UPS's 2025 Q2 Call: Navigating Contradictions in Amazon Strategy, SurePost Insourcing, and International Margins

Revenue and Operating Performance:
- UPS reported consolidated revenue of $21.2 billion for Q2 2025, with consolidated operating profit of $1.9 billion and a consolidated operating margin of 8.8%.
- The decline in revenue was primarily due to the planned reduction in Amazon volume, which was partially offset by an increase in air cargo revenue and revenue per piece.

Impact of Trade Policies and Tariffs:
- UPS experienced a 34.8% decline in average daily volume for the China to U.S. trade lane in May and June due to increased tariffs and the elimination of de minimis exceptions.
- This decline pressured the international operating margin but was offset by growth in other trade lanes, particularly the China to the rest of the world, which increased by 22.4%.

Strategic Actions and Cost Management:
- UPS aims to remove approximately $3.5 billion in expenses from its base business this year, with progress in reducing Amazon volume, closing facilities, and implementing Efficiency Reimagined initiatives.
- The anticipated decline in Amazon volume was slightly lower than expected, which impacted attrition rates, but the company is confident in achieving its cost reduction targets.

SMB and Enterprise Customer Dynamics:
- The overall U.S. average daily volume declined by 7.3%, mainly due to the glide down of Amazon volume. Despite this, revenue declined by only 0.8%, indicating a positive shift in the product mix.
- Small and medium-sized businesses (SMBs) saw flat year-on-year growth rate, as they face challenges from trade uncertainties and tightened credit conditions, but UPS remains focused on providing solutions like supply chain mapping.