News / UPS slashes less-profitable Amazon volumes

© Alexey Novikov

UPS has announced that it will be reducing the volumes it handles for Amazon by 50% going into the second half of next year.

The news was announced today as part of a cost-cutting initiative by the express operator, which is eyeing a $1bn reduction in spending, with an emphasis on cuts to air, labour, and road costs, as well as closing a number of buildings.

During the company’s earnings call, chief executive Carol Tome said: “Amazon is our largest customer, but not our most profitable,” citing the “dilutive” impact it has on UPS’s margins.

Even so, the ecommerce behemoth made up just shy of 12% of the company’s 2024 revenue, with the news precipitating a 15% drop in value, adding further woe after a difficult three years in which UPS lost a third of its value, following indications of a post-pandemic bump.

Compounding this, Q4 24 revenue of $24.3bn was shy of the forecast $25.42bn, UPS expecting to hit $89bn for full-year 2025.

According to reports, in the absence of Amazon, it seems UPS is looking to take on the small parcel sector, which it had shunted over to US Postal Service, hoping to make gains from having signed up the likes of Shein and Temu.