UPS Cut Amazon Volumes on Purpose. The Margin Data Says It Worked.
Key PointsEarly last year, UPS began scaling back the amount of work it was doing for Amazon.
United Parcel Service (UPS) intentionally reduced its delivery volumes from Amazon in 2024. This decision was made due to the revenue generated from this relationship no longer being profitable enough. By cutting its Amazon volume by more than half, UPS aimed to stabilize and improve its financial performance. The outcome of this strategy has been positive, as sales have slightly decreased but gross profits and operating cash flow are now stabilizing, and even hint at a faster recovery rate than revenue growth in 2027.
What sets this apart is that UPS's EBITDA margins and gross margins have remained well above those of 2024, where the costs of maintaining extensive business with Amazon became unsustainable. Despite the rising fuel costs, UPS has managed to maintain strong margins. The CEO, Carol Tomé, emphasized that by taking control of its destiny, UPS' future now appears significantly brighter.
While UPS was not included in the Motley Fool's list of top 10 stocks for long-term growth, the company's recent performance indicates a promising outlook.
Written by urgent.news from Yahoo Finance's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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