United Parcel Service (UPS) shares plunged 14% on Thursday after the company announced plans to reduce its business with Amazon by more than 50% by June 2026.
The 18-month shift is expected to lower 2025 revenue to $89 billion, down 2.3% from 2024, as Amazon accounted for nearly 12% of UPS's revenue last year, reported the Wall Street Journal.
UPS said will focus on sectors with higher "profit margins" like healthcare and small businesses in the future.
"Amazon is our largest customer, but it's not our most profitable customer," chief executive officer Carol Tome said on Thursday's earnings call. The earning report for Q4 showed $91.1 billion revenue.
The company will restructure operations, cut labor hours, and in-source SurePost deliveries for smaller orders. The United States Postal Service (USPS) ended its partnership with UPS SurePost.
Amazon's spokesperson Kelly Nantel said UPS requested the decrease in volume to address operational needs, reported the Wall Street Journal.
The move is part of UPS's ongoing plan to scale back its business with Amazon and focus on reconfiguration of its nationwide network and a reduction in the size of its delivery fleet.
Analysts warned that the rapid transition may hurt short-term results, though UPS remains focused on long-term growth.
