UPS used its fourth-quarter earnings call to talk through its ongoing pullback from Amazon, a shift the company says is reshaping its U.S. network and costs.
What’s Related
UPS CEO Carol Tomé said the company reached its volume reduction target by the end of 2025, cutting Amazon volume by about 1 million pieces per day and delivering $3.5 billion in savings through network reconfiguration and its Efficiency Reimagined initiatives. The effort to scale back Amazon volume began a year ago and is now entering its final six months.
Brian Dykes, UPS CFO, said the company is “pleased with the progress” so far and explained that the $3.5 billion in savings came from lower variable costs tied to volume, fewer operational positions, and reduced fixed costs, including the closure of 195 operations and 93 buildings.
“We intend to glide down another million pieces per day of Amazon volume,” Dykes said, adding that UPS plans further reductions in labor hours, operational positions, and facilities in 2026, while continuing to deploy automation across the network. “We are targeting $3 billion in savings related to the Amazon glide down.”
Looking ahead, Dykes said 2026 will be a transition year for UPS’s domestic business. Full-year domestic revenue is expected to be flat, with average daily volume down mid-single digits due to the Amazon reduction, partially offset by higher revenue per piece.
“Revenue and our cost structure in the back half of the year will be meaningfully different than in the beginning of the year,” Dykes said. He noted that first-half margins will be pressured by transition costs, while the second half should reflect a more agile network and improved profitability.
Robert Persuit, Sr. Director of Business Development at ShipMatrix, told Logistics Management that the planned reduction of up to 30,000 operational positions does not mean mass layoffs.
“With over 2 million less packages per day to sort, UPS needs less personnel in sort operations,” he said, explaining that high turnover in package handling roles allows workforce reductions through attrition and slower hiring rather than direct job cuts.
University of Tennessee Assistant Professor Alan Amling offered a more cautious view, writing on LinkedIn that while UPS’s execution is improving, broader market trends remain a concern.
“The US parcel market will grow 36% by 2030… and Amazon will be the largest carrier by 2028,” he wrote. “UPS is improving revenue per piece while the market’s revenue per piece is declining. That’s not strength; that’s retreat.”
Visit Logistics Management for more coverage of this story
