UPS raises revenue outlook after scaling back Amazon deliveries
UPS beat expectations in its third-quarter results and raised its annual revenue forecast to $92.6 billion, after deciding to cut back on delivering packages for Amazon.
UPS raised its full-year revenue forecast to $92.6 billion, up from $91.2 billion, after reporting third-quarter results that beat expectations. The company's shares rose around 5 percent on the news. The results suggest that a strategic decision to pull back from a major customer, Amazon, is helping the delivery giant strengthen its finances.
The shift is central to the company's turnaround. UPS announced early last year that it would scale back its partnership with Amazon, with a plan to cut Amazon delivery volume roughly in half by this summer. CEO Carol Tomé described Amazon as the carrier's largest customer but not its most profitable one, calling the high-volume, low-margin arrangement “very dilutive to the US domestic business.” Amazon accounted for around half of the carrier's domestic package deliveries in 2023 and about 12 percent of its revenue.
Investors had been wary of the plan to sever much of the Amazon delivery business. Tomé said the company was driving more premium growth, improving revenue quality and mix, and creating greater operating leverage through a more efficient network. “All of this is strengthening the underlying performance of our business,” she said during the earnings call.
UPS did not end its relationship with Amazon entirely. The company will continue handling Amazon returns, including in-person returns at UPS locations, which Tomé said the company does “very, very well” and plans to keep. She noted that 19 percent of all e-commerce sales are returned, and said the carrier's reverse network and box-less, label-less return capabilities would allow the relationship to keep growing.
The changes come after a difficult stretch for the company's stock. UPS shares soared during the pandemic-era delivery boom in 2020, but are now worth about half of their value four years ago. Its chief rival, FedEx, saw its shares climb steadily over the same period, gaining roughly the percentage of value that UPS lost. Both companies are now working to unwind pandemic-era expansion, when consumers stuck at home ordered more than ever before.
UPS has also cut jobs and facilities. Earlier this year the company announced it would eliminate 30,000 jobs and close dozens of warehouses, following 48,000 job cuts it made in 2025. A UPS spokesperson described the effort as “the largest U.S. network reconfiguration in UPS history.” The company says the goal is to become a “nimbler, more efficient operation” by winding down parts of its business that are not delivering results.
5
