One of UPS Inc.'s hallmarks has been its conservatism. The company has rarely gotten ahead of itself, even when it was performing beyond the most bullish expectations. It is a trait that has served the Atlanta-based transport logistics giant well, both in good times and in bad.

But even those accustomed to UPS's traditionally cautious stance were taken aback by the dour mood of two of its top executives in discussing with analysts July 26 the near-term future of U.S. and global economies and the markets it serves. William Greene, lead transport analyst for Morgan Stanley & Co., summed it up best when he referred to management's "somber outlook" that struck him as "particularly bearish."

Indeed, Chairman and CEO Scott Davis and Chief Financial Officer Kurt Kuehn painted a less-than-rosy picture of the balance of the year, one marked by sub-par growth in U.S. gross domestic product, uncertainty over Congress and the White House's ability to end the deficit stalemate and raise the nation's debt ceiling, signs of a soft or delayed peak shipping season, slowing Asian growth impacting international volumes, and companies reluctant to build inventories as consumer confidence remains shaky.

Ironically, the dour comments came the same day UPS released what could be seen as solid second-quarter results. The company reported a 25-percent year-over-year gain in earnings per share, on an 8.1 percent increase in year-over-year revenue to $13.2 billion.

On an adjusted basis, operating profits for its U.S. domestic business in the quarter rose 31 percent on revenue gains of 6.4 percent. Volume growth was virtually flat year over year, reflecting weaker demand amid a slowing economy. The company's Supply Chain and Freight Division, whose performance has long lagged behind UPS's domestic and international package units, seemed to hit its stride in the quarter, reporting record operating profit of $187 million.

The earnings gains are less of a reflection of an improving economy than they are of UPS's ability to master yield management and maintain firm pricing levels. Indeed, domestic yields—measured in revenue per hundredweight—rose 6.3 percent despite a 0.1-percent gain in volume, a sign UPS is extracting higher rates out of each shipment it moves, according to analysts.

Davis told a Sanford C. Bernstein analyst conference in early June that pricing had been solid across UPS's three operating channels. He also tipped UPS's hand about the macro outlook, saying the landscape was "muddier" than it was at the start of 2011.

The day before UPS's earnings announcement, Morgan Stanley released its latest survey of 350 large parcel shippers. The respondents expected domestic air and ground volumes to decelerate over the next six months, with international volumes increasing. Parcel shippers also expect a deceleration in pricing trends over the next six months compared with expectations a year ago, according to the survey.