UPS plans to cut Amazon delivery volume by 50%, facing profit challenges and economic slowdown

From Nasdaq: 2025-05-19 04:00:00

UPS Company Overview:
United Parcel Service (UPS) is the world’s largest express carrier and package delivery company, delivering 22.4 million packages daily. Based in Atlanta, UPS offers specialized transportation and logistics services globally, including freight forwarding and customs brokerage.

UPS to Slash Amazon Business in Half:
Facing profit challenges, UPS plans to cut Amazon delivery volume by over 50% by next year. While this move may boost margins, filling the volume gap will be difficult. Amazon is UPS’s largest customer, but thin margins make these deliveries less profitable.

Weakness in Europe and Asia Persists:
Geopolitical uncertainty and poor consumer sentiment have led to an economic slowdown in Asia and Europe, affecting UPS’s demand. The company forecasts lower revenue in 2025 due to ongoing global trade concerns.

Unionization Means Higher Costs:
As the largest employer of Teamsters union members, UPS was forced to increase full-time workers’ pay significantly after a strike. This deal has impacted profitability, and future wage increases may pose challenges for UPS.

Relative Price Weakness Versus the Market:
UPS shares have fallen 19.7% year-to-date, significantly underperforming the S&P 500 Index. Despite falling in line with the market, UPS has not recovered with it, signaling relative weakness in the company’s stock.

Bottom Line:
UPS faces challenges from shifting Amazon relationships, weak international markets, and rising labor costs. Navigating these headwinds will be crucial for the company’s future success.



Read more at Nasdaq: Bear of the Day: United Parcel Service (UPS)