UPS (UPS) announced on Thursday that it will slash its Amazon (AMZN) delivery volume by more than 50% by the second half of 2026, a move that sent its stock plummeting as much as 15%. However, the company emphasized that the strategy is aimed at improving long-term profitability.
“The portion of the business that we’re transitioning out of just doesn’t make sense for us to do,” said UPS CFO Brian Dykes in an interview with Yahoo Finance. “We want to manage our assets and resources in areas of the market where we can drive higher yields and returns.”
Lower Volumes, Higher Margins
Dykes noted that while the decision will reduce UPS’s shipping volumes in the short term, it is expected to contribute to higher operating margins. He clarified that Amazon will remain a key long-term partner, but UPS will prioritize deliveries that involve multiple pickup locations or require long-haul shipments across the U.S.
Despite the shift, UPS still anticipates generating approximately $89 billion in revenue in 2025, missing Wall Street’s consensus estimate of $94.9 billion.
Wall Street Reacts to UPS’s Amazon Shift
Evercore ISI analyst Jonathan Chappell called the decision to cut Amazon deliveries a “surprise” and warned that the rapid implementation of the plan could negatively affect short-term results.
“UPS will realign its network for this volume loss, but the speed at which it will unfold will negatively impact near-term results,” Chappell wrote in a note to clients.
Jefferies equity analyst Stephanie Moore pointed out that while UPS delivered better-than-expected earnings for the fourth quarter—posting $2.75 per share versus Wall Street’s forecast of $2.53—investors remain focused on the company’s weak revenue outlook and shrinking Amazon partnership.
Investor Frustration Continues
UPS’s U.S. domestic operating margin for the fourth quarter was 10.1%, exceeding expectations of closer to 9.5%. However, analysts noted that investors are fixated on the company’s long-term growth prospects.
“The announcements today add to what has been a frustrating several years for investors,” Moore stated.
