	$	372	$	(57)
Six Months Ended June 30:
Derivative Instruments in Cash Flow Hedging Relationships	Amount of Gain (Loss) Recognized in AOCI on Derivatives
	2022		2021
Interest rate contracts	$	4	$	—
Foreign currency exchange contracts	463		106
Total	$	467	$	106

The following table indicates the amount of gains and (losses) that have been recognized in AOCI within foreign currency translation adjustment for the three and six months ended June 30, 2022 and 2021 for those instruments designated as net investment hedges (in millions):

Three Months Ended June 30:
Non-derivative Instruments in Net Investment Hedging Relationships	Amount of Gain (Loss) Recognized in AOCI on Debt
	2022		2021
Foreign denominated debt	$	181	$	(47)
Total	$	181	$	(47)
Six Months Ended June 30:
Non-derivative Instruments in Net Investment Hedging Relationships	Amount of Gain (Loss) Recognized in AOCI on Debt
	2022		2021
Foreign denominated debt	$	227	$	77
Total	$	227	$	77

Schedule of Derivative Instruments, Gain (Loss) in Statement of Financial Performance

The following is a summary of the amounts recorded in the statements of consolidated income related to fair value changes and settlements of foreign currency exchange forward contracts not designated as hedges for the three and six months ended June 30, 2022 and 2021 (in millions):

Derivative Instruments Not Designated in Hedging Relationships	Location of Gain (Loss) Recognized in Income	Amount of Gain (Loss) Recognized in Income
		2022		2021
Three Months Ended June 30:
Foreign currency exchange contracts	Investment income and other	$	(58)	$	3
Total		$	(58)	$	3
Six Months Ended June 30:
Foreign currency exchange contracts	Investment income and other	$	(86)	$	(3)
Total		$	(86)	$	(3)

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TRANSFORMATION STRATEGY x (Tables)

6 Months Ended

Jun. 30, 2022

Restructuring and Related Activities [Abstract]

Restructuring and Related Costs

The table below presents transformation strategy costs for the three and six months ended June 30, 2022 and 2021 (in millions):

	Three Months Ended  June 30,				Six Months Ended  June 30,
	2022		2021		2022		2021
Transformation Strategy Costs:
Compensation and benefits	$	23	$	55	$	56	$	131
Total other expenses	18		61		40		103
Total Transformation Strategy Costs	$	41	$	116	$	96	$	234
Income Tax Benefit from Transformation Strategy Costs	(10)		(28)		(22)		(56)
After Tax Transformation Strategy Costs	$	31	$	88	$	74	$	178

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Revenue Recognition - Disaggregation of Revenue (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Disaggregation of Revenue
Revenue	$ 24,766	$ 23,424	$ 49,144	$ 46,332
Forwarding
Disaggregation of Revenue
Revenue	2,389	2,309	4,978	4,381
Logistics
Disaggregation of Revenue
Revenue	1,290	1,162	2,541	2,266
Freight
Disaggregation of Revenue
Revenue	0	297	0	1,064
Other
Disaggregation of Revenue
Revenue	555	437	1,093	785
U.S | Next Day Air
Disaggregation of Revenue
Revenue	2,656	2,456	5,250	4,787
U.S | Deferred
Disaggregation of Revenue
Revenue	1,392	1,313	2,812	2,573
U.S | Ground
Disaggregation of Revenue
Revenue	11,411	10,633	22,521	21,052
International | Domestic
Disaggregation of Revenue
Revenue	829	936	1,680	1,864
International | Export
Disaggregation of Revenue
Revenue	3,976	3,674	7,754	7,167
International | Cargo & Other
Disaggregation of Revenue
Revenue	268	207	515	393
U.S. Domestic Package
Disaggregation of Revenue
Revenue	15,459	14,402	30,583	28,412
U.S. Domestic Package | U.S | Operating Segments
Disaggregation of Revenue
Revenue	15,459	14,402	30,583	28,412
International Package
Disaggregation of Revenue
Revenue	5,073	4,817	9,949	9,424
International Package | International | Operating Segments
Disaggregation of Revenue
Revenue	5,073	4,817	9,949	9,424
Supply Chain Solutions
Disaggregation of Revenue
Revenue	4,234	4,205	8,612	8,496
Supply Chain Solutions | Operating Segments
Disaggregation of Revenue
Revenue	$ 4,234	$ 4,205	$ 8,612	$ 8,496

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Revenue Recognition - Narratives (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021
Revenue from Contract with Customer [Abstract]
Less: Allowance for credit losses	$ (145)		$ (145)		$ (128)
Provisions for doubtful receivables	52	$ 39	106	$ 80
Contract assets	350		350		304
Deferred revenue	339		339		314
Deferred revenue, current	10		10		27
Deferred revenue, noncurrent	$ 26		$ 26		$ 25

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STOCK-BASED COMPENSATION - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Millions		3 Months Ended		6 Months Ended
	Mar. 23, 2022	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Mar. 21, 2022	Feb. 09, 2022
Stockholders Equity Note [Line Items]
Stock compensation expense		$ 231	$ 206	$ 617	$ 521
Management Incentive Award
Stockholders Equity Note [Line Items]
Closing New York Stock Exchange price							$ 225.07
Management Incentive Award | International employee
Stockholders Equity Note [Line Items]
Closing New York Stock Exchange price						$ 218.56
Long-Term Incentive Performance Award
Stockholders Equity Note [Line Items]
Award vesting period				3 years
Long-Term Incentive Performance Award | Year 2021 | Restricted Units
Stockholders Equity Note [Line Items]
Weighted-average fair value of options granted (usd per share)	$ 230.67
Nonqualified Stock Options
Stockholders Equity Note [Line Items]
Award vesting period				5 years
Weighted-average fair value of options granted (usd per share)	$ 214.58
Percentage of the award vesting at each anniversary date of the grant				20.00%
Expiration period (in years)				10 years
Stock options granted	100,000

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STOCK-BASED COMPENSATION - Fair Value of Employee Stock Options Granted as Determined by Black-Scholes Valuation Model Assumptions (Detail) - $ / shares	6 Months Ended	12 Months Ended
	Jun. 30, 2022	Dec. 31, 2021
Nonqualified Stock Options
Stockholders Equity Note [Line Items]
Risk-free interest rate	2.39%	0.84%
Expected volatility	25.04%	23.15%
Weighted-average fair value of options granted (usd per share)	$ 48.45	$ 23.71
Expected life (in years)	7 years 6 months	7 years 6 months
Expected dividend yield	2.35%	3.31%
Long-Term Incentive Performance Award
Stockholders Equity Note [Line Items]
Risk-free interest rate	2.29%	0.19%
Expected volatility	31.90%	30.70%
Weighted-average fair value of RPU's granted (usd per share)	$ 230.67	$ 168.05
Share payout	107.50%	102.39%

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CASH AND INVESTMENTS - Summary of Marketable Securities (Detail) - USD ($) $ in Millions	Jun. 30, 2022	Dec. 31, 2021
Schedule of Marketable Securities [Line Items]
Debt Securities, Trading, Amortized Cost	$ 2	$ 2
Trading Securities, Gross Unrealized Gain	0	0
Trading Securities, Gross Unrealized Loss	0	0
Debt Securities, Trading, and Equity Securities, FV-NI	2	2
Debt Securities, Available-for-sale, Amortized Cost	342	335
Debt Securities, Available-for-sale, Current	334	336
Debt Securities, Available-for-sale, Accumulated Gross Unrealized Loss, before Tax	8	1
Debt Securities, Available-for-sale, Accumulated Gross Unrealized Gain, before Tax	0	2
Total Amortized Cost	344	337
Marketable Securities, Gross Unrealized Gain	0	2
Marketable Securities, Gross Unrealized Loss	(8)	(1)
Total Estimated Fair Value	336	338
Equity securities
Schedule of Marketable Securities [Line Items]
Debt Securities, Trading, Amortized Cost	2	2
Trading Securities, Gross Unrealized Gain	0	0
Trading Securities, Gross Unrealized Loss	0	0
Debt Securities, Trading, and Equity Securities, FV-NI	2	2
U.S. government and agency debt securities
Schedule of Marketable Securities [Line Items]
Debt Securities, Available-for-sale, Amortized Cost	200	199
Debt Securities, Available-for-sale, Current	195	200
Debt Securities, Available-for-sale, Accumulated Gross Unrealized Loss, before Tax	5	1
Debt Securities, Available-for-sale, Accumulated Gross Unrealized Gain, before Tax	0	2
Mortgage and asset-backed debt securities
Schedule of Marketable Securities [Line Items]
Debt Securities, Available-for-sale, Amortized Cost	12	7
Debt Securities, Available-for-sale, Current	12	7
Debt Securities, Available-for-sale, Accumulated Gross Unrealized Loss, before Tax	0	0
Debt Securities, Available-for-sale, Accumulated Gross Unrealized Gain, before Tax	0	0
Corporate debt securities
Schedule of Marketable Securities [Line Items]
Debt Securities, Available-for-sale, Amortized Cost	125	121
Debt Securities, Available-for-sale, Current	122	121
Debt Securities, Available-for-sale, Accumulated Gross Unrealized Loss, before Tax	3	0
Debt Securities, Available-for-sale, Accumulated Gross Unrealized Gain, before Tax	0	0
U.S. state and local municipal debt securities
Schedule of Marketable Securities [Line Items]
Debt Securities, Available-for-sale, Amortized Cost	5	5
Debt Securities, Available-for-sale, Current	5	5
Debt Securities, Available-for-sale, Accumulated Gross Unrealized Loss, before Tax	0	0
Debt Securities, Available-for-sale, Accumulated Gross Unrealized Gain, before Tax	0	0
Non-U.S. government debt securities
Schedule of Marketable Securities [Line Items]
Debt Securities, Available-for-sale, Amortized Cost	0	3
Debt Securities, Available-for-sale, Current	0	3
Debt Securities, Available-for-sale, Accumulated Gross Unrealized Loss, before Tax	0	0
Debt Securities, Available-for-sale, Accumulated Gross Unrealized Gain, before Tax	$ 0	$ 0

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CASH AND INVESTMENTS - Amortized Cost and Estimated Fair Value of Marketable Securities by Contractual Maturity (Detail) - USD ($) $ in Millions	Jun. 30, 2022	Dec. 31, 2021
Cost
Due in one year or less	$ 30
Due after one year through three years	312
Due after three years through five years	0
Due after five years	0
Marketable Securities, Debt Maturities, Amortized Cost, Total	342
Equity securities	2
Total Amortized Cost	344	$ 337
Estimated Fair Value
Due in one year or less	29
Due after one year through three years	305
Due after three years through five years	0
Due after five years	0
Marketable Securities, Debt Maturities, Fair Value, Total	334
Equity securities	2
Total Estimated Fair Value	$ 336	$ 338

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CASH AND INVESTMENTS - Additional Information (Detail) - USD ($)	6 Months Ended
	Jun. 30, 2022	Dec. 31, 2021
Gain (Loss) on Securities [Line Items]
Other than temporary impairment losses	$ 0
Investments and Restricted Cash	21,000,000	$ 26,000,000
cash held in escrow [Member]
Gain (Loss) on Securities [Line Items]
Restricted Cash and Cash Equivalents, Noncurrent	2,000,000	3,000,000
Variable life insurance policy
Gain (Loss) on Securities [Line Items]
Investments and Restricted Cash	$ 19,000,000	$ 23,000,000

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CASH AND INVESTMENTS - Cash Details (Details) - USD ($) $ in Millions	Jun. 30, 2022	Dec. 31, 2021	Jun. 30, 2021	Dec. 31, 2020
Investments, Debt and Equity Securities [Abstract]
Cash and cash equivalents	$ 11,735	$ 10,255	$ 9,608
Restricted cash	0	0	0
Total cash, cash equivalents and restricted cash	$ 11,735	$ 10,255	$ 9,608	$ 5,910

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CASH AND INVESTMENTS - Investments Measured at Fair Value on a Recurring Basis (Detail) - Fair Value, Measurements, Recurring - USD ($) $ in Millions	Jun. 30, 2022	Dec. 31, 2021
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	$ 355	$ 361
Marketable securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	336	338
Marketable securities | U.S. government and agency debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	195	200
Marketable securities | Mortgage and asset-backed debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	12	7
Marketable securities | Corporate debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	122	121
Marketable securities | Equity securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	2	2
Marketable securities | Non-U.S. government debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	0	3
Marketable securities | U.S. state and local municipal debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	5	5
Other Non-Current Investments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	19	23
Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	214	223
Quoted Prices in Active Markets for Identical Assets (Level 1) | Marketable securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	195	200
Quoted Prices in Active Markets for Identical Assets (Level 1) | Marketable securities | U.S. government and agency debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	195	200
Quoted Prices in Active Markets for Identical Assets (Level 1) | Marketable securities | Mortgage and asset-backed debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Marketable securities | Corporate debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Marketable securities | Equity securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Marketable securities | Non-U.S. government debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Marketable securities | U.S. state and local municipal debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Other Non-Current Investments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	19	23
Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	141	138
Significant Other Observable Inputs (Level 2) | Marketable securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	141	138
Significant Other Observable Inputs (Level 2) | Marketable securities | U.S. government and agency debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	0	0
Significant Other Observable Inputs (Level 2) | Marketable securities | Mortgage and asset-backed debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	12	7
Significant Other Observable Inputs (Level 2) | Marketable securities | Corporate debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	122	121
Significant Other Observable Inputs (Level 2) | Marketable securities | Equity securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	2	2
Significant Other Observable Inputs (Level 2) | Marketable securities | Non-U.S. government debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	0	3
Significant Other Observable Inputs (Level 2) | Marketable securities | U.S. state and local municipal debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	5	5
Significant Other Observable Inputs (Level 2) | Other Non-Current Investments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	0	0
Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	0	0
Significant Unobservable Inputs (Level 3) | Marketable securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	0	0
Significant Unobservable Inputs (Level 3) | Marketable securities | U.S. government and agency debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	0	0
Significant Unobservable Inputs (Level 3) | Marketable securities | Mortgage and asset-backed debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	0	0
Significant Unobservable Inputs (Level 3) | Marketable securities | Corporate debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	0	0
Significant Unobservable Inputs (Level 3) | Marketable securities | Equity securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	0	0
Significant Unobservable Inputs (Level 3) | Marketable securities | Non-U.S. government debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	0	0
Significant Unobservable Inputs (Level 3) | Marketable securities | U.S. state and local municipal debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	0	0
Significant Unobservable Inputs (Level 3) | Other Non-Current Investments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	$ 0	$ 0

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PROPERTY, PLANT AND EQUIPMENT (Detail) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	$ 65,622		$ 65,622		$ 64,809
Less: Accumulated depreciation and amortization	(32,135)		(32,135)		(31,334)
Property, plant and equipment, net	33,487		33,487		33,475
Impairment charges on property plant and equipment	0	$ 0	0	$ 24
Vehicles
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	10,181		10,181		10,018
Aircraft
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	22,507		22,507		21,973
Land
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	2,106		2,106		2,140
Buildings
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	5,794		5,794		5,802
Building and leasehold improvements
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	5,027		5,027		5,010
Plant equipment
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	15,629		15,629		15,650
Technology equipment
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	2,858		2,858		2,798
Construction-in-progress
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	$ 1,520		$ 1,520		$ 1,418

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PROPERTY, PLANT AND EQUIPMENT - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021
Property, Plant and Equipment [Abstract]
Property, plant and equipment purchased on account	$ 477		$ 477		$ 248
Impairment charges on property plant and equipment	$ 0	$ 0	$ 0	$ 24

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EMPLOYEE BENEFIT PLANS - Net Periodic Benefit Cost for Pension and Postretirement Benefit Plans (Detail) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Defined Benefit Pension Plan | U.S. Pension Benefits
Net Periodic Cost:
Service cost	$ 506	$ 461	$ 1,012	$ 1,014
Interest cost	487	481	975	969
Expected return on assets	(820)	(831)	(1,640)	(1,677)
Amortization of prior service cost	23	34	46	67
Actuarial (gain) loss			0	(3,290)
Settlement and curtailment (gain) loss			0	0
Net periodic benefit cost	196	145	393	(2,917)
Defined Benefit Pension Plan | International Pension Benefits
Net Periodic Cost:
Service cost	17	19	35	38
Interest cost	11	10	23	20
Expected return on assets	(20)	(17)	(40)	(34)
Amortization of prior service cost	1	1	1	1
Actuarial (gain) loss			0	0
Settlement and curtailment (gain) loss			(33)	0
Net periodic benefit cost	9	13	(14)	25
U.S. Postretirement Medical Benefits | U.S. Pension Benefits
Net Periodic Cost:
Service cost	7	7	15	14
Interest cost	21	20	41	39
Expected return on assets	(1)	(1)	(2)	(3)
Amortization of prior service cost	0	1	0	3
Actuarial (gain) loss			0	0
Settlement and curtailment (gain) loss			0	0
Net periodic benefit cost	$ 27	$ 27	$ 54	$ 53

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EMPLOYEE BENEFIT PLANS - Additional Information (Detail) $ in Millions			6 Months Ended
	Apr. 30, 2021 USD ($)	Dec. 31, 2007 USD ($)	Jun. 30, 2022 USD ($) employee	Jun. 30, 2021 USD ($)	Dec. 31, 2021 USD ($)	Dec. 31, 2020 USD ($)
Defined Benefit Plan Disclosure [Line Items]
Curtailment gain, before tax			$ 33
Curtailment gain, after tax			$ 24
Defined benefit plan, net actuarial gain (loss)	$ 2,100
Pre-tax actuarial gain				$ 69
Actuarial gain, after tax				52
Other Comprehensive Income (Loss), Defined Benefit Plan, Plan Amendments, Reclassification Adjustment from AOCI, before Tax				66
Other Comprehensive Income (Loss), Defined Benefit Plan, Plan Amendments, Reclassification Adjustment from AOCI, After Tax				50
Multiemployer Plans, Payment Term			40 years
National Master Agreement And Various Supplemental Agreements
Defined Benefit Plan Disclosure [Line Items]
Number of employees covered | employee			327,000
Independent Pilots Association
Defined Benefit Plan Disclosure [Line Items]
Number of employees covered | employee			3,200
Teamsters Local 2727
Defined Benefit Plan Disclosure [Line Items]
Number of employees covered | employee			1,700
International Association Of Machinists And Aerospace Workers
Defined Benefit Plan Disclosure [Line Items]
Number of employees covered | employee			3,300
UPS/IBT Plan
Defined Benefit Plan Disclosure [Line Items]
Actuarial gain (loss)				6,400
Reduction of the liability for coordinating benefits				5,100
Gain from other updated actuarial assumptions				1,300
Pre-tax actuarial gain				3,300
Actuarial gain, after tax				$ 2,500
Defined Benefit Pension Plan
Defined Benefit Plan Disclosure [Line Items]
Multi-employer Plans, Withdrawal Obligation, Fair Value Disclosure			$ 744		$ 963
Defined Benefit Pension Plan | Central States Pension Fund
Defined Benefit Plan Disclosure [Line Items]
Payment of withdrawal liability		$ 6,100
Pension liability						$ 5,500
Defined Benefit Pension Plan | Long term debt
Defined Benefit Plan Disclosure [Line Items]
Multiemployer Plans, Withdrawal Obligation, Present Value			826		830
Defined Benefit Pension Plan | Other current liabilities
Defined Benefit Plan Disclosure [Line Items]
Multiemployer Plans, Withdrawal Obligation, Present Value			8		$ 8
Defined Benefit Pension Plan | U.S. Pension Benefits
Defined Benefit Plan Disclosure [Line Items]
Amount contributed to company- sponsored benefit plans			66
Estimated future employer contributions to defined benefit plan, current fiscal year			1,900
U.S. Postretirement Medical Benefits | U.S. Pension Benefits
Defined Benefit Plan Disclosure [Line Items]
Amount contributed to company- sponsored benefit plans			57
Estimated future employer contributions to defined benefit plan, current fiscal year			$ 221

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GOODWILL AND INTANGIBLE ASSETS - Allocation of Goodwill by Reportable Segment (Detail) $ in Millions	6 Months Ended
	Jun. 30, 2022 USD ($)
Goodwill [Roll Forward]
Beginning balance	$ 3,692
Acquired	61
Currency / Other	(78)
Ending balance	3,675
U.S. Domestic Package
Goodwill [Roll Forward]
Beginning balance	847
Acquired	0
Currency / Other	0
Ending balance	847
International Package
Goodwill [Roll Forward]
Beginning balance	403
Acquired	0
Currency / Other	(21)
Ending balance	382
Supply Chain Solutions
Goodwill [Roll Forward]
Beginning balance	2,442
Acquired	61
Currency / Other	(57)
Ending balance	$ 2,446

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GOODWILL AND INTANGIBLE ASSETS - Summary of Intangible Assets (Detail) - USD ($) $ in Millions	Jun. 30, 2022	Dec. 31, 2021
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 6,190	$ 6,045
Accumulated Amortization	(3,918)	(3,763)
Net Carrying Value	2,272	2,282
Indefinite-lived intangible assets	204	204
Indefinite-lived Intangible Assets (Excluding Goodwill) [Abstract]
Indefinite-lived intangible assets	204	204
Intangible Assets, Net (Excluding Goodwill) [Abstract]
Gross Carrying Amount	6,394	6,249
Accumulated Amortization	(3,918)	(3,763)
Intangible Assets, Net	2,476	2,486
Capitalized software
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	5,048	4,910
Accumulated Amortization	(3,406)	(3,275)
Net Carrying Value	1,642	1,635
Intangible Assets, Net (Excluding Goodwill) [Abstract]
Accumulated Amortization	(3,406)	(3,275)
Licenses
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	48	58
Accumulated Amortization	(22)	(27)
Net Carrying Value	26	31
Intangible Assets, Net (Excluding Goodwill) [Abstract]
Accumulated Amortization	(22)	(27)
Franchise rights
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	138	119
Accumulated Amortization	(36)	(37)
Net Carrying Value	102	82
Intangible Assets, Net (Excluding Goodwill) [Abstract]
Accumulated Amortization	(36)	(37)
Customer relationships
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	720	733
Accumulated Amortization	(435)	(408)
Net Carrying Value	285	325
Intangible Assets, Net (Excluding Goodwill) [Abstract]
Accumulated Amortization	(435)	(408)
Trade name
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	67	67
Accumulated Amortization	(5)	(1)
Net Carrying Value	62	66
Intangible Assets, Net (Excluding Goodwill) [Abstract]
Accumulated Amortization	(5)	(1)
Trademarks, patents and other
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	169	158
Accumulated Amortization	(14)	(15)
Net Carrying Value	155	143
Intangible Assets, Net (Excluding Goodwill) [Abstract]
Accumulated Amortization	$ (14)	$ (15)

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GOODWILL AND INTANGIBLE ASSETS (Narratives) (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021
Finite-Lived Intangible Assets [Line Items]
Indefinite-lived intangible assets	$ 204		$ 204		$ 204
Impairment of finite lived intangible assets	0	$ 1	0	$ 7
Trade name
Finite-Lived Intangible Assets [Line Items]
Indefinite-lived intangible assets	200		200
Licenses
Finite-Lived Intangible Assets [Line Items]
Indefinite-lived intangible assets	$ 4		$ 4

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DEBT AND FINANCING ARRANGEMENTS - Carrying Value of Outstanding Debt (Detail) - USD ($)	Jun. 30, 2022	May 16, 2022	Dec. 31, 2021
Debt Instrument [Line Items]
Principal Amount	$ 20,748,000,000
Total debt	20,576,000,000		$ 21,915,000,000
Less current maturities	(2,579,000,000)		(2,131,000,000)
Long-Term Debt and Finance Leases	$ 17,997,000,000		19,784,000,000
Senior notes | 2.450% senior notes
Debt Instrument [Line Items]
Debt instrument, stated interest rate	2.45%
Principal Amount	$ 1,000,000,000
Total debt	$ 999,000,000		1,010,000,000
Senior notes | 2.350% senior notes
Debt Instrument [Line Items]
Debt instrument, stated interest rate	2.35%	2.35%
Principal Amount	$ 0
Total debt	$ 0		600,000,000
Senior notes | 2.500% senior notes
Debt Instrument [Line Items]
Debt instrument, stated interest rate	2.50%
Principal Amount	$ 1,000,000,000
Total debt	$ 999,000,000		998,000,000
Senior notes | 2.800% senior notes
Debt Instrument [Line Items]
Debt instrument, stated interest rate	2.80%
Principal Amount	$ 500,000,000
Total debt	$ 498,000,000		498,000,000
Senior notes | 2.200% senior notes
Debt Instrument [Line Items]
Debt instrument, stated interest rate	2.20%
Principal Amount	$ 400,000,000
Total debt	$ 399,000,000		399,000,000
Senior notes | 3.900% senior notes
Debt Instrument [Line Items]
Debt instrument, stated interest rate	3.90%
Principal Amount	$ 1,000,000,000
Total debt	$ 997,000,000		996,000,000
Senior notes | 2.400% senior notes
Debt Instrument [Line Items]
Debt instrument, stated interest rate	2.40%
Principal Amount	$ 500,000,000
Total debt	$ 499,000,000		498,000,000
Senior notes | 3.050% senior notes
Debt Instrument [Line Items]
Debt instrument, stated interest rate	3.05%
Principal Amount	$ 1,000,000,000
Total debt	$ 994,000,000		994,000,000
Senior notes | 3.400% senior notes
Debt Instrument [Line Items]
Debt instrument, stated interest rate	3.40%
Principal Amount	$ 750,000,000
Total debt	$ 746,000,000		746,000,000
Senior notes | 2.500% senior notes
Debt Instrument [Line Items]
Debt instrument, stated interest rate	2.50%
Principal Amount	$ 400,000,000
Total debt	$ 397,000,000		397,000,000
Senior notes | 4.450% senior notes
Debt Instrument [Line Items]
Debt instrument, stated interest rate	4.45%
Principal Amount	$ 750,000,000
Total debt	$ 744,000,000		744,000,000
Senior notes | 6.200% senior notes
Debt Instrument [Line Items]
Debt instrument, stated interest rate	6.20%
Principal Amount	$ 1,500,000,000
Total debt	$ 1,484,000,000		1,484,000,000
Senior notes | 5.200% senior notes
Debt Instrument [Line Items]
Debt instrument, stated interest rate	5.20%
Principal Amount	$ 500,000,000
Total debt	$ 494,000,000		494,000,000
Senior notes | 4.875% senior notes
Debt Instrument [Line Items]
Debt instrument, stated interest rate	4.875%
Principal Amount	$ 500,000,000
Total debt	$ 491,000,000		491,000,000
Senior notes | 3.625% senior notes
Debt Instrument [Line Items]
Debt instrument, stated interest rate	3.625%
Principal Amount	$ 375,000,000
Total debt	$ 368,000,000		368,000,000
Senior notes | 3.400% senior notes
Debt Instrument [Line Items]
Debt instrument, stated interest rate	3.40%
Principal Amount	$ 500,000,000
Total debt	$ 492,000,000		492,000,000
Senior notes | 3.750% senior notes
Debt Instrument [Line Items]
Debt instrument, stated interest rate	3.75%
Principal Amount	$ 1,150,000,000
Total debt	$ 1,137,000,000		1,137,000,000
Senior notes | 4.250% senior notes
Debt Instrument [Line Items]
Debt instrument, stated interest rate	4.25%
Principal Amount	$ 750,000,000
Total debt	$ 743,000,000		743,000,000
Senior notes | 3.400% senior notes
Debt Instrument [Line Items]
Debt instrument, stated interest rate	3.40%
Principal Amount	$ 700,000,000
Total debt	$ 688,000,000		688,000,000
Senior notes | 5.300% senior notes
Debt Instrument [Line Items]
Debt instrument, stated interest rate	5.30%
Principal Amount	$ 1,250,000,000
Total debt	1,231,000,000		1,231,000,000
Senior notes | Floating-rate senior notes
Debt Instrument [Line Items]
Principal Amount	0
Total debt	0		400,000,000
Senior notes | Floating-rate senior notes
Debt Instrument [Line Items]
Principal Amount	500,000,000
Total debt	500,000,000		500,000,000
Senior notes | Floating-rate senior notes
Debt Instrument [Line Items]
Principal Amount	1,039,000,000
Total debt	$ 1,027,000,000		1,027,000,000
Senior notes | 7.620% debentures
Debt Instrument [Line Items]
Debt instrument, stated interest rate	7.62%
Principal Amount	$ 276,000,000
Total debt	$ 280,000,000		280,000,000
Pound Sterling notes | 5.500% notes
Debt Instrument [Line Items]
Debt instrument, stated interest rate	5.50%
Principal Amount	$ 81,000,000
Total debt	$ 80,000,000		89,000,000
Pound Sterling notes | 5.125% notes
Debt Instrument [Line Items]
Debt instrument, stated interest rate	5.125%
Principal Amount	$ 553,000,000
Total debt	$ 525,000,000		583,000,000
Euro Senior Notes | 0.375% senior notes
Debt Instrument [Line Items]
Debt instrument, stated interest rate	0.375%
Principal Amount	$ 728,000,000
Total debt	$ 727,000,000		791,000,000
Euro Senior Notes | 1.625% senior notes
Debt Instrument [Line Items]
Debt instrument, stated interest rate	1.625%
Principal Amount	$ 728,000,000
Total debt	$ 726,000,000		791,000,000
Euro Senior Notes | 1.000% senior notes
Debt Instrument [Line Items]
Debt instrument, stated interest rate	1.00%
Principal Amount	$ 520,000,000
Total debt	$ 518,000,000		564,000,000
Euro Senior Notes | 1.500% senior notes
Debt Instrument [Line Items]
Debt instrument, stated interest rate	1.50%
Principal Amount	$ 520,000,000
Total debt	$ 517,000,000		564,000,000
Canadian Senior Notes | 2.125% senior notes
Debt Instrument [Line Items]
Debt instrument, stated interest rate	2.125%
Principal Amount	$ 582,000,000
Total debt	580,000,000		585,000,000
Facility notes and bonds
Debt Instrument [Line Items]
Principal Amount	320,000,000
Total debt	320,000,000		320,000,000
Other debt
Debt Instrument [Line Items]
Principal Amount	4,000,000
Total debt	$ 4,000,000		$ 5,000,000

XML

DEBT AND FINANCING ARRANGEMENTS - Additional Information (Detail) € in Billions		6 Months Ended
	May 16, 2022 USD ($)	Jun. 30, 2022 USD ($) Credit_Agreements	Jun. 30, 2021 USD ($)	Jun. 30, 2022 EUR (€) Credit_Agreements	Dec. 31, 2021 USD ($)
Debt Instrument [Line Items]
Repayments of long-term debt		$ 1,105,000,000	$ 2,599,000,000
Face value of debt instrument		$ 20,748,000,000
Number of credit agreements | Credit_Agreements		2		2
Sale-lease back outstanding		$ 0
Long-term debt fair value		20,400,000,000			$ 25,100,000,000
Finance Lease, Liability		$ 372,000,000			$ 408,000,000
Covenants limit, amount of secured indebtedness and debt in sale-leaseback transactions, percentage of net tangible assets		10.00%		10.00%
Covenants that limit the amount of secured indebtedness and amount of attributable debt in sale-leaseback transactions, net tangible assets amount		$ 4,700,000,000
Secured debt outstanding		0
U.S. Commercial Paper Program
Debt Instrument [Line Items]
Commercial paper program, authorized to borrow		10,000,000,000.0
Long-term Debt		0
Foreign Commercial Paper Program
Debt Instrument [Line Items]
Commercial paper program, authorized to borrow | €				€ 5.0
Long-term Debt		$ 0
Revolving Credit Facility Expiring In 2015
Debt Instrument [Line Items]
Maturity		Dec. 06, 2022
Revolving credit facilities		$ 1,000,000,000
Amounts outstanding under this facility		$ 0
Revolving Credit Facility Expiring In 2017
Debt Instrument [Line Items]
Maturity		Dec. 07, 2026
Revolving credit facilities		$ 2,000,000,000
Amounts outstanding under this facility		$ 0
Senior notes | 2.350% senior notes
Debt Instrument [Line Items]
Debt instrument, stated interest rate	2.35%	2.35%		2.35%
Repayments of senior notes	$ 600,000,000
Face value of debt instrument		$ 0
Senior notes | Floating Rate Senior Notes [Member]
Debt Instrument [Line Items]
Repayments of senior notes	$ 400,000,000
Face value of debt instrument		$ 0
Senior notes | 3.050% senior notes
Debt Instrument [Line Items]
Debt instrument, stated interest rate		3.05%		3.05%
Face value of debt instrument		$ 1,000,000,000
Senior notes | 3.900% senior notes
Debt Instrument [Line Items]
Debt instrument, stated interest rate		3.90%		3.90%
Face value of debt instrument		$ 1,000,000,000
Senior notes | 4.450% senior notes
Debt Instrument [Line Items]
Debt instrument, stated interest rate		4.45%		4.45%
Face value of debt instrument		$ 750,000,000
Senior notes | 5.200% senior notes
Debt Instrument [Line Items]
Debt instrument, stated interest rate		5.20%		5.20%
Face value of debt instrument		$ 500,000,000
Senior notes | 5.300% senior notes
Debt Instrument [Line Items]
Debt instrument, stated interest rate		5.30%		5.30%
Face value of debt instrument		$ 1,250,000,000
Senior notes | 3.400% senior notes
Debt Instrument [Line Items]
Debt instrument, stated interest rate		3.40%		3.40%
Face value of debt instrument		$ 750,000,000
Senior notes | 4.250% senior notes
Debt Instrument [Line Items]
Debt instrument, stated interest rate		4.25%		4.25%
Face value of debt instrument		$ 750,000,000
Senior notes | 2.500% senior notes
Debt Instrument [Line Items]
Debt instrument, stated interest rate		2.50%		2.50%
Face value of debt instrument		$ 400,000,000
Senior notes | 2.200% senior notes
Debt Instrument [Line Items]
Debt instrument, stated interest rate		2.20%		2.20%
Face value of debt instrument		$ 400,000,000
Senior notes | 3.400% senior notes
Debt Instrument [Line Items]
Debt instrument, stated interest rate		3.40%		3.40%
Face value of debt instrument		$ 700,000,000
Senior notes | 7.620% debentures
Debt Instrument [Line Items]
Debt instrument, stated interest rate		7.62%		7.62%
Face value of debt instrument		$ 276,000,000
Federal Funds Rate | Revolving Credit Facility Expiring In 2015
Debt Instrument [Line Items]
Applicable margin rates		0.50%
Federal Funds Rate | Revolving Credit Facility Expiring In 2017
Debt Instrument [Line Items]
Applicable margin rates		0.50%
Base Rate | Revolving Credit Facility Expiring In 2015
Debt Instrument [Line Items]
Applicable margin rates		0.875%
Base Rate | Revolving Credit Facility Expiring In 2017
Debt Instrument [Line Items]
Applicable margin rates		0.875%
Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | Revolving Credit Facility Expiring In 2015
Debt Instrument [Line Items]
Applicable margin rates		0.10%
Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | Revolving Credit Facility Expiring In 2017
Debt Instrument [Line Items]
Applicable margin rates		0.10%
Adjusted Term Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | Revolving Credit Facility Expiring In 2015
Debt Instrument [Line Items]
Applicable margin rates		1.00%
Adjusted Term Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | Revolving Credit Facility Expiring In 2017
Debt Instrument [Line Items]
Applicable margin rates		1.00%

XML

LEASES - Narratives (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2022 USD ($) aircraft	Jun. 30, 2021 USD ($)	Jun. 30, 2022 USD ($) aircraft	Jun. 30, 2021 USD ($)
Lessee, Lease, Description [Line Items]
Number of lease aircrafts (aircraft)	311		311
Number of lease aircrafts, finance (aircraft)	19		19
Number of lease aircrafts, operating (aircraft)	18		18
Number of lease aircrafts, short-term (aircraft)	274		274
Finance Lease, Impairment Loss | $	$ 0	$ 0	$ 0	$ 0
Operating Lease, Impairment Loss | $	0	$ 0	0	$ 0
Lessee, Finance Lease and Operating Lease, Lease Not Yet Commenced, Amount | $	$ 808,000,000		$ 808,000,000
Minimum
Lessee, Lease, Description [Line Items]
Remaining lease term	1 month
Maximum
Lessee, Lease, Description [Line Items]
Remaining lease term	138 years

XML

LEASES - Lease Cost (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Leases [Abstract]
Operating lease costs	$ 184	$ 179	$ 367	$ 354
Amortization of assets	28	23	56	46
Interest on lease liabilities	3	3	7	7
Total finance lease costs	31	26	63	53
Variable lease costs	64	62	132	127
Short-term lease costs	323	251	625	530
Total lease costs	$ 602	$ 518	$ 1,187	$ 1,064

XML

LEASES - Supplemental Balance Sheet (Details) - USD ($)	Jun. 30, 2022	Dec. 31, 2021
Operating Leases:
Operating lease right-of-use assets	$ 3,436,000,000	$ 3,562,000,000
Current maturities of operating leases	562,000,000	580,000,000
Non-current operating leases	2,962,000,000	3,033,000,000
Total lease obligations	3,524,000,000	3,613,000,000
Finance Leases:
Property, plant and equipment, net	$ 1,008,000,000	$ 1,225,000,000
Finance Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration]	Current maturities of long-term debt, commercial paper and finance leases	Current maturities of long-term debt, commercial paper and finance leases
Current maturities of long-term debt, commercial paper and finance leases	$ 79,000,000	$ 129,000,000
Finance Lease, Liability, Noncurrent, Statement of Financial Position [Extensible Enumeration]	Long-Term Debt, Excluding Current Maturities	Long-Term Debt, Excluding Current Maturities
Long-term debt and finance leases	$ 293,000,000	$ 279,000,000
Total lease obligations	$ 372,000,000	$ 408,000,000
Weighted average remaining lease term (in years):
Operating leases	11 years 3 months 18 days	11 years 8 months 12 days
Finance leases	8 years 7 months 6 days	8 years
Weighted average discount rate:
Operating leases	2.06%	1.94%
Finance leases	3.06%	2.79%

XML

LEASES - Supplemental Cash Flow Disclosures (Details) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Leases [Abstract]
Operating cash flows from operating leases	$ 354	$ 364
Operating cash flows from finance leases	2	7
Financing cash flows from finance leases	105	33
Operating leases	345	854
Finance leases	$ 72	$ 113

XML

LEASES - Maturity Schedule After Adoption (Details) - USD ($)	Jun. 30, 2022	Dec. 31, 2021
Finance Leases
2022	$ 49,000,000
Finance Lease, Liability, to be Paid, Year One	80,000,000
Lessee, Operating Lease, Liability, to be Paid, Year One	620,000,000
2023	54,000,000
2024	40,000,000
2025	33,000,000
Thereafter	196,000,000
Total lease payments	452,000,000
Less: Imputed interest	(80,000,000)
Total lease obligations	372,000,000	$ 408,000,000
Less: Current obligations	(79,000,000)	(129,000,000)
Long-term lease obligations	293,000,000	279,000,000
Operating Leases
2022	304,000,000
2023	521,000,000
2024	461,000,000
2025	415,000,000
Thereafter	1,748,000,000
Total lease payments	4,069,000,000
Less: Imputed interest	(545,000,000)
Total lease obligations	3,524,000,000	3,613,000,000
Less: Current obligations	(562,000,000)	(580,000,000)
Long-term lease obligations	$ 2,962,000,000	$ 3,033,000,000

XML

LEGAL PROCEEDINGS AND CONTINGENCIES (Narratives) (Details)	1 Months Ended
	Aug. 31, 2016 Defendants
CNMC
Loss Contingencies
Number of defendants	10

XML

SHAREOWNERS' EQUITY - Additional Information (Detail) $ / shares in Units, $ in Millions	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2022 USD ($) Vote Classes_of_Common_Stock $ / shares shares	Jun. 30, 2021 USD ($)	Jun. 30, 2022 USD ($) Vote Classes_of_Common_Stock $ / shares shares	Jun. 30, 2021 USD ($)	Dec. 31, 2022 USD ($)	Aug. 31, 2021 USD ($)
Stockholders Equity Note [Line Items]
Classes of Common Stock, Number | Classes_of_Common_Stock	2		2
Preferred stock, shares authorized | shares	200,000,000		200,000,000
Preferred stock, par value | $ / shares	$ 0.01		$ 0.01
Preferred stock, issued | shares	0		0
Purchases of common stock			$ 1,242	$ 0
Change in non-controlling minority interest	$ 3	$ 5	5	5
Other Comprehensive Income (Loss), Defined Benefit Plan, Plan Amendments, Reclassification Adjustment from AOCI, before Tax				66
Defined benefit plan, curtailments			$ 33
August 2021 Share Repurchase Program
Stockholders Equity Note [Line Items]
Common stock authorized for purchase, amount						$ 5,000
Common stock purchases | shares	5,500,000		6,700,000
Total of Class A and Class B common stock, repurchased, value	$ 983		$ 1,200
Share repurchase authorization available	$ 3,300		$ 3,300
August 2021 Share Repurchase Program | Forecast
Stockholders Equity Note [Line Items]
Projected repurchase value in 2022					$ 3,000
Class A common stock
Stockholders Equity Note [Line Items]
Votes per common share | Vote	10		10
Common stock, par value | $ / shares	$ 0.01		$ 0.01
Common stock, shares authorized | shares	4,600,000,000		4,600,000,000
Class B common stock
Stockholders Equity Note [Line Items]
Votes per common share | Vote	1		1
Common stock, par value | $ / shares	$ 0.01		$ 0.01
Common stock, shares authorized | shares	5,600,000,000		5,600,000,000
Net income
Stockholders Equity Note [Line Items]
TotalOtherComprehensiveIncomeReclassification, Net of Tax	$ 31	(21)	$ 67	2,467
Unrealized gain (loss) on cash flow hedges, net of tax:
Stockholders Equity Note [Line Items]
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI on Derivatives, Tax	(16)	(1)	(25)	(4)
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI on Derivatives, Net of Tax	49	3	78	13
Unrealized gain (loss) on cash flow hedges, net of tax: | Income tax expense
Stockholders Equity Note [Line Items]
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI on Derivatives, Tax	(16)	(1)	(25)	(4)
Unrealized gain (loss) on cash flow hedges, net of tax: | Net income
Stockholders Equity Note [Line Items]
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI on Derivatives, Net of Tax	49	3	78	13
Accumulated Defined Benefit Plans Adjustment Attributable to Parent
Stockholders Equity Note [Line Items]
Reclassification to earnings (net of tax effect of $_ and $12)	(18)	(25)	(11)	2,450
Accumulated Defined Benefit Plans Adjustment Attributable to Parent | Income tax expense
Stockholders Equity Note [Line Items]
Other Comprehensive (Income) Loss, Defined Benefit Plan, after Reclassification Adjustment, Tax	6	8	3	(772)
Accumulated Defined Benefit Plans Adjustment Attributable to Parent | Net income
Stockholders Equity Note [Line Items]
Reclassification to earnings (net of tax effect of $_ and $12)	(18)	(25)	(11)	2,450
Accumulated Defined Benefit Plans Adjustment Attributable to Parent | Investment income and other
Stockholders Equity Note [Line Items]
Other Comprehensive (Income) Loss, Defined Benefit Plan, Prior Service Cost (Credit), Reclassification Adjustment from AOCI, before Tax	(24)	(36)	(47)	(71)
Other Comprehensive Income (Loss), Defined Benefit Plan, Gain (Loss), Reclassification Adjustment from AOCI, before Tax			0	3,290
Defined benefit plan, curtailments			33	0
Accumulated Defined Benefit Plans Adjustment Attributable to Parent | Other expenses
Stockholders Equity Note [Line Items]
Other Comprehensive (Income) Loss, Defined Benefit Plan, Prior Service Cost (Credit), Reclassification Adjustment from AOCI, before Tax	0	69	0	69
Other Comprehensive Income (Loss), Defined Benefit Plan, Plan Amendments, Reclassification Adjustment from AOCI, before Tax	0	(66)	0	(66)
Accumulated Net Investment Gain (Loss) Attributable to Parent
Stockholders Equity Note [Line Items]
Reclassification to earnings, tax effect	0	0	0	0
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI for Sale of Securities, Net of Tax	0	1	0	4
Accumulated Net Investment Gain (Loss) Attributable to Parent | Income tax expense
Stockholders Equity Note [Line Items]
Reclassification to earnings, tax effect	0	0	0	0
Accumulated Net Investment Gain (Loss) Attributable to Parent | Net income
Stockholders Equity Note [Line Items]
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI for Sale of Securities, Net of Tax	0	1	0	4
Accumulated Net Investment Gain (Loss) Attributable to Parent | Investment income and other
Stockholders Equity Note [Line Items]
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI for Sale of Securities, before Tax	0	1	0	4
Foreign Exchange Contracts | Interest expense
Stockholders Equity Note [Line Items]
Amount of gain or (loss) reclassified from accumulated other comprehensive income	0		0	0
Foreign Exchange Contracts | Investment income and other
Stockholders Equity Note [Line Items]
Amount of gain or (loss) reclassified from accumulated other comprehensive income		0	0	0
Foreign Exchange Contracts | Revenue
Stockholders Equity Note [Line Items]
Amount of gain or (loss) reclassified from accumulated other comprehensive income	67	7	108	22
Foreign Exchange Contracts | Unrealized gain (loss) on cash flow hedges, net of tax: | Revenue
Stockholders Equity Note [Line Items]
Amount of gain or (loss) reclassified from accumulated other comprehensive income	67	7	108	22
Interest Contracts | Interest expense
Stockholders Equity Note [Line Items]
Amount of gain or (loss) reclassified from accumulated other comprehensive income	(2)	(3)	(5)	(5)
Interest Contracts | Investment income and other
Stockholders Equity Note [Line Items]
Amount of gain or (loss) reclassified from accumulated other comprehensive income	0	0	0	0
Interest Contracts | Revenue
Stockholders Equity Note [Line Items]
Amount of gain or (loss) reclassified from accumulated other comprehensive income	0	0	0	0
Interest Contracts | Unrealized gain (loss) on cash flow hedges, net of tax: | Interest expense
Stockholders Equity Note [Line Items]
Amount of gain or (loss) reclassified from accumulated other comprehensive income	$ (2)	$ (3)	$ (5)	$ (5)

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Roll-forward of Common Stock, Additional Paid-in Capital, Retained Earnings Accounts and Noncontrolling Interest (Detail) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Stockholders Equity Note [Roll Forward]
Balance at beginning of period			$ 14,253
Net income attributable to common shareowners	$ 2,849	$ 2,676	5,511	$ 7,468
Balance at end of period	16,289		16,289
Non-Controlling Minority Interest
Balance at beginning of period	18	12	16	12
Change in non-controlling minority interest	3	5	5	5
Balance at end of period	$ 21	$ 17	$ 21	$ 17
Common stock, cash paid for dividends, per share	$ 1.52	$ 1.02	$ 3.04	$ 2.04
Dividends, common stock	$ 44	$ 33	$ 166	$ 113
Class A common stock
Stockholders Equity Note [Roll Forward]
Balance at beginning of period, shares			138
Balance at end of period, shares	138		138
Class B common stock
Stockholders Equity Note [Roll Forward]
Balance at beginning of period, shares			732
Balance at end of period, shares	732		732
Common Stock | Class A common stock
Stockholders Equity Note [Roll Forward]
Balance at beginning of period	$ 2	$ 2	$ 2	$ 2
Balance at beginning of period, shares	140	148	138	147
Stock award plans	$ 0	$ 0	$ 0	$ 0
Stock award plans, shares	2	2	6	6
Common stock issuances			$ 0	$ 0
Common stock issuances, shares			1	1
Conversions of class A to class B common stock	$ 0	$ 0	$ 0	$ 0
Conversions of Class A to Class B common stock, shares	(4)	(6)	(7)	(10)
Balance at end of period	$ 2	$ 2	$ 2	$ 2
Balance at end of period, shares	138	144	138	144
Common Stock | Class B common stock
Stockholders Equity Note [Roll Forward]
Balance at beginning of period	$ 7	$ 7	$ 7	$ 7
Balance at beginning of period, shares	734	722	732	718
Common stock purchases	$ 0	$ 0	$ 0	$ 0
Common stock purchases, shares	(6)	0	(7)	0
Conversions of class A to class B common stock	$ 0	$ 0	$ 0	$ 0
Conversions of Class A to Class B common stock, shares	(4)	(6)	(7)	(10)
Balance at end of period	$ 7	$ 7	$ 7	$ 7
Balance at end of period, shares	732	728	732	728
Additional Paid-In Capital
Stockholders Equity Note [Roll Forward]
Balance at beginning of period	$ 1,231	$ 1,049	$ 1,343	$ 865
Common stock purchases	(983)	0	(1,243)	0
Stock award plans	212	193	177	223
Common stock issuances	113	87	296	241
Balance at end of period	573	1,329	573	1,329
Retained Earnings
Stockholders Equity Note [Roll Forward]
Balance at beginning of period	17,433	10,748	16,179	6,896
Net income attributable to common shareowners		2,676	5,511	7,468
Balance at end of period	18,958	12,531	18,958	12,531
Dividends ($1.52 and $1.02 per share) (1)	(1,327)	(893)	(2,733)	(1,831)
Other	$ 3	$ 0	$ 1	$ (2)

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Activity in Accumulated Other Comprehensive Income (Loss) (Detail) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Balance at beginning of period			$ (3,278)
Translation adjustment (net of tax effect of $7 and $(1))	$ (245)	$ 48	(285)	$ (34)
Current period changes in fair value (net of tax effect of $0 and $0)	(1)	(1)	(7)	(5)
Change in unrealized gain (loss) on cash flow hedges, net of tax	234	(46)	277	68
Balance at end of period	(3,251)	(3,064)	(3,251)	(3,064)
Foreign currency translation gain (loss):
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Balance at beginning of period	(1,202)	(1,063)	(1,162)	(981)
Translation adjustment (net of tax effect of $7 and $(1))	(245)	48	(285)	(34)
Balance at end of period	(1,447)	(1,015)	(1,447)	(1,015)
Aggregate adjustment for the period, tax	7	(1)	7	29
Accumulated Net Investment Gain (Loss) Attributable to Parent
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Balance at beginning of period	(7)	2	(1)	6
Current period changes in fair value (net of tax effect of $0 and $0)	(1)	0	(7)	(1)
Reclassification to earnings (net of tax effect of $0 and $0)	0	(1)	0	(4)
Balance at end of period	(8)	1	(8)	1
Current period changes in fair value, tax effect	0	0	(2)	0
Reclassification to earnings, tax effect	0	0	0	0
Unrealized gain (loss) on cash flow hedges, net of tax:
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Balance at beginning of period	26	(109)	(17)	(223)
Change in unrealized gain (loss) on cash flow hedges, net of tax	283	(43)	355	81
Reclassification to earnings (net of tax effect of $(16) and $(1))	(49)	(3)	(78)	(13)
Balance at end of period	260	(155)	260	(155)
Current period changes in fair value, tax effect	89	(14)	112	25
Reclassification to earnings, tax effect	(16)	(1)	(25)	(4)
Accumulated Defined Benefit Plans Adjustment
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Balance at beginning of period	(2,074)	(3,489)	(2,098)	(5,915)
Reclassification to earnings (net of tax effect of $6 and $8)	18	25	11	(2,450)
Net actuarial gain (loss) resulting from remeasurements of plan assets and liabilities (net of tax effect of $11 and $2,039)	0	1,569	31	6,470
Balance at end of period	(2,056)	(1,895)	(2,056)	(1,895)
Net actuarial gain (loss) resulting from remeasurements of plan assets and liabilities, tax effect	0	495	11	2,039
Reclassification to earnings, tax effect	6	8	3	(772)
Income tax expense | Accumulated Net Investment Gain (Loss) Attributable to Parent
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Reclassification to earnings, tax effect	0	0	0	0
Income tax expense | Unrealized gain (loss) on cash flow hedges, net of tax:
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Reclassification to earnings, tax effect	(16)	(1)	(25)	(4)
Net income | Accumulated Net Investment Gain (Loss) Attributable to Parent
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Reclassification to earnings (net of tax effect of $0 and $0)	0	(1)	0	(4)
Net income | Unrealized gain (loss) on cash flow hedges, net of tax:
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Reclassification to earnings (net of tax effect of $(16) and $(1))	(49)	(3)	(78)	(13)
Net income | Accumulated Defined Benefit Plans Adjustment
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Reclassification to earnings (net of tax effect of $6 and $8)	$ 18	$ 25	$ 11	$ (2,450)

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SHAREOWNERS' EQUITY - Gains (Losses) Reclassified from AOCI (Detail) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
AmountsReclassifiedFromAOCI [Line Items]
Other Comprehensive Income (Loss), Defined Benefit Plan, Plan Amendments, Reclassification Adjustment from AOCI, before Tax				$ 66
Net income
AmountsReclassifiedFromAOCI [Line Items]
TotalOtherComprehensiveIncomeReclassification, Net of Tax	$ 31	$ (21)	$ 67	2,467
Interest rate contracts | Investment income and other
AmountsReclassifiedFromAOCI [Line Items]
Amount of gain or (loss) reclassified from accumulated other comprehensive income	0	0	0	0
Interest rate contracts | Interest expense
AmountsReclassifiedFromAOCI [Line Items]
Amount of gain or (loss) reclassified from accumulated other comprehensive income	(2)	(3)	(5)	(5)
Interest rate contracts | Revenue
AmountsReclassifiedFromAOCI [Line Items]
Amount of gain or (loss) reclassified from accumulated other comprehensive income	0	0	0	0
Foreign currency exchange contracts | Investment income and other
AmountsReclassifiedFromAOCI [Line Items]
Amount of gain or (loss) reclassified from accumulated other comprehensive income		0	0	0
Foreign currency exchange contracts | Interest expense
AmountsReclassifiedFromAOCI [Line Items]
Amount of gain or (loss) reclassified from accumulated other comprehensive income	0		0	0
Foreign currency exchange contracts | Revenue
AmountsReclassifiedFromAOCI [Line Items]
Amount of gain or (loss) reclassified from accumulated other comprehensive income	67	7	108	22
Accumulated Net Unrealized Investment Gain (Loss)
AmountsReclassifiedFromAOCI [Line Items]
Reclassification to earnings, tax effect	0	0	0	0
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI for Sale of Securities, Net of Tax	0	1	0	4
Accumulated Net Unrealized Investment Gain (Loss) | Income tax expense
AmountsReclassifiedFromAOCI [Line Items]
Reclassification to earnings, tax effect	0	0	0	0
Accumulated Net Unrealized Investment Gain (Loss) | Net income
AmountsReclassifiedFromAOCI [Line Items]
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI for Sale of Securities, Net of Tax	0	1	0	4
Accumulated Net Unrealized Investment Gain (Loss) | Investment income and other
AmountsReclassifiedFromAOCI [Line Items]
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI for Sale of Securities, before Tax	0	1	0	4
Unrealized gain (loss) on cash flow hedges, net of tax:
AmountsReclassifiedFromAOCI [Line Items]
Reclassification to earnings, tax effect	(16)	(1)	(25)	(4)
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI on Derivatives, Net of Tax	49	3	78	13
Unrealized gain (loss) on cash flow hedges, net of tax: | Income tax expense
AmountsReclassifiedFromAOCI [Line Items]
Reclassification to earnings, tax effect	(16)	(1)	(25)	(4)
Unrealized gain (loss) on cash flow hedges, net of tax: | Net income
AmountsReclassifiedFromAOCI [Line Items]
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI on Derivatives, Net of Tax	49	3	78	13
Unrealized gain (loss) on cash flow hedges, net of tax: | Interest rate contracts | Interest expense
AmountsReclassifiedFromAOCI [Line Items]
Amount of gain or (loss) reclassified from accumulated other comprehensive income	(2)	(3)	(5)	(5)
Unrealized gain (loss) on cash flow hedges, net of tax: | Foreign currency exchange contracts | Revenue
AmountsReclassifiedFromAOCI [Line Items]
Amount of gain or (loss) reclassified from accumulated other comprehensive income	67	7	108	22
Accumulated Defined Benefit Plans Adjustment
AmountsReclassifiedFromAOCI [Line Items]
Other Comprehensive Income (Loss), Reclassification, Pension and Other Postretirement Benefit Plans, Net Gain (Loss) Recognized in Net Periodic Benefit Cost, Net of Tax	(18)	(25)	(11)	2,450
Accumulated Defined Benefit Plans Adjustment | Income tax expense
AmountsReclassifiedFromAOCI [Line Items]
Other Comprehensive (Income) Loss, Defined Benefit Plan, after Reclassification Adjustment, Tax	6	8	3	(772)
Accumulated Defined Benefit Plans Adjustment | Net income
AmountsReclassifiedFromAOCI [Line Items]
Other Comprehensive Income (Loss), Reclassification, Pension and Other Postretirement Benefit Plans, Net Gain (Loss) Recognized in Net Periodic Benefit Cost, Net of Tax	(18)	(25)	(11)	2,450
Accumulated Defined Benefit Plans Adjustment | Investment income and other
AmountsReclassifiedFromAOCI [Line Items]
Other Comprehensive (Income) Loss, Defined Benefit Plan, Prior Service Cost (Credit), Reclassification Adjustment from AOCI, before Tax	(24)	(36)	(47)	(71)
Other Comprehensive Income (Loss), Defined Benefit Plan, Gain (Loss), Reclassification Adjustment from AOCI, before Tax			0	3,290
Accumulated Defined Benefit Plans Adjustment | Other expenses
AmountsReclassifiedFromAOCI [Line Items]
Other Comprehensive (Income) Loss, Defined Benefit Plan, Prior Service Cost (Credit), Reclassification Adjustment from AOCI, before Tax	0	69	0	69
Other Comprehensive Income (Loss), Defined Benefit Plan, Plan Amendments, Reclassification Adjustment from AOCI, before Tax	$ 0	$ (66)	$ 0	$ (66)

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SHAREOWNERS' EQUITY - Activity in Deferred Compensation Program (Detail) - USD ($) shares in Millions, $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Stockholders Equity Note [Roll Forward]
Balance at beginning of period			$ 14,253
Balance at beginning of period			0.3
Balance at end of period	$ 16,289		$ 16,289
Balance at end of period	0.2		0.2
Treasury Stock [Member]
Stockholders Equity Note [Roll Forward]
Balance at beginning of period	$ (12)	$ (15)	$ (16)	$ (20)
Balance at beginning of period	0.0	0.0	0.0	0.0
Reinvested dividends	$ (1)	$ (1)	$ (1)	$ (1)
Reinvested dividends	0.0	0.0	0.0	0.0
Benefit payments	0.0	0.0	0.0	0.0
Benefit payments	$ (1)	$ 0	$ (5)	$ (5)
Balance at end of period	$ (12)	$ (16)	$ (12)	$ (16)
Balance at end of period	0.0	0.0	0.0	0.0
Deferred Compensation Obligations
Stockholders Equity Note [Roll Forward]
Balance at beginning of period	$ 12	$ 15	$ 16	$ 20
Reinvested dividends	(1)	(1)	(1)	(1)
Benefit payments	(1)	0	(5)	(5)
Balance at end of period	$ 12	$ 16	$ 12	$ 16

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SEGMENT INFORMATION - Additional Information (Detail)	6 Months Ended
	Jun. 30, 2022 Countries_and_Territories Segment
Segment Reporting Information [Line Items]
Number of reportable segments | Segment	2
International Package | Minimum
Segment Reporting Information [Line Items]
Number of countries and territories in which service is rendered	220
Supply Chain Solutions | Minimum
Segment Reporting Information [Line Items]
Number of countries and territories in which service is rendered	200

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SEGMENT INFORMATION - Results of Operations (Detail) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Segment Reporting Information [Line Items]
Revenue	$ 24,766	$ 23,424	$ 49,144	$ 46,332
Operating profit	3,535	3,258	6,786	6,023
U.S. Domestic Package
Segment Reporting Information [Line Items]
Revenue	15,459	14,402	30,583	28,412
U.S. Domestic Package | Operating Segments
Segment Reporting Information [Line Items]
Operating profit	1,829	1,567	3,491	2,926
International Package
Segment Reporting Information [Line Items]
Revenue	5,073	4,817	9,949	9,424
International Package | Operating Segments
Segment Reporting Information [Line Items]
Operating profit	1,193	1,184	2,309	2,269
Supply Chain Solutions
Segment Reporting Information [Line Items]
Revenue	4,234	4,205	8,612	8,496
Supply Chain Solutions | Operating Segments
Segment Reporting Information [Line Items]
Revenue	4,234	4,205	8,612	8,496
Operating profit	$ 513	$ 507	$ 986	$ 828

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Computation of Basic and Diluted Earnings Per Share (Detail) - USD ($) shares in Millions, $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Numerator:
Net income attributable to common shareowners	$ 2,849	$ 2,676	$ 5,511	$ 7,468
Denominator:
Weighted average shares	871	870	871	869
Vested portion of restricted shares	3	5	3	5
Denominator for basic earnings per share	874	875	874	874
Effect of dilutive securities:
Denominator for diluted earnings per share	876	878	878	878
Restricted performance units
Effect of dilutive securities:
Incremental common shares attributable to share-based payment arrangements	1	2	3	3
Stock option plans
Effect of dilutive securities:
Incremental common shares attributable to share-based payment arrangements	1	1	1	1

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EARNINGS PER SHARE - Additional Information (Detail) - shares shares in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Employee Stock Option
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Shares excluded from diluted earnings per share that may be issued upon the exercise of employee stock options because such effect would be antidilutive	0.1	0.0	0.1	0.1

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DERIVATIVE INSTRUMENTS AND RISK MANAGEMENT - Additional Information (Detail) - USD ($)	3 Months Ended	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2022	Dec. 31, 2021
Derivative [Line Items]
Derivative, Collateral, Obligation to Return Cash	$ 546,000,000	$ 546,000,000	$ 260,000,000
Commodity Asset	$ 0	0	0
Derivative Instrument Recognition Period	8 years
Pre-tax losses related to cash flow hedges that are currently deferred in AOCI and are expected to be reclassified to income within twelve months		$ 199,000,000
Maximum term over hedging exposures to the variability of cash flow		10 years
Collateral Securities Repledged, Delivered, or Used	$ 0	$ 0	0
Fixed to Floating Interest Rates Swaps
Derivative [Line Items]
Debt instrument, stated interest rate	2.45%	2.45%
Quoted Prices in Active Markets for Identical Assets (Level 1)
Derivative [Line Items]
Derivatives classified as Level 1 or Level 3	$ 0	$ 0	0
Significant Other Observable Inputs (Level 2)
Derivative [Line Items]
Liability Derivatives	22,000,000	22,000,000	62,000,000
Significant Unobservable Inputs (Level 3)
Derivative [Line Items]
Derivatives classified as Level 1 or Level 3	0	0	$ 0
Long-term debt and finance leases | Not Designated as Hedging Instrument | Fair Value
Derivative [Line Items]
Liability Derivatives	$ 5,000,000	$ 5,000,000

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DERIVATIVE INSTRUMENTS AND RISK MANAGEMENT (Detail) € in Millions, £ in Millions, $ in Millions, $ in Millions	Jun. 30, 2022 USD ($)	Jun. 30, 2022 EUR (€)	Jun. 30, 2022 GBP (£)	Jun. 30, 2022 CAD ($)	Jun. 30, 2022 HKD ($)	Dec. 31, 2021 USD ($)	Dec. 31, 2021 EUR (€)	Dec. 31, 2021 GBP (£)	Dec. 31, 2021 CAD ($)	Dec. 31, 2021 HKD ($)
Derivative [Line Items]
Collateral Securities Repledged, Delivered, or Used	$ 0					$ 0
Foreign Exchange Contracts | Euro Member Countries, Euro
Derivative [Line Items]
Derivative, Notional Amount | €		€ 4,279					€ 4,257
Foreign Exchange Contracts | United Kingdom, Pounds
Derivative [Line Items]
Derivative, Notional Amount | £			£ 1,421					£ 1,402
Foreign Exchange Contracts | Canada, Dollars
Derivative [Line Items]
Derivative, Notional Amount				$ 1,655					$ 1,633
Foreign Exchange Contracts | Hong Kong, Dollars
Derivative [Line Items]
Derivative, Notional Amount					$ 4,327					$ 4,033
Fixed to Floating Interest Rate Swaps
Derivative [Line Items]
Derivative, Notional Amount	1,000,000,000					1,000,000,000
Floating to Fixed Interest Rate Swaps
Derivative [Line Items]
Derivative, Notional Amount	$ 28,000,000					$ 28,000,000

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Location on the Balance Sheet of Derivative Assets and Liabilities (Detail) - Fair Value, Inputs, Level 2 - USD ($) $ in Millions	Jun. 30, 2022	Dec. 31, 2021
Asset Derivatives
Asset Derivatives	$ 544	$ 236
Net Amounts if Right of Offset had been Applied	529	185
Derivative Liabilities [Abstract]
Liability Derivatives	22	62
Net Amounts if Right of Offset had been Applied	7	11
Designated as Hedging Instrument | Foreign currency exchange contracts | Other current assets
Asset Derivatives
Asset Derivatives	214	100
Net Amounts if Right of Offset had been Applied	207	82
Designated as Hedging Instrument | Foreign currency exchange contracts | Other non-current assets
Asset Derivatives
Asset Derivatives	328	123
Net Amounts if Right of Offset had been Applied	320	90
Designated as Hedging Instrument | Foreign currency exchange contracts | Other current liabilities
Derivative Liabilities [Abstract]
Liability Derivatives	7	19
Net Amounts if Right of Offset had been Applied	0	1
Designated as Hedging Instrument | Foreign currency exchange contracts | Other non-current liabilities
Derivative Liabilities [Abstract]
Liability Derivatives	8	33
Net Amounts if Right of Offset had been Applied	0	0
Designated as Hedging Instrument | Interest rate contracts | Other current assets
Asset Derivatives
Asset Derivatives	0	11
Net Amounts if Right of Offset had been Applied	0	11
Designated as Hedging Instrument | Interest rate contracts | Other current liabilities
Derivative Liabilities [Abstract]
Liability Derivatives	1	0
Net Amounts if Right of Offset had been Applied	1	0
Designated as Hedging Instrument | Interest rate contracts | Other non-current liabilities
Derivative Liabilities [Abstract]
Liability Derivatives	6	10
Net Amounts if Right of Offset had been Applied	6	10
Not Designated as Hedging Instrument | Foreign currency exchange contracts | Other current assets
Asset Derivatives
Asset Derivatives	2	2
Net Amounts if Right of Offset had been Applied	$ 2	$ 2

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DERIVATIVE INSTRUMENTS AND RISK MANAGEMENT - Fair Value Derivative Balance Sheet Location (Details) - Designated as Hedging Instrument - USD ($) $ in Millions	Jun. 30, 2022	Dec. 31, 2021
Current maturities of long-term debt, commercial paper and finance leases | Carrying Amount
Derivatives, Fair Value [Line Items]
Liability Derivatives	$ 999	$ 1,010
Current maturities of long-term debt, commercial paper and finance leases | Fair Value
Derivatives, Fair Value [Line Items]
Hedged Liability, Fair Value Hedge, Cumulative Increase (Decrease)	(1)	11
Long-term debt and finance leases | Carrying Amount
Derivatives, Fair Value [Line Items]
Liability Derivatives	280	280
Long-term debt and finance leases | Fair Value
Derivatives, Fair Value [Line Items]
Hedged Liability, Fair Value Hedge, Cumulative Increase (Decrease)	$ 5	$ 5

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DERIVATIVE INSTRUMENTS AND RISK MANAGEMENT - Income Statement and AOCI Recognition (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Revenue
Derivative Instruments, Gain (Loss) [Line Items]
Hedged items	$ 0	$ 0	$ 0	$ 0
Total amounts of income and expense line items presented in the statement of income in which the effects of fair value or cash flow hedges are recorded	67	7	108	22
Revenue | Interest Contracts
Derivative Instruments, Gain (Loss) [Line Items]
Derivatives designated as hedging instruments	0	0	0	0
Amount of gain or (loss) reclassified from accumulated other comprehensive income	0	0	0	0
Revenue | Foreign Exchange Contracts
Derivative Instruments, Gain (Loss) [Line Items]
Amount of gain or (loss) reclassified from accumulated other comprehensive income	67	7	108	22
Interest expense
Derivative Instruments, Gain (Loss) [Line Items]
Hedged items	3	4	11	10
Total amounts of income and expense line items presented in the statement of income in which the effects of fair value or cash flow hedges are recorded	(2)	(3)	(5)	(5)
Interest expense | Interest Contracts
Derivative Instruments, Gain (Loss) [Line Items]
Derivatives designated as hedging instruments	(3)	(4)	(11)	(10)
Amount of gain or (loss) reclassified from accumulated other comprehensive income	(2)	(3)	(5)	(5)
Interest expense | Foreign Exchange Contracts
Derivative Instruments, Gain (Loss) [Line Items]
Amount of gain or (loss) reclassified from accumulated other comprehensive income	0		0	0
Investment income and other
Derivative Instruments, Gain (Loss) [Line Items]
Hedged items	0	0	0	0
Total amounts of income and expense line items presented in the statement of income in which the effects of fair value or cash flow hedges are recorded	0	0	0	0
Investment income and other | Interest Contracts
Derivative Instruments, Gain (Loss) [Line Items]
Derivatives designated as hedging instruments	0	0	0	0
Amount of gain or (loss) reclassified from accumulated other comprehensive income	0	0	0	0
Investment income and other | Foreign Exchange Contracts
Derivative Instruments, Gain (Loss) [Line Items]
Amount of gain or (loss) reclassified from accumulated other comprehensive income		$ 0	$ 0	$ 0

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Amount and Location in the Income Statement for Derivatives Designed as Cash Flow Hedges (Detail) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Derivative Instruments in Cash Flow Hedging Relationships
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized in AOCI on Derivatives	$ 372	$ (57)	$ 467	$ 106
Derivative Instruments in Cash Flow Hedging Relationships | Interest rate contracts
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized in AOCI on Derivatives	1	(3)	4	0
Derivative Instruments in Cash Flow Hedging Relationships | Foreign currency exchange contracts
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized in AOCI on Derivatives	371	(54)	463	106
Non-derivative Instruments in Net Investment Hedging Relationships
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized in AOCI on Derivatives	181	(47)	227	77
Non-derivative Instruments in Net Investment Hedging Relationships | Foreign currency exchange contracts
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized in AOCI on Derivatives	$ 181	$ (47)	$ 227	$ 77

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Amount Recorded in Income Statements for Foreign Currency Forward Contracts Not Designated as Hedges (Detail) - Not Designated as Hedging Instrument - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized in Income	$ (58)	$ 3	$ (86)	$ (3)
Foreign currency exchange contracts | Investment income and other
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized in Income	$ (58)	$ 3	$ (86)	$ (3)

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INCOME TAXES - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended			6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Mar. 31, 2021	Jun. 30, 2022	Jun. 30, 2021
Income Tax
Effective tax rate	22.90%	22.10%		22.30%	22.50%
Effective income tax rate reconciliation, percent	(0.10%)	(0.30%)		(1.20%)	(0.80%)
Defined benefit plan, curtailments				$ 33
Mark to market gain (loss), tax effect					$ 788
Mark to market gain (loss)					3,300
Transformation cost	$ 41	$ 116		96	234
Income tax benefit from restructuring costs	$ 10	28		22	56
Disposed of by Sale | UPS Freight Business
Income Tax
Pre-tax gain		101	$ 66
Gain (loss) on disposal, tax expense (benefit)		$ 24	$ 16
Investment income and other | Accumulated Defined Benefit Plans Adjustment Attributable to Parent
Income Tax
Defined benefit plan, curtailments				$ 33	$ 0

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TRANSFORMATION STRATEGY (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Restructuring and Related Activities [Abstract]
Compensation and benefits	$ 23	$ 55	$ 56	$ 131
Total other expenses	18	61	40	103
Total Transformation Strategy Costs	41	116	96	234
Income Tax Benefit from Transformation Strategy Costs	(10)	(28)	(22)	(56)
After Tax Transformation Strategy Costs	$ 31	$ 88	$ 74	$ 178