Amazon's Delivery Empire Expands Amid Rising Costs
UPS recently completed its strategic reduction of Amazon packages, eliminating 2 million daily shipments to improve profitability. This move has resulted in UPS benefiting from higher margins and revenue growth, while Amazon faces rising costs.
The scale of what ended is massive. On the earnings call, CEO Carol Tomé said UPS had eliminated about 2 million pieces per day of what she called lower-quality Amazon volume, removing roughly $4.5 billion of related expenses along the way.
For Amazon shareholders, the story runs the other way. Two million packages a day stopped moving through UPS trucks. Who's moving them now, and at what cost?
The biggest parcel carrier is now the shipper. According to logistics data firm ShipMatrix, Amazon's delivery arm handled an estimated 6.7 billion U.S. parcels in 2025. The U.S. Postal Service handled 6.6 billion, UPS came in at 4.4 billion, and FedEx delivered 3.6 billion. That made Amazon the country's largest parcel carrier by volume.
Amazon's own delivery network is already expanding fast. The company is spending more than $4 billion to triple its rural delivery footprint by the end of this year, growing that network to over 200 delivery stations reaching more than 13,000 ZIP codes -- capacity it says will handle over a billion additional packages a year.
The cost of carrying these packages sits on Amazon's own network now, and it likely will for a long time. The company's worldwide shipping costs hit $27.9 billion in the second quarter, up 19% from $23.4 billion a year earlier.