- Amazon is UPS’s biggest customer, but not its most profitable
- UPS says it will slash its Amazon deal by over 50% to help profitability
- Amazon will “continue to partner with [UPS]”
UPS has announced plans to reduce its shipping volumes for Amazon by “more than 50%” under a revised agreement with the global ecommerce giant.
The change will come into effect by the second half of 2026, with UPS CEO Carol Tomé indicating the cause being that Amazon is not the delivery company’s most profitable customer, despite being its biggest.
Amazon only accounted for 11% of UPS’s $91.1 billion revenue in 2024, down from 13.3% in 2020 when pandemic-induced online shopping saw figures rise.
UPS to cut down on Amazon shipments
Speaking at UPS's Q4 2024 earnings, Tomé stated: “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.”
The company’s most recent full quarter brought in $25.3 billion in revenue, up a mere 1.5% year-over-year. Current predictions suggest that total annual revenue for 2025 could drop to $89.0 billion, down from $91.1 billion in 2024.
Amazon spokesperson Kelly Nantel told TechRadar Pro: “Due to their operational needs, UPS requested a reduction in volume and we certainly respect their decision. We’ll continue to partner with them and many other carriers to serve our customers.”
It’s not the first time Amazon has lost delivery slots with a third-party firm – in 2019, FedEx ended its contract with the retail giant.
Amazon has also been busy building up its own delivery team, as alongside its own fleet of vehicles, the company also operates a Delivery Service Partner program to help SMBs across the US play their role in last-mile delivery, giving them another revenue stream.
UPS has also been busy cutting costs to address poor financial growth. In January 2024, it laid off 12,000 workers as part of an effort to claw back $1 billion in savings.
Amazon told us that the company had previously offered to increase UPS' volumes, and that it has a strong working relationship with the delivery partner.
UPS declined to offer any further comments beyond what was announced on its earnings call.
You might also like
- Take orders with the best payment gateways
- We’ve listed the best shopping cart software
- Amazon is spending billions on improving its delivery services
