As global trade undergoes its most significant transformation in a century, logistics giant UPS finds itself navigating unprecedented challenges and opportunities. The Atlanta-based global shipping and logistics provider delivered mixed financial results for the third quarter of 2025.
Declining Revenue and Profits Amid Strategic Pricing
UPS reported total revenue of $21.4 billion for Q3 2025, marking a 3.7% year-over-year decrease. While basic earnings per share of $1.74 exceeded Wall Street expectations of $1.29, this still represented a 13.4% decline from the previous year. Total operating profits fell 9.1% to $1.8 billion.
The company's pricing strategy helped mitigate some losses. U.S. domestic package revenue decreased 2.6% to $14.2 billion, primarily due to reduced volume. However, growth in air freight and higher per-piece revenue (up 9.8% to $13.47) partially offset this decline. Daily domestic package volume dropped significantly by 12.3% to 16.1 million pieces.
International Business Shines Amid Overall Decline
International package operations emerged as a bright spot, with revenue growing 5.9% to $4.6 billion. Daily international package volume increased 4.8% to 3.2 million pieces, while revenue per piece rose 0.8% to $21.48.
However, supply chain solutions revenue plummeted 22.1% to $2.5 billion, largely due to the divestiture of Coyote Logistics in Q3 2024.
CEO Addresses Tariff Changes and Network Restructuring
UPS CEO Carol Tomé explained during the earnings call: "The third quarter brought a series of tariff changes—some anticipated, some not. Our team navigated these complexities with exceptional skill and resilience. Simultaneously, we continue advancing our network restructuring, a crucial step in shaping our U.S. business future."
Tomé emphasized the company's ongoing focus on pricing strategy and revenue quality. The planned reduction in Amazon shipments and targeted cuts to low-margin e-commerce volume contributed to the domestic volume decline.
Internationally, UPS demonstrated operational agility by reallocating capacity to meet customer needs. International export volume grew 5.9%, marking the fifth consecutive quarter of growth, though high-margin routes saw declines due to trade policy shifts.
"Recent years have seen intensified focus on international trade and supply chain complexity," Tomé noted. "In 2025, we're witnessing the most profound trade policy transformation in a century."
Amazon Volume Reduction and Network Optimization
The planned reduction in Amazon shipments progressed as scheduled, with Q3 volume dropping 21.2%—a steeper decline than the 13% reduction seen in the first half of the year.
UPS continues restructuring its U.S. network, having closed 19 additional facilities this quarter (bringing the year-to-date total to 93) and implementing a voluntary retirement program for long-term drivers. "Our network restructuring and cost reduction efforts remain on track," Tomé confirmed.
Ground Saver Adjustments and Potential USPS Partnership
UPS's Ground Saver service (formerly SurePost) saw volume decline 32.7% year-over-year, primarily due to the Amazon reduction strategy and cuts to low-margin e-commerce shipments. Tomé revealed potential renewed collaboration with the U.S. Postal Service for last-mile delivery, citing preliminary agreements on revenue and rates.
Peak Season Preparedness with Automation Focus
Looking ahead to the holiday season, Tomé noted that UPS's top 100 customers typically drive about 80% of peak volume. Early forecasts suggest these clients anticipate strong demand, though overall domestic peak volume will likely decline year-over-year due to the Amazon reduction plan.
Operational improvements include reduced reliance on seasonal hires and fewer leased assets, enabled by automation. Thirty-five facilities now feature new automation systems, with 66% of Q4 volume expected to flow through automated processes (up from 63% last year).
"We've set industry-leading service standards for seven consecutive holiday seasons," Tomé stated. "With tariff uncertainties largely resolved and clearer forecasts from major clients, we're better positioned to deliver guidance than at Q2's end."
Q4 Financial Outlook
UPS anticipates Q4 consolidated revenue of approximately $24 billion, with operating margins between 11% and 11.5%. CFO Brian Dykes noted meaningful offsetting of volume declines through revenue quality improvements, while highlighting positive trends in small/medium business, healthcare, and automotive sectors.
Analysts expressed concerns about accelerating domestic volume declines but acknowledged UPS's cost management efforts. As global trade dynamics continue evolving, UPS remains focused on strategic network optimization and revenue quality to navigate this transformative period.