Additional Coverage:
- UPS plunged after saying it’ll deliver fewer Amazon packages. Its CEO says it’s about ‘taking control of our destiny.’ (newsbreak.com)
Local shipping giant UPS announced a major shift in its business strategy, revealing plans to significantly reduce its deliveries for online retail behemoth Amazon. CEO Carol Tomé stated this decision was driven by UPS, not Amazon, and aims to improve profitability.
While Amazon is UPS’s largest customer, Tomé explained its shipments are not the most profitable. She described Amazon’s margins as “very dilutive” to UPS’s domestic business. The move signals a strategic shift for UPS, focusing on higher-profit deliveries.
The company intends to halve its Amazon business by 2026. This reduction represents a significant portion of UPS’s volume, as Amazon currently accounts for about 20% of its US shipments.
Tomé emphasized this decision allows UPS to “take control of our destiny.” She added that maintaining the current level of Amazon deliveries would likely lead to diminishing returns.
An Amazon spokesperson confirmed UPS initiated the reduction, stating they “respect their decision.” Amazon plans to continue partnering with UPS and other carriers.
Industry analysts suggest this move, while potentially impacting short-term business, could ultimately benefit UPS. It allows the company to prioritize more profitable deliveries and enhance its margins.
Tomé clarified that UPS will continue handling some Amazon returns, a service they excel at. She highlighted the convenience of UPS’s numerous store locations for Amazon customers.
Amazon’s own logistics network, including warehouses and aircraft, has been expanding for years. This infrastructure supports its own shipping services and options for both on-site and off-site sellers.