United Parcel Service parcel volumes fell during the second quarter as it completed the phase out of low-margin Amazon business, but revenue per piece and profits increased behind a focus on premium shipments, efficiency gains, and strong pricing amid ongoing economic volatility, according to FreightWaves.
Financial Performance and Strategic Shift
The integrated parcel and logistics giant on Tuesday reported revenues of $22.8 billion, up 7.6% year over year, with adjusted operating profit increasing 12% to $2.1 billion, or $1.76 per share, delivering a modest beat of analyst expectations. Management raised full-year guidance a notch, with revenue expected at $91.2 billion and adjusted operating profit up 0.5% to $8.6 billion.
Key Q2 2026 Financials
| Metric | Q2 2026 Value | Year-over-Year Change |
|---|---|---|
| Revenue | $22.8B | +7.6% |
| Adjusted operating profit | $2.1B | +12% |
| EPS | $1.76 | Beat expectations |
| Domestic package revenue | - | +6% |
| Domestic revenue per piece | - | +9.3% |
| Domestic volume | - | -3.3% |
| International package revenue | - | +12.5% |
"This reconfiguration was never the destination. It was the foundation. We now have a leaner, more automated, more agile network that will deliver operating leverage as volume grows. And importantly, incremental volume today carries materially better economics than before because of the structural changes we’ve made," CEO Carol Tomé emphasized.
UPS has worked with Amazon over 18 months to eliminate unprofitable shipments from its network, which accounted for half the volume tendered by the retail marketplace — its largest customer. In total, UPS eliminated 2 million pieces per day of Amazon volume and $4.5 billion in related expenses. Amazon is still responsible for about 9% of UPS revenue, down from 13% during the Covid e-commerce boom.
Network Restructuring and Automation
The drawdown, along with slower overall parcel demand, led UPS to initiate a network reconfiguration based on closing 150 parcel sort facilities, eliminating 30,000 positions and 50 million labor hours, and adding technology to improve the throughput of existing distribution stations. The company closed 45 buildings in the first half of 2025, with several additional closures planned in the second half, said CFO Brian Dykes on a conference call with analysts. Management previously identified a total of 51 facility closures this year.
By the end of June, 68.5% of U.S. volume flowed through an automated facility compared to 64% the year prior. The cost per piece in an automated handling facility is about 28% lower than a conventional facility with mechanical systems, which spreads out unit costs and drives operating leverage. "That gives us confidence in the productivity that we should continue to deliver going forward," Dykes said.
Results were weighed down by an $891 million charge for employee separation costs associated with a voluntary program that encouraged 7,500 drivers to leave the company as part of the network streamlining effort. About 80% of participating drivers departed the company in the second quarter.
Pricing and Customer Mix
Stronger pricing came from a combination of higher base rates and broad application of fees and surcharges. The TD/Cowen Freight Index quantified how fuel surcharges, higher billed weight per parcel and other fees increased prices for ground and expedited shippers at FedEx and UPS during the quarter. UPS officials maintained that higher fuel costs negated most of the revenue increase from fuel surcharges, with international margins more impacted by fuel because there is more air volume flying longer distances, making it a larger portion of the cost base.
Domestic package revenue increased 6%, driven by a 9.3% increase in revenue per piece, while volume declined 3.3%. When adjusting for the exit from Amazon and other low-yield delivery accounts, average daily volume actually grew in the second quarter. International package revenue increased 12.5% with a 19% increase in revenue per piece.
UPS Supply Chain Solutions posted a 7.8% increase in revenue to $2.86 billion, highlighting the company’s continued activity in contract logistics as rival FedEx prepares to sell its supply chain unit to Ceva Logistics.
Watch List
- Continued facility closures: UPS expects 51 total this year, with more in H2 2025.
- Automation penetration: further gains expected as remaining conventional facilities are upgraded or closed.
- Amazon relationship: remaining 9% revenue share could be optimized further for profitability.
- Fuel surcharge dynamics: fuel costs will continue to impact margins, especially international.
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