United Parcel Service Inc. changed its earnings forecast again after labor costs and volume drops.

United Parcel Service Inc. cut its annual profit target for a second time in less than three months, hurt by a spike in labor costs and lower volumes for shipped packages.

Adjusted earnings came to $1.57 a share, down 47% from a year ago, UPS said Thursday in a statement. Analysts had expected $1.52 after slashing the estimate by about 40 cents due to the impact of a new labor agreement that took effect Aug. 1. Sales dropped about 13% to $21.1 billion.

“We expected the conditions in the third quarter to be challenging and they were,” Chief Executive Officer Carol Tomé said on a conference call with analysts. She blamed slowing economic growth for lower international and freight forwarding volume, and also said labor strife cost UPS some business in the US.

The Atlanta company reduced its 2023 forecast again to an adjusted operating profit margin of 10.8% to 11.3% and sales of $91.3 million and $92.3 million. That followed an earlier move in August to trim its 2023 outlook to an operating margin of 11.8% and also lower its annual sales goal.

UPS shares fell 4.1% to $140.89 as of 9:55 a.m in New York. The stock is down about 19% this year.

The cost of UPS’ new labor contract with the Teamsters is front-loaded with 46% coming in the first year, crimping the company’s profit margins.

The contentious summer talks, which were resolved only days before a strike was scheduled, also drove some customers to switch to competitors.

Lost volume

UPS said the lost volume stemming from the labor negotiations totaled 1.5 million daily packages, higher than an earlier estimate of 1.2 million. The company has regained about 600,000 daily packages of that diverted volume and expects to win back all of it by the end of the year, Tomé said on the conference call.

To help shore up profits, UPS is focusing on health-care and small-business deliveries that typically fetch higher prices. UPS in September agreed to acquire MNX Global Logistics, a health-care delivery service, and has announced a general rate increase of 5.9% for next year.

The courier also has pledged to cut 2,500 management jobs and lean on automation to boost worker efficiency.