UPS Q2 revenue falls 2.7% amid economic uncertainty, Amazon volume glide down takes hold

Second quarter 2025 earnings results issued today by Atlanta-based global freight transportation and logistics services provider UPS saw a nearly 3% decline, amid uncertain economic conditions.

Quarterly consolidated revenue, at $21.2 billion, fell 2.7% annually, and basic earnings per share, at $1.55 (short of Wall Street estimates of $1.57), fell $0.24, or 13.4%, annually. Total operating profit, at $1.8 billion, decreased 6.3% annually. 

Segment results for Q2 2025:

• U.S. Domestic Package Revenue, at $14.08 billion, was off 0.8% annually, due to an expected volume decline that UPS said was partially offset by increases in air cargo and revenue per piece, with the latter up 5.5%, at $13.03, and total average U.S. daily package volume off 7.3% annually, to 16.553 million’
• International Revenue, at $4.373 billion, rose 2.7% annually, with average daily volume, at 3.346 billion, up 7.1% annually. Average daily revenue per piece, at $20.32, fell 2.6% annually; and
• International Package revenue, at $4.485 billion, saw a 2.6% annual gain, with average daily volume, at 3.188 million, up 3.9%; and
• Supply Chain Solutions revenue, at $2.653 billion, was down 18.3% annually, which UPS said was mostly due to its divestiture of Coyote

“I want to thank all UPSers for their hard work and efforts as we’ve made material progress against the strategic actions we laid out in January,” said Carol Tomé, UPS chief executive officer, on the company’s earnings call this morning. “Those actions include accelerating the glide down of Amazon volume, transitioning our Ground Saver product [formerly known as SurePost through a partnership with the United States Postal Service (USPS), which ended in January] and generating savings through our Efficiency Reimagined initiative. During the quarter, our team of dedicated UPSers remained focused on execution, while keeping supply chains moving and delivering best-in-class service. Our second quarter financial results reflect the impact of a complex macro environment driven by ever evolving trade policies, as well as the significant actions we are taking to strengthen UPS’ competitive and financial positioning.”

Addressing the current business climate, Tomé stated that despite uncertainties around trade policies, the overall U. S. economy demonstrated continued resilience in the second quarter—with the caveat that the U. S. Small package market was unfavorably impacted by U. S. consumer sentiment that was near historic lows. She also cited a recent research report from McKinsey which showed that in the face of tariffs and other uncertainties, consumers are trading down, while at the same time splurging.

“For the first time in three years, consumer spending on discretionary categories like restaurants and automobiles outpaced growth in essential items,” she said.  “And on the commercial side of the economy, manufacturing activity in The U. S. remained soft. These macroeconomic dynamics impacted overall market demand as well as demand by customer segment and product.”

As for the business climate abroad, Tome noted that U.S. trade policy and tariffs are not good for trade.

“With the announcement of certain changes to trade policies in the second quarter, we saw that play out,” she said. “For example, looking at our China to U. S. trade lane, an increased tariff and the elimination of de minimis exceptions resulted in a year-over-year drop in average daily volume of 34.8% for the month of May and June. Our China-to-U.S. trade lane is our most profitable trade lane and the volume decline here pressured our international operating margin. But it’s important to remember that with policy changes, trade doesn’t stop, it moves. Given our global integrated network, we are well positioned to service these moves. As an example, in the second quarter, we saw volume in our China to the rest of the world trade lanes increased by 22.4% and we nearly doubled our capacity between India and Europe to meet the growing export demand on that trade lane.”

A major theme of the company’s previous earnings call was its plan to accelerate the glide down of Amazon volume it handles, based on an agreement UPS reached with Amazon to reduce the Amazon volume in the UPS network by more than 50% by June 2026—and is focused on transitioning out Amazon’s fulfillment center outbound volume.

Tomé said that efforts are largely proceeding as planned.

“In concert with our network reconfiguration efforts, so far this year, we’ve closed 74 buildings,” she said. “Each building had a closing checklist of over 1,000 steps and I’m happy to report that the closures went smoothly with minimal issues. From a staffing perspective, our attrition rate was lower than we anticipated, which resulted in higher expense than we planned.

UPS CFO Brian Dykes said on the call that through the company’s Amazon glide down strategy, UPS is shifting the mix of its U.S. business.

“We are laser focused on improving revenue quality and the changes we are making are beginning to show up in our results,” said Dykes. “For the quarter, total U. S. average daily volume was down 7.3%, primarily driven by our planned glide down of Amazon volume and revenue quality efforts. Total Air average daily volume [ADV] was down 11.6%. When excluding Amazon, total Air ADV increased 1.4 driven by healthcare and high-tech customers. Ground average daily volume was down 6.6% year over year and within Ground, Ground Saver ADV declined 23.3% primarily due to the pricing actions we took on e-commerce volume. In the second quarter, Ground Saver made up the smallest portion of our total Ground volume that we’ve seen in two years. This shift is a proof point showing positive product mix improvement. In terms of customer mix, ADV growth within our small and medium sized customers was lower than we anticipated.”

Regarding Peak Season, she said that peak plans have not yet been submitted by its customers, which is an indication that they, too, are having difficulty in forecasting demand for the holiday selling season, citing changes in trade policy, coupled with the impact on consumer demand and overall economy unknown.

“We have about 100 customers that drive 80% of the surge during peak,” she said. “Ordinarily, we don’t get peak plans until the August and then final plans the September. I think they’re going to be pushing them more into September as they’re working through their plans. In my conversations with CEOs, no one’s telling me they’re not going to have a peak. But they’re not in a position to dimensionalize that for us.”

Citing the current macro-economy uncertainty, UPS said it is not providing revenue or operating profit guidance, but it did confirm 2025 capital expenditures are at around $3.5 billion and is planning for $3.5 billion of expected expense reductions, due to its network reconfiguration and Efficiency Reimagined initiatives, which are designed to deliver $1 billion in savings in various ways, including the elimination of manual tasks and enhancing purchasing processes.