Is UPS Poised to Outperform in the Reshoring and E-Commerce Boom?

In 2025, the logistics industry is undergoing a seismic shift driven by reshoring, nearshoring, and the relentless growth of e-commerce. United Parcel Service (UPS) has positioned itself at the intersection of these trends, leveraging strategic pivots to navigate a volatile market. As global supply chains recalibrate to mitigate geopolitical risks and prioritize resilience, UPS's aggressive cost-cutting, diversification into high-margin sectors, and alignment with reshoring dynamics suggest a compelling case for long-term outperformance.

Strategic Rebalancing: From Amazon to SMBs

UPS's decision to reduce Amazon package volume by over 50% by 2026 marks a pivotal shift in its business model. By pivoting away from high-volume, low-margin accounts, the company is prioritizing small- and medium-sized businesses (SMBs), which now account for 31.2% of its U.S. volume—the highest in a decade UPS reports fourth-quarter gains, outlines strategic moves for 2025^[1]. This realignment is not merely defensive but strategic: SMBs often require tailored logistics solutions, enabling UPS to capture higher margins. According to a report by Logistics Management, this shift is part of a broader “Efficiency Reimagined” initiative, which includes closing 164 operations and cutting 20,000 jobs to achieve $3.5 billion in annual cost reductions UPS Supply Chain Transformation: Market Outlook | Monexa^[2].

The company's insourcing of the UPS SurePost service further underscores its commitment to controlling final-mile delivery, a critical differentiator in an era where speed and reliability are paramount UPS reports fourth-quarter gains, outlines strategic moves for 2025^[1]. Meanwhile, the launch of Ground Saver—a low-cost, slower shipping option—positions UPS to compete directly with Amazon's logistics arm while maintaining profitability UPS Announces Strategic Initiatives And Three-Year Plan^[3].

Reshoring and Nearshoring: A Tailwind for Logistics Demand

The broader reshoring trend is reshaping global supply chains, with companies relocating manufacturing and sourcing closer to domestic markets to reduce vulnerabilities. As noted by KPMG in its 2025 supply chain update, nearshoring is gaining traction as a middle ground between offshoring and reshoring, offering cost efficiency and operational agility Navigating increasingly complex supply chains: Five trends^[4]. For UPS, this trend translates into increased demand for logistics services in regions like Latin America and Eastern Europe, where nearshoring hubs are emerging.

UPS's acquisition of Andlauer Healthcare Group in 2025 is a masterstroke in this context. By expanding into healthcare logistics—a sector requiring specialized handling of temperature-sensitive and high-value medical shipments—the company is tapping into a high-growth niche. Analysts at Monexa highlight that this move aligns with the rising demand for pharmaceutical and medical supply deliveries, a sector projected to grow at a double-digit CAGR over the next decade UPS 2025 Strategy: Trade Tariffs, Healthcare Logistics^[5].

Earnings Potential: A Cautious Optimism

While UPS's strategic moves are promising, the path to long-term earnings growth is not without hurdles. As of September 2025, 17 analysts have assigned a “Buy” rating to UPS stock, with an average price target of $106.65, implying a potential 26.87% increase in the next 12 months United Parcel Service (UPS) Stock Forecast & Price Targets^[6]. However, some analysts, including those from BMO Capital and B of A Securities, have downgraded their ratings due to concerns over labor costs and regulatory challenges United Parcel Service (UPS) Stock Forecast & Price Targets^[6].

Financial projections paint a mixed picture. For 2026, UPS aims for consolidated revenue between $108 billion and $114 billion, with an adjusted operating margin above 13% UPS reports fourth-quarter gains, outlines strategic moves for 2025^[1]. Earnings per share (EPS) are expected to rise to $7.23 in 2026, a 11.46% increase from 2025's $6.51 United Parcel Service (UPS) Stock Forecast & Price Targets^[6]. While these figures suggest stabilization, the minimal revenue growth (projected at $87.98 billion in 2026, up 0.5% from 2025) indicates that profitability, rather than top-line expansion, will drive value creation.

Conclusion: A Calculated Bet on Resilience

UPS's strategic repositioning—divesting from low-margin e-commerce segments, embracing automation, and capitalizing on reshoring and healthcare logistics—positions it as a resilient player in a fragmented market. While near-term challenges persist, the company's focus on margin expansion and high-growth sectors like healthcare suggests a strong foundation for long-term outperformance. For investors, the key will be monitoring how effectively UPS executes its cost-cutting initiatives and scales its new services amid evolving industry dynamics.