UPS Cuts Amazon Deliveries Amid Margin Concerns
UPS has announced it will reduce Amazon's delivery volume by 50% from January 2025 to July 2026. The move is in line with CEO Carol Tome's 'better, not bigger' strategy, which focuses on higher-margin businesses and targets more efficient operations.
The decision aims to boost revenue per piece while reducing costs per piece, ultimately leading to a higher-margin company. However, the market has reacted negatively, with UPS stock declining 10.5% since the announcement.
Concerns over margin performance have been fueled by lower-than-expected adjusted operating profit margins, despite increased revenue guidance. A significant contributor to this trend is rising fuel surcharges, which account for a substantial portion of the expected increase in revenue and earnings.