UPS Shifts Strategy: Cuts Amazon Deliveries to Boost Profitability

United Parcel Service (UPS) recently announced a plan to significantly reduce its deliveries for their largest customer, Amazon.com, in an effort to improve profitability. The company aims to cut Amazon volumes by over 50% by the second half of 2026, which will allow UPS to focus on more lucrative deliveries and reduce costs by about $1 billion.

UPS CEO Carol Tome stated that while Amazon is their largest customer, it is not their most profitable, prompting the company to take control of its destiny and shift towards higher-margin businesses. UPS plans to increase profit per package by adding deliveries for new customers like Temu and Shein, and insourcing small packages previously handled by the United States Postal Service.

This strategic shift, although initially impacting near-term earnings, aligns with UPS' long-term focus on profitability over volume.