During the UPS Q4 2024 earnings call at the end of January, CEO Carol Tomé announced that the carrier has "reached an agreement in principle with our largest customer for a significant reduction in volume, lowering their volume with us by more than 50% by the second half of 2026."

Their largest customer? Amazon.

The news shocked shareholders, leading to the carrier's steepest single-day drop in share prices since 2008. According to UPS, this move is necessary for margin growth. So, what's the plan? Find out why UPS is reducing service for Amazon, how they intend to use this as a growth opportunity, and how you can benefit from this shift in strategy.

Why is UPS reducing business with its biggest customer?

Although stakeholders were shocked at this announcement, Tomé explained, "Amazon is our largest customer but it's not our most profitable customer." Despite Amazon making up over 20% of UPS's domestic volume, it only accounts for 11.8% of its total company revenue.

In light of those figures, Tomé said, "We are making business and operational changes that, along with the foundational changes we've already made, will put us further down the path to becoming a more profitable, agile and differentiated UPS that is growing in the best parts of the market." By June 2026, business between UPS and Amazon will cool down by 50%.

However, not all business with Amazon will cease. The e-commerce giant will continue to rely on UPS to handle customer returns at their brick-and-mortar shops.

How will UPS improve its margin?

The carrier's latest actions align with its Bigger, not Better initiative, characterized by customer-first, people-led, and innovation-driven strategies. To replace lost income from Amazon, UPS is taking steps to secure more business in the healthcare industry, expanding cold chain capabilities. It's also courting small- and medium-sized businesses whose shipping needs can increase revenue and lower volume.

In addition to securing more external parcels, as of January 1, 2025, UPS ceased its reliance on USPS for its SurePost product. Previously, the carrier transferred SurePost parcels to the Postal Service for last-mile delivery. By bringing these B2C, lightweight packages in-house, UPS has more control over customer service and financial implications.

How can you benefit from UPS's shift toward margin growth?

Now is the time to use UPS's shift in strategy to your advantage. Executive Vice President and Chief Financial Officer Brian Dykes said, "The result of this change will be lower overall volume levels but an improved customer mix at a significantly higher revenue per piece." While no business has the negotiating power of Amazon, UPS needs to fill the financial gap with more profitable parcels.

That's where we come in.

ShipRx can help you negotiate a contract with UPS that saves you money while boosting margins for the carrier in place of Amazon parcels. Get in touch today for a free savings analysis and find out how a parcel negotiation can help you save 20-30% or more on shipping— a win-win situation.