UPS Cuts Amazon Deliveries to Enhance Profitability
UPS (UPS) announced a strategic shift to reduce deliveries for its largest customer, Amazon (AMZN), by more than 50% by mid-2026. This move aims to optimize resources and drive higher returns, according to UPS CFO Brian Dykes.
Dykes emphasized that while the decision will reduce volumes in the near term, it is projected to increase margins. The company anticipates revenue of approximately $89 billion in 2025, slightly below analyst estimates.
Analysts speculate that the pace of the Amazon delivery reduction may negatively impact short-term results. Despite exceeding earnings expectations for the fourth quarter, UPS's weak sales outlook and reduced Amazon volumes have drawn attention from investors.
UPS remains committed to its partnership with Amazon but will prioritize deliveries with multiple pickup locations or long-distance shipments. This cost-cutting measure is part of a broader strategy to drive profitability and enhance shareholder value.