UPS Slashes Amazon Deliveries: A Strategic Shift for Profitability

In a surprising turn of events, United Parcel Service (UPS) has announced that it will reduce the amount of Amazon volume it delivers by more than 50% by the second half of 2026. This strategic move, driven by the desire to focus on more profitable segments, has raised eyebrows in the logistics and e-commerce industries. Let's delve into the reasons behind this decision and its potential implications for both UPS and Amazon.



UPS, the world's largest package delivery company, has been Amazon's largest customer for nearly 30 years. However, CEO Carol Tomé recently stated that Amazon is not UPS' most profitable customer, and its margin is dilutive to the U.S. domestic business. This revelation has led UPS to reassess its relationship with Amazon and prioritize more lucrative segments, such as healthcare product shippers and small- and medium-sized businesses.



The decision to reduce Amazon volume is part of UPS' broader strategy to become a more profitable, agile, and differentiated company. By focusing on more profitable segments, UPS expects to see improved profitability despite the decline in Amazon volume. In 2025, UPS anticipates average daily U.S. volume to drop about 8.5% year over year, while revenue per package is projected to increase by 6%. This shift in focus will allow UPS to maintain its revenue while delivering fewer packages at more profitable rates.



Amazon, on the other hand, has been building out its own logistics network to deliver more customer orders itself. However, it still relies on a mix of major carriers, including UPS, FedEx, and the U.S. Postal Service, to cover the remainder of its orders. Amazon spokesperson Kelly Nantel stated that the company respects UPS' decision and will continue to partner with them and other carriers to serve its customers.



The UPS-Amazon relationship is unique compared to other major carrier relationships with Amazon. While UPS has decided to actively reduce its volume with Amazon, other major carriers like FedEx and the U.S. Postal Service continue to work with Amazon. This decision by UPS highlights the company's focus on profitability and its desire to shift its business model to capture volume from more profitable segments.

In conclusion, UPS' decision to reduce its Amazon volume is a strategic shift aimed at improving profitability and focusing on more lucrative segments. This move is part of UPS' broader strategy to become a more agile and differentiated company in the face of changing market dynamics. While Amazon continues to build out its own logistics network, it still relies on major carriers to cover the remainder of its orders. The UPS-Amazon relationship is unique compared to other major carrier relationships with Amazon, with UPS actively reducing its volume with Amazon while other carriers continue to work with the e-commerce giant.