UPS slashes Amazon delivery volumes amid revenue struggles

In 2025, United Parcel Service (UPS), a major American package delivery service, announced plans to significantly reduce its delivery volumes for Amazon, its largest customer, by more than 50% by the second half of 2026. This decision came after UPS issued weak revenue guidance for the upcoming year, forecasting $89 billion in revenue for 2025, down from $91.1 billion in 2024. The reduced dependency on Amazon is part of UPS's broader strategy to reconfigure its U.S. network and implement efficiency initiatives expected to yield about $1 billion in savings. Despite Amazon being its largest customer, UPS noted that deliveries to Amazon are not advantageous due to low profit margins associated with those shipments. Despite Amazon's ongoing business relationship, it has sought to gain greater control over its logistics operations in recent years, building up a vast in-house delivery network that has lessened its reliance on UPS and other major carriers like FedEx and the United States Postal Service. Amazon's move toward self-sufficiency in logistics follows past challenges with outside carriers. UPS's CEO, Carol Tome, characterized Amazon's margin as “very dilutive to the U.S. domestic business,” emphasizing a need for focusing on more profitable segments, such as healthcare and small business deliveries. UPS's announcement followed disappointing earnings results for the fourth quarter of 2024, where it reported revenues of $25.30 billion against analyst expectations of $25.42 billion. With consensus estimates for 2025 revenue at approximately $94.88 billion, UPS's projections reflect a significant divergence from what analysts anticipated. Moreover, the company's decision to cut delivery volumes is influenced by operational needs and the necessity to prioritize profitability over sheer volume. The context of UPS's decision can be attributed to both operational challenges and strategic pivots within the broader logistics market. Over the past years, Amazon has rapidly expanded its logistics capacity in response to past delivery issues and consumer demand, now overseeing thousands of delivery partners that exclusively serve their deliveries, while UPS is adapting its business model to cater more effectively to sectors that promise better margins. Given these factors, the future of the partnership between UPS and Amazon may alter significantly, signaling a pivotal change in one of the largest logistics relationships in the industry.