- UPS is cutting its business with Amazon in half by mid-2026, it said Thursday.
- While big, Amazon’s business with UPS was becoming less profitable, CEO Carol Tomé said.
- Amazon has been building out its own logistics infrastructure in recent years.
UPS is reducing the number of Amazon packages it handles as profit from those shipments shrink, its CEO said Thursday.
“This was not their ask,” CEO Carol Tomé said on an investor call. “This was us. This was UPS taking control of our destiny.”
Shares plunged as much as 18%.
The shipping giant said it would cut its business with its largest customer in half by June 2026. Amazon shipments make up about 20% of UPS’s volume in the US, CFO Brian Dykes said on the call. The company had reported fourth-quarter results before the stock market opened.
“Amazon is our largest customer, but it’s not our most profitable customer,” CEO Tomé said on the call. “Its margin is very dilutive to the US domestic business.”
UPS used recent contract negotiations with Amazon to reach an agreement on the drawdown, Tomé said. Keeping the same amount of business with the retail giant “will likely result in diminishing returns,” she added.
“Due to their operational needs, UPS requested a reduction in volume, and we certainly respect their decision,” an Amazon spokesperson told Business Insider. “We’ll continue to partner with them and many other carriers to serve our customers.”
While the move away from Amazon will cost UPS business in the short run, the company could use it to “focus in on higher-yielding, margin-enhancing volumes,” analysts at Goldman Sachs wrote on Thursday.
Tomé said that the remaining 50% of UPS’s business with the e-commerce giant includes handling some returns for Amazon — something that UPS does “very, very well” for them and is unlikely to go away anytime soon.
“We have 5,200 UPS store locations that make it very convenient for customers of Amazon to return their Amazon packages,” she said on Thursday’s call.
Amazon has spent years building its logistics services, from warehouses to its aircraft fleet.
The company has used those resources to offer its own shipping options. Late last year, Amazon launched a new option for sellers on its website that can deliver products from source factories to customers, for instance.
Amazon also offers shipping options to sellers who don’t even sell on its website.
