UPS (NYSE: UPS), the biggest U.S. deliverer of small packages, has experienced a rollercoaster ride over the past few years.
The Covid pandemic boosted the company’s fortunes in 2020-21, as package volume and pricing soared. But that fizzled out, and the stock has dropped 49% since the end of 2022.
UPS’ finances have suffered from a generous five-year wage package it gave to workers in 2023. Full-time drivers can ultimately receive $170,000 a year in total compensation.
Sluggish consumer goods spending, high inflation and tariff increases also hurt the company. That includes last year’s elimination of the U.S. de minimis tariff exemption, which allowed shipments worth $800 or less to enter the country duty-free. Also, UPS is replacing all 28 of its MD-11 jets, after a cargo plane crashed in November.
Perhaps the biggest development was UPS’ decision last year to cut its volume of package carriage for Amazon (NASDAQ: AMZN) by more than 50%.
The retail-technology colossus was UPS’ largest customer, accounting for 20% to 25% of its package volume in 2024. But that business only made up 11%-11.8% of UPS’ revenue, so it hurt the company’s profit margins. That’s why UPS decided last year to shrink the relationship with Amazon. It plans to complete the reduction by the middle of this year.
Broader restructuring
The move was part of a broader company restructuring. UPS cut 48,000 jobs in 2025 and announced plans last week to dump another 30,000 workers this year. It now has about 490,000 employees.
The company closed more than 90 buildings in 2025, deployed automation in another 57 and plans to shutter at least 24 in the first half of this year. UPS says all its cutbacks, including the Amazon move, saved it $3.5 billion last year.
UPS isn’t just playing defense. It’s working to expand in healthcare, business-to-business deliveries, small and medium-sized businesses and overseas shipping.
Last year, the company bought Andlauer Healthcare Group for $1.6 billion. It’s a North American company offering third-party logistics and cold chain transportation for the healthcare sector. Also in 2025, UPS purchased Frigo-Trans and its sister company BPL for an undisclosed sum. The company offers similar services to Andlauer across Europe.
In addition, UPS plans to open a new air hub in the Philippines near the end of this year, and it plans to complete an expansion of its Hong Kong operation with a new hub in 2028.
Earnings numbers
Something is certainly going right for UPS. It beat analysts’ revenue and profit forecasts for the fourth quarter, even though revenue slid 3.2% from a year earlier. Earnings per share rose 4.5%. The adjusted operating profit margin dipped to 11.8% from 12.3%.
Investors have reacted positively to UPS’ moves over the past six months, pushing the stock up 30%.
And Morningstar analyst Matthew Young sees good things ahead for the company. Its return on invested capital averaged about 20% over the past decade, beating its cost of capital, he notes.
While ROIC eased from 2023-25, “we have very high confidence that excess returns will remain for at least the next 10 years” he said.
So UPS may deliver strong profits along with packages.
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