News / UPS bullish for Q4 amid 'cost-saving' initiatives

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Amid the cull of 4% of its workforce, UPS assured compliance with its Teamsters contract and boasted further cost-saving measures when announcing its Q3 performance this week.

Third-quarter consolidated revenue hit $21.4bn, and while up on last quarter’s $21.2bn, it represented a year-on-year decline of 2.6%, with the company pointing to volume declines, although it noted that this had, to some extent, been mitigated by higher revenue per piece and air cargo revenue.

Operating profit experienced a more substantive year-on-year drop, 9.9% for the quarter, to $1.8bn, or $2.1bn on a non-GAAP adjusted basis, with a consolidated operating margin of 8.4%, a non-GAAP 10%. 

The carrier had announced it would be reducing the “less-profitable” volumes it handles for Amazon by 50% by H2 26. During the investor call, CEO of UPS Carol Tomé explained that, while UPS had been “gliding down” the volume “[they] don’t want”, it had simultaneously been “growing the volume [they] do want”, such as returns.  

Nando Cesarone, EVP and president US, said: “If you think about the buildings we’ve closed, the operations we’ve closed, also the 34,000 positions that we’ve eliminated, that’s driven by some Amazon, but also our productivity. 

“Our inside operations are demonstrating the best process rates in 12 years, our hub process rates, in 20 years… What should give everybody comfort is what we’ve displayed in the first nine months. We’ve also started the stage next year in 2026,” he added. 

UPS had come under fire from the Teamsters union for the recent job cull, claiming the firm was contractually obligated to create 30,000 jobs under the current national master agreement. 

But CFO Brian Dykes said: “We are in compliance with the terms of our contract… part of the terms of the contract allows us to offer full-time positions to part-time employees… quite frankly, that’s the best outcome for us. 

“From a net headcount standpoint, it doesn’t really change things, but it’s a way for us to create career pathing,” he added. 

In its supply chain solutions segment, UPS posted a year-on-year revenue decline of 22.1% which it said was primarily from the third quarter 2024 divestiture of Coyote – the actual operating profit from this segment went up to $525m, from $344m in Q3 2024. 

Last quarter, UPS failed to predict its Q3 figures, due to volatile external market factors, including tariffs and de minimis exemption removal.

The Loadstar recently reported on a “systemic breakdown” at UPS, post de minimis, as thousands of parcels had been piling up in the integrator’s US facilities, owing to problems in the clearance process. 

“Thank goodness we invested in technology,” said Ms Tomé, adding that following the elimination of the exemption for US imports, UPS experienced a tenfold surge in daily customs entries. 

“To manage the increased volume and complexity, we enhanced our customs brokerage capabilities by integrating agentic AI. This advanced technology streamlined formal entry processes,” she explained. 

“With the uncertainty around tariffs now somewhat resolved, and clearer peak forecasts from our largest customers, we’re in a stronger position to offer guidance than we were at the end of the second quarter.” 

UPS expects Q4 revenue to be some $24bn and a non-GAAP adjusted operating margin of 11%-11.5%. 

The Loadstar Premium’s DeskOne described UPS’s results as positive and highlighted that the revenue was about $500m above consensus estimates, according to Capital IQ.