United Parcel Service (UPS) shares plummeted 14% on Thursday after the company announced plans to slash Amazon deliveries by more than half. The move comes as UPS shifts away from less-profitable contracts and focuses on its most profitable customers.
The decision is part of a broader effort to become a more agile and differentiated UPS that grows in the best parts of the market, according to CEO Carol Tome. The company has already made significant changes in recent years, including reconfiguring its US network and launching efficiency initiatives.
Tome stated that Amazon is UPS’ largest customer, but not its most profitable one, citing “margin dilution” issues. Amazon spokesperson Kelly Nantel said the request for a volume reduction was due to operational needs, while offering to increase UPS’ volumes beforehand.
The move comes after Amazon built up its own in-house logistics empire, rivaling or exceeding the size of major carriers. The company now oversees thousands of last-mile delivery companies and a budding in-house network of planes, trucks, and ships.
In contrast, UPS has taken cost-control measures, focusing on more profitable customers like healthcare, small businesses, international deliveries, and business-to-business services. This shift has resulted in an influx of volume from bargain retailers Temu and Shein, which have gained popularity in the US.
The company’s revised 2025 revenue forecast is $89 billion, below consensus estimates. Fourth-quarter results also fell short of expectations, with revenue missing analyst projections.
Source: https://www.cnbc.com/2025/01/30/ups-shares-tank-after-weak-guidance-plan-to-slash-amazon-deliveries.html