UPS Reduced Amazon Deliveries to Improve Profitability
United Parcel Service (NYSE: UPS) intentionally reduced its delivery volume for Amazon (NASDAQ: AMZN), cutting it by more than half in an effort to improve profitability. While the decision led to a slight decline in revenue, gross profits and operating cash flow have stabilized or improved at a faster rate compared to expected revenue growth in 2027. Despite rising fuel costs, UPS's EBITDA margins and gross margins remain above levels seen during 2024 when Amazon’s business was less profitable for the company. UPS CEO Carol Tomé stated that by “taking control of our destiny,” the logistics firm is now on a stronger financial footing than it was two years ago. Although profitability may not return to the exceptional levels achieved in 2022, which were driven by pandemic-related e-commerce growth and favorable conditions, UPS appears better positioned for long-term stability.
Topics: Amazon profitability UPS volume_reduction