The over-a-century-old shipping and supply chain management company is rounding the bases on its multi-year plan to slash its low-margin Amazon package volume by over 50%, and on Tuesday’s (Jan. 27) fourth-quarter 2025 earnings call management’s language was explicit about the company’s pivot.
The Amazon glide-down is nearing completion, the network has been resized and UPS believes it has rebuilt the foundation for margin-led growth by focusing on high-margin package growth areas like healthcare, small-and-medium-sized business (SMB), automotive and international B2B.
“How are we adding this productivity? Automation. The cost-per-piece is 28% less in our automated facilities than our traditional ones,” UPS Chief Executive Officer Carol Tomé said. “We are investing into capabilities that are turning into wins.”
“Customers want better order-to-cash visibility, and our smart logistics is giving it to them, which is allowing us to earn new commercial business,” she added.
If successful, 2026 will be the first year since the announcement of its Amazon volume reduction in which the company’s margin expansion is driven more by steady-state execution rather than by extraordinary change programs.
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UPS reported fourth-quarter revenue of $24.5 billion, while the firm’s 2026 revenue outlook of $89.7 billion, shared on Tuesday, was the first time in a year that UPS has provided full-year sales guidance. The company’s stock was up slightly on the news Tuesday morning.
“2025 was a year of considerable progress for UPS as we took action to strengthen our revenue quality and build a more agile network. Looking ahead, upon completion of the Amazon glide-down, 2026 will be an inflection point in the execution of our strategy to deliver growth and sustained margin expansion,” said Tomé.
See also: UPS’ B2B Recalibration Trades Shipping Volumes for Logistics Value
Transformation as an Operating System
In an industry long conditioned to equate growth with scale, UPS is testing whether premium service, operational precision and yield management can generate more durable returns.
The implication is that UPS is transitioning from a period of restructuring to one of operational harvesting. Over 2025, the company executed workforce reductions totaling more than 60,000 positions, closed or consolidated dozens of facilities, and completed the retirement of its MD-11 aircraft fleet. These actions generated $3.5 billion in year-over-year cost savings during 2025 alone, with an additional $3 billion targeted for 2026.
And while U.S. domestic business continues to carry the narrative weight for UPS, the international segment is quietly doing the heavy lifting on profitability. Fourth-quarter international revenue grew 2.5%, fueled by a 7.1% increase in revenue per piece, even as global trade flows remained uneven. More striking was the segment’s operating margin: 17.5% reported and 18.0% on an adjusted basis.
This performance underscores two structural advantages. First, international operations are less labor-intensive than U.S. ground delivery and benefit more directly from air network optimization. Second, UPS’s international customer base skews toward time-definite, higher-value shipments, which are more resilient to economic softness, something particularly valuable in a world where geopolitical fragmentation and trade policy volatility are becoming permanent features.
“Over 90% of all cross-border transactions were completed digitally,” executives told investors.
More here: B2B Logistics Resets for 2026 as Old Pricing Models Break Down
A Different Kind of Logistics Company
The Supply Chain Solutions segment tells a story of contraction paired with intentional focus. Revenue declined 12.7% in the quarter, largely due to lower volumes in the Mail Innovations business. Yet operating profit rose, and adjusted operating margin improved to 10.3%, up from 9.3% a year earlier.
This reflects a conscious pruning of low-margin activities rather than operational stress. UPS has been shedding businesses and services that dilute returns or fail to align with its integrated logistics vision. The result is a segment that is smaller in absolute terms but more coherent strategically.
The Supply Chain Solutions vertical is also getting a shot in the arm from technology. RFID technology, to be specific. All 5,500 The UPS Store locations feature RFID sensing tech that gives shippers enhanced visibility from drop-off to delivery. UPS’ Network of the Future initiative has also scaled automation and artificial intelligence (AI)-driven planning and upgrades across the business.
What emerges from the fourth-quarter results is a portrait of a company that has redefined its identity. UPS is no longer optimizing for dominance by volume. It is optimizing for resilience, predictability and margin integrity.
