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UPS Picks Profitability Over Volume, and The Teamsters Push Back
Kelly Barner : April 23, 2026
As of 2024, Amazon accounted for 11 percent of UPS's revenue but between 20% and 25% of U.S. package volume. That math simply does not work. The company realized this and made the bold decision to cut their Amazon delivery volume in half. They have also reduced headcount and closed unneeded facilities.
While at first glance this might look like a story about cost cutting, it is really about something deeper that applies across the small parcel industry: a shift from volume to margin, from labor-intensive growth to automation-driven efficiency, and from stability to a much more fragmented (if more profitable) customer base.
UPS Pivots Away From Volume, and Toward Margin
UPS is making a deliberate strategic shift to prioritize profitability over scale. It sounds like a rational decision, but they are having to make some pretty daunting decisions to make it happen, unwinding years of emphasizing package volume over revenue per item.
The imbalance that resulted from that approach created a lot of pressure, especially when viewed through the lens of their competitive landscape.
FedEx’s market cap recently surpassed UPS’s for the first time in the company’s history. According to The Wall Street Journal, “FedEx had $88 billion in revenue in its last fiscal year, just behind the $88.7 billion in revenue that UPS reported in the 2025 calendar year. But FedEx delivered fewer packages: Its average daily domestic parcel volume was 14 million compared with 20 million for UPS.”
FedEx is making more money delivering less packages. The writing was on the wall. Even if it seems like UPS made some tough decisions, they likely didn’t have much in the way of alternatives.
Brown Making Big Cuts
UPS cut about 1 million Amazon packages per day in 2025, and they plan to reduce their volume by another 1 million packages per day this year.
The company has a big picture plan to generate $3 billion in savings just from reducing their Amazon volume, and an additional half billion from other efforts. They have achieved $2.2 billion in savings to date.
When UPS cut their Amazon volume, the effects were immediate. Their U.S. daily volume declined by 10.8 percent. This reduction allowed them to close facilities, reduce headcount, and restructure their network.
In 2025, UPS cut 48,000 jobs, including a controversial buyout involving 3,000 of their Teamsters unionized drivers. In 2026, they plan to cut another 30,000 operational jobs.
They closed 93 facilities in 2025, and plan to close an additional 24 in 2026. They are also investing in increased automation, looking to make every facility they keep open as efficient as possible.
Results to Show for UPS’s Changes
UPS’s tough decisions have not gone unrewarded. Here’s the good news. By the end of 2025, revenue per piece increased by 8.3 percent. More rounds of similar changes in 2026 should deliver more of the same.
Although higher margins derived through efficiency offer much-needed financial improvement, the changes made to achieve them also reduce capacity, labor demand, and network redundancy.
None of this is to be taken lightly, because UPS is a union shop, and approximately 80 percent of their workforce belongs to the International Brotherhood of Teamsters, not a group known to absorb change and suffer silently.
UPS will need to be careful not to optimize too much around profitability in the same way that they previously optimized around volume. The pendulum can absolutely swing too far in the other direction.
This transformation underscores a broader inflection point for the parcel industry: scale alone is no longer a guarantee of success. By walking away from low-margin volume and reshaping their network around efficiency and profitability, UPS is betting that disciplined growth will outperform sheer size.
The challenge now is to achieve balance. Having spent years over-indexing on volume, they must avoid overcorrecting toward margin at the expense of flexibility, resilience, and workforce stability. How well UPS manages that tension will define their future trajectory and also set the tone for what sustainable success looks like across the entire logistics sector.