UPS is sharpening its focus on higher-value freight segments as it reduces its dependence on lower-margin e-commerce volume, particularly from Amazon.
Speaking at a Raymond James investor conference, UPS executive vice president and chief financial officer Brian Dykes said the company expects to benefit from a more agile and more profitable network as it shifts toward business types offering better returns.
The change means less emphasis on general e-commerce shipments and more attention on business-to-business, industrial, healthcare and small business traffic from the second quarter onward.
Dykes said the strategy is intended to help UPS continue increasing revenue per package, as sectors such as healthcare are more likely to accept higher prices provided service levels remain strong. He contrasted these shipments with low-value residential e-commerce parcels, suggesting the economics are fundamentally different.
The move reflects a broader trend in the parcel market. Both UPS and FedEx have been distancing themselves from standard e-commerce volume, where competition from alternative carriers is intense, and instead targeting customers whose shipments require more specialised service and generate greater value.
For UPS, that shift includes reducing roughly $5 billion in Amazon revenue and around 2 million pieces of daily volume, a process that began last year. To adapt, the company has been cutting jobs, closing facilities and offering buyouts to full-time drivers.
Dykes said the pullback is focused on Amazon shipments already positioned close to end customers, often within roughly 50 miles of the final destination. For that kind of traffic, he said, an integrated end-to-end network like UPS’s is not essential, making it easier for Amazon to bring that portion in-house.
He added that Amazon will still remain one of UPS’s largest customers. The carrier continues to handle large volumes of returns through its UPS Store network and also provides services to small businesses selling on Amazon’s platform.
As Amazon-related volume declines, UPS is pushing to win more business in sectors such as healthcare and among smaller companies. One of its key tools is the Digital Access Program, which integrates with e-commerce platforms to offer rate discounts and related services. According to Dykes, the programme generated more than $4 billion last year, up from $150 million six years ago.
He said the programme is not limited to craft or micro-seller activity, noting that it also supports industrial retailers selling products online.
UPS expects revenue per package to increase by 6.5% in 2026 as it removes lower-yield Amazon volume and grows in more profitable segments. That would build on an 8.3% year-on-year increase in revenue per package recorded in the fourth quarter, around 340 basis points of which came from base pricing growth.
Dykes also addressed the company’s latest driver buyout programme, saying it is helping UPS accelerate attrition as it right-sizes its network. More than 100,000 drivers, including package car and tractor-trailer operators, have been offered buyouts.
He said uptake has been encouraging so far and that UPS expects to close the programme in the second quarter, take the charge and begin seeing the benefits in the second half of the year.
