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UPDATE 4-UPS COO's retirement overshadows e-commerce fueled profit rise

Lisa Baertlein and Sanjana Shivdas

(Adds executive comment, details on capex, updates shares)

Oct 22 (Reuters) - United Parcel Service Inc's e-commerce fueled quarterly profit beat on Tuesday was overshadowed by news that Jim Barber, widely viewed as the world's biggest parcel delivery firm's next leader, would retire at year-end.

Shares in Atlanta-based UPS fell 4 percent to $113.52 on news of the departure of Chief Operating Officer Barber, who oversees the company's global small package, freight, supply chain, freight forwarding and engineering, and was instrumental in the company's turnaround.

"Investors assumed he was going to be the next CEO and this caught us by surprise. Unfortunately, the market does not like surprises," Seaport Global analyst Kevin Sterling said.

Barber's retirement comes just months after similar news from Chief Financial Officer Richard Peretz, ushering in big changes to the UPS C-suite at a time when cooling economies in Asia and Europe threaten global growth.

"We have a strong bench. Succession planning is something we constantly focus on," Chief Executive David Abney said on a conference call with analysts.

UPS said Barber and Peretz will guide UPS through the key holiday peak shopping and shipping season, when the company's daily volumes can double.

The U.S. consumer continues to spend, bolstering online sales that fueled a 24% rise in UPS Next Day Air U.S. delivery volume during the third quarter.

That result was buoyed by rival FedEx Corp's breakup with online retailer Amazon.com Inc this summer.

"It's Amazon, but it's beyond Amazon," Abney said in a telephone interview with Reuters.

"Companies are competing on time. Next Day has become the standard. We see it in our Next Day Ground and our Next Day Air," said Abney, who noted that the company's multi-billion-dollar investments in network upgrades have shaved per-package costs by 2.5%.

Still, investors remain wary of the potential ill-effects of the ongoing U.S.-China trade war on the company, whose international package group accounts for about 20% of total revenue but roughly 35% of operating income.

UPS third-quarter net income rose 16% to $1.75 billion, or $2.01 per share, after revenue increased 5% to $18.32 billion.

Excluding items, the company earned $2.07 per share, topping analysts' average forecast by a penny, according to IBES data from Refinitiv.

(Reporting by Sanjana Shivdas in Bengaluru and Lisa Baertlein in Los Angeles Editing by Shinjini Ganguli and Nick Zieminski)