UPS Is Reducing Volume of Deliveries for Amazon by More Than 50%

Over the next year and a half, UPS will cut its volume of Amazon deliveries by more than 50%. While the parcel delivery company will maintain its parentship with the world’s largest retailer, it is prioritizing resources and assets in market share areas that provide the best profitability in the long term.

According to the company’s CFO Brian Dykes, volumes will significantly drop by reducing Amazon shipments, but higher profit margins will be realized from the shift. In addition, the company is reworking its delivery network and implementing measures to improve efficiency, an initiative slated to reduce costs by roughly $1 billion.

“We are making business and operational changes that, along with the foundational changes we’ve already made, will put us further down the path to become a more profitable, agile and differentiated UPS that is growing in the best parts of the market,” said CEO Carol Tome in the Q4 2024 earnings report.

Tome also told investors during an earnings call that while Amazon is UPS’s largest customer, it is not the most profitable. In 2024, just under 12% of revenue earned by the company came from Amazon orders.

Meanwhile, for Amazon, it’s business as usual. The retailer has agreements with every major package carrier, including FedEx and USPS, and typically splits shipments among them. However, “last-mile deliveries” to homes and businesses are mostly handled by Amazon’s contracted, independent drivers. Using this strategy, Amazon actually surpassed both UPS and FedEx in parcel delivery volumes in recent years.

“We certainly respect their decision,” Amazon spokesperson Kelly Nantel told CNBC. “We’ll continue to partner with them and many other carriers to serve our customers.”

UPS Earnings Report

Fourth-quarter 2024 revenue for UPS was $25.3 billion, a 1.5% uptick year over year. Operating profit reached $2.9 billion, up 18.1% compared to Q4 2023, and net income came in at $1.72 billion.

For 2024, revenue was $91.1 billion, which is just a touch above what the company earned in 2023. In 2025, UPS anticipates revenue to hit about $89 billion, disappointing analysts who projected $95 billion.

Even without Amazon, UPS still delivers about $80 billion in parcels for others. Moving forward, the parcel delivery company will likely make up the revenue lost from Amazon with more profitable customers, while at the same time improving and optimizing its network and internal operations.