UPS Reduces Amazon Business for Improved Profitability
United Parcel Service (NYSE: UPS) reported a decline in parcel volumes during Q2 2026 due to its ongoing phase-out of low-margin business with Amazon, but saw an increase in revenue per piece and profits. The company's strategic shift toward premium shipments and automation helped drive higher efficiency and pricing power amid economic uncertainty. Revenues rose by 7.6% year-over-year to $22.8 billion, while adjusted operating profit increased 12% to $2.1 billion. UPS has worked with Amazon over the past 18 months to eliminate unprofitable shipments from its network—accounting for half of what was previously tendered by the e-commerce giant. This led to a reduction of two million pieces per day and $4.5 billion in related expenses, prompting UPS to reconfigure its operations through facility closures and workforce reductions. The company has closed 150 parcel sort facilities so far this year, eliminated 30,000 positions, and added automation that lowered cost-per-piece by about 28%. Despite the strategic benefits of streamlining operations, UPS shares fell nearly 6.5% following a modest beat on earnings but below-consensus guidance for the second half of the year. Analysts remain cautious due to potential risks such as Amazon withdrawing more business and ongoing labor negotiations with the Teamsters union.
Topics: Amazon cost reduction logistics revenue growth UPS