UPS reports Q3 revenue decline, amid strong pricing and lower volumes

Third quarter 2025 earnings results issued today by Atlanta-based global freight transportation and logistics services provider UPS were off almost 4%.

Quarterly consolidated revenue, at $21.4 billion, fell 3.7% annually, and basic earnings per share, at $1.74 (topped Wall Street estimates of $1.29), fell $0.24, or 13.4%, annually. Total operating profit, at $1.8 billion, was off 9.1% annually. 

Segment results for Q3 2025:

• U.S. Domestic Package Revenue, at $14.2 billion, was off 2.6% 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 9.8%, at $13.47, and total average U.S. daily package volume off 12.3% annually, to 16.1 million’
• International Package Revenue, at $4.6 billion, rose 5.9% annually, with average daily volume, at 3.2 million, up 4.8% annually. Average daily revenue per piece, at $21.48, rose 0.8% annually; and
• Supply Chain Solutions revenue, at $2.5 billion, was down 22.1% annually, which UPS said was mostly due to its third quarter 2024 divestiture of Coyote

“The third quarter brought a wave of tariff changes, some expected, others unforeseen, and our team navigated these complexities with exceptional skills and resilience,” said Carol Tomé, UPS chief executive officer, on the company’s earnings call this morning. “At the same time, we continued advancing our network reconfiguration, a critical step in shaping the future of our U.S. business. Amid this significant transformation, I remain deeply impressed by the determination of UPSers and their steadfast commitment to serving our customers and building a stronger, more agile UPS.”

The top UPS executive said that the company’s focus on pricing, or revenue quality, continued, and, as expected, average U.S. daily volume (ADV) declined, with the main drivers for that being the planned glide down of Amazon volume UPS handles and a targeted reduction in lower-yielding e-commerce volume.

On the international side, Tomé said that UPS ran it with agility, rerouting capacity to where its customers need it, adding that international export ADV climbed 5.9% annually, marking the fifth consecutive quarter of growth. But due to changes in trade policy, she said export volumes dropped in higher-margin lanes.

“In recent years, the spotlight on international commerce and the intricacies of supply chain has intensified, and in 2025, we're witnessing the most profound shift in trade policy in a century,” she said.

Amazon glide down: Addressing UPS’s Amazon glide down efforts, Tomé said things are proceeding as planned. In the third quarter, UPS saw a 21.2% decline in the Amazon volume it handled, steeper than the 13% seen over the first half of the year.

What’s more, she added that in tandem with this change, UPS is continuing to reconfigure its U.S. network.

“We closed an additional 19 buildings, bringing our total so far this year to 93 buildings,” she said. “During the quarter, we completed a successful voluntary retirement program for many long-term drivers who welcome the opportunity to retire from UPS after decades of dedicated service. In total, our network reconfiguration and cost out efforts are on schedule and the profit improvement we expect to see from the Amazon glide down initiative is on plan.”

Taking a look at UPS’s Ground Saver product, formerly known as SurePost (in a former partnership with the United States Postal Service), which it describes as a reliable, economical shipping solution for less urgent packages, leveraging the UPS Smart Logistics Network, Tomé said volume fell 32.7% annually, due primarily to the actions UPS has taken with Amazon and also to trim lower-yielding e-commerce volume.

And she noted it may be re-engaging with the USPS, saying that UPS recently reached a preliminary understanding on revenue and rates with the USPS to support last mile delivery for its Ground Saver products, with UPS confident it will come to an agreement that ensures its service levels will remain best-in-class.

Peak Season: For UPS, Tomé said that the company’s top 100 customers drive around 80% of its peak surge each year, with UPS expecting that to remain the same this year.

“Early forecasts from these customers suggest they are planning for a good peak that will result in a considerable surge in volume from our current volume level,” she said. But remember that, given the Amazon glide down plan, we expect total peak average daily volume in the U.S. to be down year-over-year. Operationally, we're poised to deliver a strong peak season driven by several key factors.”

Those factors include: strategic enhancements UPS has made through its Network of the Future initiative, which she said will allow UPS to reduce reliance on seasonal hires and significantly cut back on lease trailers, vehicles and aircraft, with much of this powered by automation, as UPS has deployed new automated systems in 35 facilities and in the fourth quarter, it anticipates 66% of its volume will move through automated processes, up from 63% during the same period last year; and UPS will continue to leverage its proven technologies and scale the network where needed, all while maintaining a sharp focus on service quality, which she said position it to run the most efficient peak in company history.

“We've set the standard for holiday shipping seven consecutive years of industry leading service, and we're confident that our operational strategy and commitment to excellence will make it eight,” she said. “With the uncertainty around tariffs now somewhat resolved and clearer peak forecasts from our largest customers, we're in a stronger position to offer guidance than we were at the end of the second quarter.”

As for fourth quarter earnings guidance, she said UPS expects consolidated revenue to come in at around $24 billion and consolidated operating margin of approximately 11%-to-11.5%.

UPS CFO Brian Dykes said on the earnings call that UPS continues to improve the mix of volume in its network, adding that the company’s disciplined approach to revenue quality meaningfully offset the impact lower volume had on revenue.

Looking at customer mix, he said that SMB average daily volume was off 2.2% annually, with the caveat that UPS is seeing what he called “bright spots” in SMB, healthcare and automotive, as well as from DAP (its Digital Access Program).

“In the third quarter, SMBs made up 32.8% of total U.S. volume, which is about a 340-basis. point improvement compared to last year,” said Newman. “In the third quarter, B2B average daily volume finished down 4.8% compared to last year, due to softness in retail and manufacturing activity. B2B represented 45.2% of our U.S. volume, which was a 350-basis point improvement versus last year. B to C, average daily volume was down 17.6%.”

Vertical Research Partners analyst Jeff Kauffman wrote in a research note that his firm has concerns in regards to UPS’s pace of yield improvement accelerating in the, but so did the pace of domestic volume decline.

“At the end of the day, we need to see better control of cost inflation,” he wrote.