The Blubber

UPS to Slash Amazon Deliveries by Over 50%, Forecasts Weak 2025 Revenue

United Parcel Service (UPS) delivered a downbeat 2025 revenue forecast on Thursday as it accelerates plans to drastically reduce deliveries for its largest customer, Amazon.com. The unexpected move sent UPS shares tumbling as much as 18%.

A Major Shift in Strategy

UPS now plans to cut Amazon-related deliveries by more than 50% by the second half of 2026—a fivefold increase in the reduction pace compared to 2021-2024. The shift is part of a strategy to prioritize higher-margin deliveries while cutting about $1 billion in costs related to buildings, trucks, planes, and labor.

"Amazon is our largest customer, but it's not our most profitable customer," UPS CEO Carol Tomé said, calling the business “extraordinarily dilutive” to margins.

“This was UPS taking control of our destiny.”

Pursuing More Profitable Customers

UPS is restructuring its operations to maximize profit per package. While it scales back on lower-margin Amazon shipments, it has been expanding deliveries for Temu, Shein, and high-margin parcels previously handled by mail carriers.

The move comes as UPS and FedEx struggle with weak demand for premium services like overnight delivery, forcing them to rely on lower-margin e-commerce shipments. The two companies are in a fierce battle to attract and retain high-value customers.

Market Reaction and Revenue Outlook

• UPS forecast 2025 revenue at $89 billion, falling short of Wall Street’s $94.88 billion estimate, according to LSEG data.
• The company’s shares plummeted 13.6% to $115.60 in afternoon trading, dragging FedEx stock down 2%.

Analysts React

• Edward Jones analyst Faisal Hersi noted that while UPS’ long-term focus on profitability is clear, the move may weigh on near-term earnings.
• Evercore ISI analyst Jonathan Chappell called the Amazon volume reduction a surprise, adding that UPS’ dependence on Amazon has long been a strategic risk.

With this bold shift, UPS is betting on a more profitable future—even at the cost of short-term revenue pain.