UPS Braces for Lowered Revenue as Amazon Reduces Dependency
United Parcel Service (UPS) has projected 2025 revenue below market expectations as it adjusts its business strategy to mitigate the impact of client Amazon's expanding delivery network and customer preferences for slower and more economical ground deliveries.
Shares of UPS declined 5% premarket following the announcement of an agreement between UPS and Amazon (while not explicitly named, referenced as the company's largest client) to reduce shipping volumes via UPS by over 50% in the latter half of 2024. This follows Amazon's ongoing efforts to reduce its reliance on UPS as it develops its internal delivery apparatus.
UPS anticipates 2025 revenue of $89 billion, a shortfall against the analyst consensus estimate of $94.88 billion, as per data from LSEG. Full-year revenue is also projected at $89 billion, below the estimated $94.88 billion.
In line with the shift towards cost-conscious delivery options, UPS and competitor FedEx have been implementing cost reduction measures. UPS reports a full-year consolidated operating margin of 10.8%, a gain over the 9.8% recorded in 2024.
The company reported $25.3 billion in fourth-quarter revenue, falling short of the $25.42 billion estimate. Adjusted per-share earnings for the quarter ended December 31st totaled $2.75, exceeding expectations of $2.53.