UPS Cuts Ties with Amazon, Sees Profits Stabilize Amid Soaring Fuel Costs
United Parcel Service (UPS) made a bold move early last year by cutting its Amazon delivery volumes in half. The decision was not taken lightly, as it resulted in a significant reduction in revenue for the logistics company.
However, the plan appears to have worked as intended. Despite sales declining slightly since then, gross profits and operating cash flow are stabilizing, and may even recover faster than expected by 2027.
The most encouraging sign is that despite soaring fuel costs, UPS's earnings before interest, taxes, depreciation, and amortization (EBITDA) margins and gross margins remain above 2024 levels. This was the year when continuing to do so much business with Amazon became unsustainable due to rising costs.
In an interview, UPS CEO Carol Tomé explained that by 'taking control of our destiny,' the company's future now looks brighter than it did just a couple of years ago.