UPS just revealed a $92.6 billion surprise, and it’s bad news for one of its biggest customers
UPS is breaking up with Amazon—and so far it’s paying off.
The delivery company issued its Q3 results on Tuesday, beating expectations and showing that scaling back its business of schlepping packages for a major competitor was a smart gamble that could put its financials back on track.
“We’re driving more premium growth, improving revenue quality and mix, and creating greater operating leverage through a more efficient network,” CEO Carol Tomé said in the earnings call. “All of this is strengthening the underlying performance of our business.”
Investors were skittish about the shipping stalwart’s plan to sever much of its Amazon delivery business, but UPS just improved its outlook for the year, raising revenue expectations from $91.2 billion to $92.6 billion. The company’s shares were up around 5% on the news at the time of this writing.
UPS announced that it would scale back its partnership with Amazon early last year, with a plan to cut its Amazon delivery volume in half by this summer. “Amazon is our largest customer, but it’s not our most profitable customer,” Tomé said of the decision, calling its high-volume, low-margin arrangement with Amazon “very dilutive to the U.S. domestic business.” Amazon accounted for around half of the carrier’s domestic package deliveries in 2023, accounting for 12% of its revenue.
Amazon returns remain good businessBut the carrier didn’t cut ties with the online retail behemoth outright. Instead, UPS opted to continue handling Amazon returns while reducing the kind of small, frequent deliveries that litter front porches with cardboard boxes. Amazon customers will still be able to return their packages in person at UPS locations, a part of its business Tomé said the company does “very, very well” and plans to hang onto.
“Returns are the nemesis of anybody who’s in the e-commerce space,” Tomé said. “In fact, 19% of all e-commerce sales are returned. And so with our great reverse network, the capabilities that we have for box-less, label-less returns—that relationship with Amazon is just going to continue to grow.”
The pandemic-era boom in deliveries sent UPS stock soaring in 2020, but its shares are now only worth half of what they were four years ago. Shares of the company’s chief rival, FedEx, climbed consistently during the same time period, gaining around the same percentage of value that UPS lost.
Both companies are racing to undo some of their pandemic-inspired expansion, when consumers stuck at home were ordering more to their door than ever before. UPS announced that it would slash 30,000 jobs and shutter dozens of warehouses earlier this year, a piece of its turnaround plan that followed the 48,000 job cuts it made in 2025.
“We’re well into the largest U.S. network reconfiguration in UPS history,” a UPS spokesperson told Fast Company at the time. The shipping giant remains focused on its plan to transform into a “nimbler, more efficient operation” by winding down pieces of its business that aren’t delivering.