UPS Cuts Amazon Volume, Increasing Profitability
UPS has successfully reduced its relationship with Amazon, eliminating about 2 million packages per day, which corresponds to approximately $4.5 billion in expenses. This strategic withdrawal, finalized on July 28, followed 18 months of adjustments and is aimed at improving UPS’s profitability. In the second quarter, UPS reported a 6% increase in U.S. domestic revenue, with an adjusted operating margin rise to 8%.
Amazon, on the other hand, is adapting to the change. In 2025, its logistics arm is projected to deliver an estimated 6.7 billion U.S. parcels, surpassing the U.S. Postal Service’s 6.6 billion. Amazon’s global shipping costs for the second quarter reached $27.9 billion, up 19% from the previous year, indicating that while costs rise, the company is investing heavily in its own delivery network.
Additionally, UPS expects its full-year revenue to hit approximately $91.2 billion, showcasing the company’s shift towards higher-quality volume. As UPS reduces low-margin Amazon deliveries, it positions itself for stronger profit margins in the logistics space.
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