UPS lost $2.6 billion in the fourth quarter as costs from their landmark agreement with the Teamsters union pushed the country's largest transportation company into the red.

The cause of the first quarterly loss as a public company was a $6.1 billion charge in the U.S. Domestic Package segment in connection with UPS's withdrawal from the Central States, Southeast and Southwest Areas Pension Fund. That withdrawal was a condition of the historic five-year agreement with the International Brotherhood of Teamsters, eight months before expiration of the existing contract. As a result of the charge for the pension fund, the company reported a $4.8 billion loss in its domestic package business, compared to a $1.2 billion profit for the same period last year.

For the fourth quarter, UPS total revenue rose 6.1 percent to $13.3 billion, justifying the comment of Chairman and CEO Scott Davis when he said, "In 2007, UPS delivered on its forecast in an economic environment that became increasingly challenging over the year."

The U.S. domestic package business generated $8.3 billion, a 2.2 percent increase. International package operations brought in $2.8 billion, up 17.3 percent compared with a year earlier. The supply chain and freight segment increased revenue 7.8 percent to reach $2.2 billion in the quarter.