In this article, shares of United Parcel Service closed down 14% on Thursday after the company issued weak revenue guidance for the year and announced plans to reduce deliveries for Amazon, its largest customer, by more than half. The shipping giant disclosed in its fourth-quarter earnings report that it had agreed in principle with its largest customer to decrease its volume by over 50% by the second half of 2026.
Simultaneously, UPS revealed that it is restructuring its U.S. network and initiating multiyear efficiency initiatives, expecting to achieve savings of around $1 billion. UPS CEO Carol Tome stated during an investor call that while Amazon is their largest customer, it is not the most profitable one, with its margin significantly impacting the U.S. domestic business.
Tome emphasized that UPS is implementing strategic changes to enhance profitability, agility, and differentiation, building on foundational changes already made. Amazon spokesperson Kelly Nantel responded to UPS’s volume reduction request, citing operational needs and expressing respect for UPS’s decision to reduce volume while affirming continued partnership with various carriers to serve customers.
Amazon had previously offered to increase UPS volumes before the announcement. UPS projected 2025 revenue of $89 billion, a decrease from $91.1 billion in 2024, falling short of analysts’ consensus estimate of $94.88 billion for 2025 revenue. In the fourth quarter, UPS missed revenue expectations, reporting $25.30 billion compared to analysts’ anticipated $25.42 billion.
Amazon has been reducing its reliance on major carriers like UPS, FedEx, and the U.S. Postal Service in recent years to gain more control over deliveries. Since a holiday incident in 2013, Amazon has expanded its logistics network significantly, managing thousands of last-mile delivery companies and developing an in-house network of planes, trucks, and ships that rivals or surpasses major carriers in size.
UPS has implemented aggressive cost-control measures, focusing on more profitable delivery customers. Tome highlighted health care, small business, international, and business-to-business segments as key areas of market focus. In response to cost-saving goals, UPS laid off 12,000 employees last January as part of its efforts to achieve $1 billion in savings.
