UPS Plans Major Reduction in Amazon Deliveries
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Jan 28 2026
0mins
Should l Buy UPS?
Source: Fool
- Delivery Volume Reduction: UPS plans to cut Amazon deliveries by over 50% by late 2026, which is expected to lead to a full-year revenue decline and necessitate a broad restructuring of the delivery network, thereby impacting overall business performance.
- Cost-Saving Measures: By closing 93 U.S. facilities and eliminating 48,000 positions, UPS achieved $3.5 billion in cost savings in 2025, although this resulted in a 10.8% decline in daily volume, revenue per piece increased by 8.3%.
- Margin Improvement: Despite a slight decline in adjusted operating profit in Q4, UPS's adjusted operating margin for its U.S. segment rose to 10.2% from 10.1% the previous year, indicating potential margin improvement following the reduction of low-margin Amazon business.
- Future Outlook: UPS expects an overall adjusted operating margin of 9.6% in 2026, down from 9.8% in 2025, but believes that once the Amazon plan is completed, it will pave the way for healthier growth and margin expansion.
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Analyst Views on UPS
Wall Street analysts forecast UPS stock price to rise
19 Analyst Rating
9 Buy
9 Hold
1 Sell
Moderate Buy
Current: 97.910
Low
80.00
Averages
107.06
High
126.00
Current: 97.910
Low
80.00
Averages
107.06
High
126.00
About UPS
United Parcel Service, Inc. provides a range of integrated logistics solutions for customers in more than 200 countries and territories. Its U.S. Domestic Package segment offers a range of United States domestic air and ground package transportation services. Its air portfolio offers time-definite, same-day, next-day, two-day and three-day delivery alternatives as well as air cargo services. Its ground network enables customers to ship using its day-definite ground service. UPS SurePost provides residential ground service for customers with non-urgent, lightweight residential shipments. Its International Package segment consists of small package operations in Europe, Indian sub-continent, Middle East and Africa, Canada and Latin America and Asia. It offers a selection of guaranteed day- and time-definite international shipping services. Its supply chain solutions consist of forwarding, logistics, customized third-party logistics and specialized cold chain transportation solutions.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Industry Impact: The surcharge reflects the rising costs in fulfillment and logistics, with Amazon stating that while it has absorbed these costs, it must implement temporary surcharges to recover part of the actual cost increases, highlighting the pressure faced across the industry.
- Relative Competitiveness: An Amazon spokesperson noted that the surcharge is 'meaningfully lower' than those imposed by other major carriers, aiming to maintain support for sellers while ensuring customers benefit from a broad selection and low prices.
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- Surcharge Implementation: Amazon will impose a 3.5% 'fuel and logistics surcharge' on third-party sellers using its fulfillment services starting April 17, driven by rising oil prices due to the ongoing conflict in Iran, which is expected to increase sellers' operational costs.
- Industry Impact: The surcharge reflects the rising costs in fulfillment and logistics, with Amazon stating that while it has absorbed these costs, it must implement temporary surcharges to recover part of the actual cost increases, highlighting the pressure faced across the industry.
- Relative Competitiveness: An Amazon spokesperson noted that the surcharge is 'meaningfully lower' than those imposed by other major carriers, aiming to maintain support for sellers while ensuring customers benefit from a broad selection and low prices.
- Market Reaction: With international oil prices surging, the surcharge is expected to impact approximately two million sellers, particularly those using Amazon's Fulfillment by Amazon (FBA) service, with an average increase of about 17 cents per unit, potentially affecting their pricing strategies and market competitiveness.
See More
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- Significant Stock Decline: UPS shares fell by 15.2% in March according to S&P Global Market Intelligence, significantly underperforming the overall market, which raises investor concerns regarding its full-year guidance.
- Fuel Cost Impact: While UPS benefited from a net gain of $471 million from fuel surcharges over the past two years, the rising fuel costs due to the Gulf conflict are expected to increase transportation costs, potentially impacting profitability.
- Trade Route Adjustments: The conflict in the Gulf is forcing UPS to reassess its trade routes, particularly with China, which could further compress margins since trade with China represents its most profitable business segment.
- Uncertain Future Outlook: UPS is set to release its Q1 earnings on April 28, with analysts already lowering their earnings estimates; if management is compelled to revise its full-year guidance downward, it would mark the fourth consecutive year of missing initial targets, raising questions about its ability to maintain a $6.56 per share dividend payout.
See More
Trump's Address Triggers Market Volatility
- War Progress Update: In his national address, Trump claimed unprecedented victories in the U.S. campaign dubbed 'Operation Epic Fury,' while forecasting the conflict to last another two to three weeks, heightening market concerns about future developments.
- Oil Price Surge: Following the speech, international benchmark Brent crude futures rose nearly 6%, with Trump attributing the price increase to Iranian attacks on commercial oil tankers, illustrating the direct impact of geopolitical tensions on energy markets.
- Negative Market Reaction: Asia-Pacific markets broadly declined after Trump's address, with major indices such as Hong Kong's Hang Seng, Japan's Nikkei 225, South Korea's Kospi, and Australia's S&P/ASX 200 all retreating, reflecting investor unease about the future situation.
- Escalating Tensions with Iran: Trump threatened that the U.S. would continue to strike Iran hard unless the Strait of Hormuz is 'open, free, and clear,' indicating a worsening relationship between the U.S. and Iran that could affect global energy supplies.
See More
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- Trump's Address Anticipation: President Trump is expected to address the nation at 9 p.m. ET tonight to provide updates on the Iran ceasefire talks, with market participants closely monitoring the speech for potential impacts on stock prices.
- Iran's Response: Despite Trump's claim that Iran's new regime requested a ceasefire, Iranian officials denied this request, stating that there are currently no negotiations, which adds complexity and uncertainty to the situation and could affect market sentiment.
- Tech Company Developments: SpaceX has confidentially filed for an IPO, setting the stage for a record offering, following a significant funding round for OpenAI, indicating strong activity and investor confidence in the tech sector, which may drive related stock prices higher.
See More
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- UPS Transformation Progress: In 2025, UPS closed 93 buildings and deployed automation at 57 locations, successfully saving $3.5 billion, with 2026 expected to be an inflection point as the second half is projected to outperform the first, indicating positive results from its turnaround efforts.
- Revenue Growth Potential: Despite a year-over-year decline in revenue and earnings in 2025, UPS saw a 7.1% increase in revenue per piece in the U.S. market, suggesting that its turnaround initiatives are yielding expected outcomes, likely attracting more investor interest in the future.
- Hormel's Strong Sales: Hormel achieved organic sales growth for five consecutive quarters in 2025, with adjusted earnings expected to rise between 4% and 10% in 2026, demonstrating the company's successful transformation towards value-added products.
- High Dividend Appeal: Hormel offers a dividend yield of 5%, significantly higher than the 1.1% from the S&P 500 index, and with over 50 years of annual dividend increases, it stands out as a strong option for income investors.
See More
UPS and Hormel Show Signs of Profit Recovery
- UPS Profit Growth: In 2025, UPS closed 93 facilities and deployed automation at 57 locations, saving $3.5 billion; despite a year-over-year decline in revenue and earnings, revenue per package increased by 7.1%, indicating positive results from the company's turnaround efforts.
- Optimistic Future Outlook: Management has indicated that the second half of 2026 is likely to be a turning point for UPS, suggesting a gradual restoration of market confidence and enhanced profitability as the company continues its recovery.
- Hormel's Strong Sales: Hormel achieved organic sales growth for five consecutive quarters in 2025; despite challenges including a CEO change and business restructuring, its focus on value-added products is beginning to yield positive results.
- Earnings Expectations Rise: Hormel anticipates adjusted earnings growth of 4% to 10% in fiscal 2026, with a 5% dividend yield significantly above the S&P 500's 1.1%, making it an attractive option for income-focused investors.
See More
