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Shares of United Parcel Service (UPS) plummeted 14% on Thursday after the company issued weak revenue guidance for the year and announced it would cut deliveries for its largest customer, Amazon, by more than 50% by the second half of 2026.
According to the company’s fourth-quarter earnings report, UPS plans to reconfigure its US network and launch multi-year efficiency initiatives, which it expects will result in savings of approximately $1 billion. UPS CEO Carol Tome stated that Amazon is its largest customer, but not its most profitable customer, citing that its margin is “very dilutive” to the US domestic business.
The news came as Amazon offered to increase UPS’ volumes, but UPS had requested a reduction in volume “due to their operational needs,” according to Kelly Nantel, an Amazon spokesperson. UPS forecast 2025 revenue of $89 billion, significantly below consensus estimates of $94.88 billion.
Amazon has been decreasing its reliance on major carriers, including UPS and FedEx, and has built its own logistics empire since a 2013 holiday fiasco left its packages stranded with outside carriers. The company now oversees thousands of last-mile delivery companies and has a growing in-house network of planes, trucks, and ships.
Roger that is all for now.