Investors are not satisfied ups (NYSE:UPS) In early 2025, the company announced plans to reduce deliveries Amazon It will be reduced by more than 50% by the end of 2026. The move will lead to a decline in full-year revenue and force a broad restructuring of the company’s delivery network to cope with lower package volumes.
With the plan well underway, the stock market is finally starting to get involved. UPS shares rose Tuesday morning after the company beat fourth-quarter results and announced massive layoffs related to Amazon’s shutdown. Although UPS’s fourth-quarter revenue fell, the benefits of dumping Amazon are becoming increasingly clear.
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In 2024, Amazon will account for 11% of UPS revenue but 20% to 25% of U.S. network volume. Amazon is the company’s largest customer, but not its most profitable. Amazon’s low-margin packages help fill UPS’s planes and trucks, but they hurt the company’s profit margins.
In 2025, UPS will reduce Amazon’s shipment volume by 1 million units per day. The plan for 2026 is to reduce another million units per day, bringing Amazon’s business down to a level that makes more economic sense for the company. As part of the plan, UPS closed 93 buildings in the United States last year to consolidate its network into fewer facilities. These building closures and other actions resulted in $3.5 billion in cost savings.
UPS is cutting 48,000 positions in 2025, including 15,000 seasonal positions, resulting in 26.9 million fewer hours than in 2024. It plans to cut another 30,000 jobs in 2026 and close 24 office buildings. These measures will reduce labor time by an additional 25 million hours.
Although average daily transaction volume in the United States fell by 10.8% in the fourth quarter due to Amazon’s plan, revenue per item increased by 8.3%. Adjusted operating profit declined slightly, but adjusted operating margin improved. UPS reported adjusted operating margin of 10.2% for its U.S. operations in the fourth quarter of 2025, up from 10.1% in the same period last year. The improvement comes despite the unusual cost of grounding part of the fleet.
The road ahead will be bumpy for UPS, with lower revenue from Amazon’s plans and costs associated with closing facilities and completing network reconfigurations hurting results. In 2026, the company expects overall adjusted operating margin to be 9.6%, down slightly from 9.8% in 2025.
