UPS Cuts Amazon Delivery Volume
United Parcel Service (NYSE: UPS) announced plans to reduce Amazon’s delivery volume by 50% starting in early 2025, as part of a strategic shift towards higher-margin business. This decision aligns with CEO Carol Tomé’s focus on profitable operations, moving away from low-margin deliveries.
Despite raising its full-year revenue guidance to $91.2 billion and adjusted operating profit to $8.65 billion, UPS shares have fallen 10.5% since the announcement due to concerns regarding margin performance, which is now expected to be slightly below initial forecasts at just under 9.5%.
As fuel surcharges have contributed significantly to revenue growth, rising by $1.173 billion in the first half of the year, analysts are questioning the sustainability of these gains in light of increased operational costs.
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