United Parcel Service is undergoing one of the most significant strategic shifts in its history as it gradually reduces its reliance on Amazon deliveries and pivots toward higher-margin logistics services.
The company’s cost-reduction and restructuring program is not intended to shrink the business, executives say, but rather to reposition UPS for long-term profitability.
Speaking at the Raymond James Industrials Conference, Chief Financial Officer Brian Dykes explained that UPS is transforming its network to focus on more profitable segments.
“As we come out of the second quarter we’ll have a more agile and more profitable network,” Dykes said. “Less e-commerce, more small- and medium-sized business, more B2B and healthcare.”
The transformation follows a deliberate decision by UPS to reduce its Amazon delivery volumes by roughly 50% by mid-2026. Although Amazon remains the company’s largest customer, certain delivery routes — particularly short-distance residential deliveries — were no longer profitable.
The adjustment has led to a major restructuring across UPS operations.
In 2025, the company eliminated 34,000 operational positions, reduced 25 million working hours and closed 93 facilities. Earlier this year, UPS announced plans to cut an additional 30,000 jobs and shut down 24 sorting centers.
By June, Amazon shipments handled by UPS are expected to decrease by approximately 2 million packages per day — representing a $5 billion reduction in revenue within two years.
Automation in remaining facilities is helping to offset the decline in volume while improving operational efficiency.
Despite the scale of the restructuring, analysts say UPS has managed the transition with limited disruption to service levels.
Delivery performance remains strong. According to ShipMatrix, UPS achieved an on-time delivery rate of 97.2% during the recent holiday peak season.
The company is now shifting its focus toward logistics segments that generate higher value per shipment.
Healthcare logistics, high-value goods transport and complex B2B supply chains are emerging as priority markets. These segments tend to offer more stable demand and stronger margins compared with residential e-commerce deliveries.
“When you are delivering clinical trial drugs with 99.99% reliability, customers are far less sensitive to price increases,” Dykes noted.
UPS is also expanding services for small businesses engaged in cross-border e-commerce, integrating shipping solutions directly into online storefront platforms.
The strategy is already improving revenue per package.
During the fourth quarter, UPS reported an 8.3% increase in revenue per shipment. Roughly one third of the increase came from rate adjustments, another third from higher-value shipment mix, and the remainder from fuel surcharges.
Meanwhile, the company is maintaining its partnership with Amazon in selected areas. UPS will continue handling a large share of Amazon merchandise returns through its UPS Store network and supporting small sellers operating on the Amazon marketplace.
“This is still a collaborative relationship,” Dykes said.
Looking ahead, UPS expects revenue per shipment to grow by approximately 6.5% in 2026 before stabilizing at around 3% annual growth in subsequent years.
