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United Parcel Service (UPS) reported a revenue decline of 3.7% in the third quarter of 2025, largely due to reduced demand driven by economic pressures including tariff uncertainties and elevated inflation. The company’s adjusted operating margin, however, improved to 10%, up from 8.9% year-over-year, supported by a 9.8% increase in revenue per piece.
UPS has decided to reduce its business with Amazon by more than 50% by June 2026, targeting $3.5 billion in expense reductions. By the end of Q3 2025, expense reductions related to Amazon totaled $2.2 billion. For the final quarter of 2025, UPS expects an adjusted operating margin between 11-11.5% and U.S. Domestic segment revenues of $16.2 billion, with a projected margin improvement from 6.4% in Q3 2025.
Competitor FedEx is also facing similar revenue challenges, cutting costs and achieving $200 million in savings in early fiscal 2026, with an expectation of $6 billion in adjusted operating income for the year.
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