Key Points
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UPS plans to cut its delivery volume for Amazon by over 50% by late 2026, affecting revenue and necessitating a restructuring of its operations.
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In 2024, Amazon constituted 11% of UPS’s revenue but accounted for 20-25% of its U.S. network volume, showcasing the impact of low-margin deliveries.
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UPS eliminated 48,000 positions in 2025 and aims to cut an additional 30,000 jobs in 2026, resulting in significant savings.
United Parcel Service (UPS) announced significant operational changes, including reducing Amazon package deliveries by 1 million pieces per day starting in 2025, with a target to remove another 1 million by 2026. This strategy is designed to improve profitability as Amazon deliveries, which were low-margin, comprised a large portion of package volume but not revenue. As a result of the changes, UPS’s stock rose following its fourth-quarter performance, despite overall revenue declines.
In 2025, UPS closed 93 U.S. buildings, slashed its workforce by 48,000, and achieved $3.5 billion in cost savings. For 2026, it plans 30,000 more job cuts and additional facility closures, projecting a decline in operating margin from 9.8% to 9.6%. Although average daily volume has dropped 10.8%, revenue per package has increased by 8.3%, indicating a potential path for profit margin recovery.
