UPDATE 1-UPS says holiday season package returns to hit a new record

(Adds UPS statement, background on investments in facilities, share price)

SEATTLE, Dec 27 (Reuters) - United Parcel Service Inc said on Wednesday it was on track to return a record number of packages following this year's bumper online holiday shipping season.

The fast growth in e-commerce is a double-edged sword for UPS and other delivery companies like FedEx Corp, which have benefited from greater delivery volumes but also have had to invest billions of dollars to upgrade and expand their networks to cope.

UPS, the world's largest package delivery company, said it handled more than 1 million returns to retailers daily in December, a pace expected to last into early January 2018. UPS said returns would likely peak at 1.4 million on Jan. 3, which would be a fifth consecutive annual record, up 8 percent from this year.

The returns follow what is expected to be a strong holiday shopping season for both brick-and-mortar and online retailers, once stores publish sales data. Mastercard Inc said on Tuesday shoppers spent over $800 billion during the season, more than ever before.

Atlanta-based UPS said record-breaking e-commerce sales during Black Friday and Cyber Monday in late November jolted the holiday returns season, with a larger flood of packages going back to retailers even as many gifts sat under Christmas trees.

The returns delivered in 2017 are part of the 750 million packages UPS said it expects to deliver globally during the peak shipping season, which begins after the U.S. Thanksgiving holiday and stretches through New Year's Eve. That is an increase of nearly 40 million over the previous year.

"While the day after Christmas used to be reserved for long return lines at department stores, the growth of e-commerce has changed when and how consumers return gifts," UPS Chief Commercial Officer Alan Gershenhorn said in a statement.

UPS shares rose 0.4 percent on Wednesday. (Reporting by Eric M. Johnson in Seattle; Editing by Bill Rigby)