UPS and Amazon are butting heads as the postal giant is further distancing itself from its business relationship with Amazon, announcing plans to cut its shipping volumes for the retail giant by more than 50% by the second half of 2026. This decision comes as part of a revised arrangement between the two huge companies, reflecting UPS’s focus on prioritizing profitability over volume.
During an investor call discussing UPS’s latest financial results, CEO Carol Tomé highlighted the rationale behind the move stating that:
“Amazon is our largest customer, but it’s not our most profitable customer.”
In 2024, Amazon accounted for approximately 11% of UPS’s $91.1 billion in revenue. While sounds like a huge number to peasants like us, it actually marks a decline from the peak of the COVID-19, when Amazon represented 13.3% of UPS’s annual revenue.
Amazon’s reliance on external shipping partners has become increasingly complicated as the company works to expand its own in-house delivery capabilities. This shift has led to strained relationships with various third-party logistics providers in the past. And UPS isn’t alone as FedEx chose not to renew its own ground-delivery contract with Amazon back in 2019.
As UPS reduces its dependence on Amazon, the move underscores the evolving dynamics between major retailers and their logistics partners. While Amazon remains a key player in the e-commerce space, UPS is clearly prioritizing profitability and diversification in its business strategy.
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