UPS Pulls the Emergency Brake in Amazon Business
UPS is implementing one of the most significant strategic moves in recent years. The US logistics company will reduce its transport volume with Amazon by half by mid-2026. At the same time, approximately 30,000 jobs will be cut and at least 24 operational locations will be closed.
The background is a clear realignment in network design and margin strategy. CEO Carol Tomé emphasizes that volume alone is no longer a goal. Profitability per shipment along the entire value chain is what matters. Particularly in the last mile, the Amazon business was hardly cost-effective for UPS.
Although Amazon remains one of the largest shippers worldwide, it is increasingly evolving into an integrated logistics service provider. With its own delivery networks, sorting centers, and linehaul capacities, Amazon has significantly reduced its dependence on traditional parcel service providers. This creates a strategic imbalance for UPS. A customer is simultaneously becoming a competitor in the same market segment.
CFO Brian Dykes estimates that the savings from withdrawing from the Amazon business will amount to approximately 3 billion US dollars by 2026. Additionally, about 25 million work hours are expected to be saved. These measures will affect both operational processing and administrative functions within the network.
At the same time, the capital market is experiencing a shift. In March 2026, FedEx will, for the first time in history, surpass UPS in market capitalization. While UPS loses around 18 percent month-on-month, FedEx has increased by about 22 percent since the beginning of the year. Investors particularly appreciate FedEx's earlier strategic focus on margin-rich segments such as B2B shipments, healthcare logistics, and international air freight.
UPS is now following a similar course with a delay. The focus will be on four clearly defined growth areas: healthcare logistics with high requirements for temperature control and compliance, automotive logistics with complex just-in-time processes, specialized air freight, and the business with small and medium-sized enterprises.
These segments are characterized by higher margins, more stable demand, and lower price sensitivity. However, they also require specialized infrastructure, high service quality, and precise management of transport chains.
The restructuring poses an operational challenge for UPS. The reduction in volume must be compensated by new customers and new transport flows. Crucial will be how quickly the company can re-optimize its capacities within the network.
The US express market is thus moving towards stronger consolidation. UPS and FedEx remain the dominant players, while Amazon continues to expand its role as an independent logistics actor.