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UPS' Revenue Struggles Persist: Is a Recovery Possible in 2026?
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Key Takeaways
UPS revenues dropped 3.7% in Q3 2025 and are likely to fall 5.4% in Q4 due to weak demand and soft volumes.
Consolidated volumes fell 9.8% in Q3 and are expected to drop 10.6% in Q4 amid trade and inflation headwinds.
UPS scaled back Amazon business by over 50%, pressuring near-term volumes despite cost-cutting efforts.
United Parcel Service’s (UPS - Free Report) revenue weakness is well-documented. The company’s top line has been pressured by soft demand amid tariff-related uncertainty, elevated inflation and other geopolitical challenges. In the September quarter, revenues decreased 3.7% year over year. Revenues were down 2.4% in the first nine months of 2025. Lower package volumes, due to these headwinds, are weighing on revenue performance. Consolidated volumes fell 9.8% in the third quarter of 2025 and 6.4% in the first nine months of 2025.
This revenue pressure is expected to continue in the final quarter of 2025 as well. UPS is scheduled to report results on Jan. 27. We forecast total operating revenues to decline 5.4% year over year in the December quarter, with consolidated volumes likely to drop 10.6%.
UPS’ decision earlier this year to scale back business with Amazon (AMZN - Free Report) is also expected to keep near-term volumes muted. Management reached an agreement in principle with Amazon to reduce the e-commerce giant’s volume by more than 50% by June 2026. CEO Carol Tome noted that Amazon was not the company’s most profitable customer.
Trade-related economic uncertainty is further worsening UPS’ situation. U.S. stock market volatility is expected to persist due to uncertainty surrounding the timing of the next interest rate cut, potential new tariffs and ongoing geopolitical tensions. These factors are likely to keep UPS’ top line under pressure in 2026 as well, despite its cost-cutting measures. We project 2026 revenues to decrease 1.6% year over year.
Package volumes are also expected to remain under strain in 2026 due to these headwinds. We anticipate consolidated volumes to decline 4.9% year over year in 2026. UPS competitor FedEx (FDX - Free Report) is facing similar revenue pressure stemming from weakness in U.S. domestic shipping. FedEx is implementing cost-cutting measures to address the soft demand environment and improving operations through its Network 2.0 initiative.
In the second quarter of 2023, FedEx introduced DRIVE, a broad program aimed at enhancing long-term profitability. DRIVE generated $1.8 billion in permanent savings in fiscal 2024 and delivered an additional $2.2 billion in cost savings in fiscal 2025. These efforts include lowering flight frequencies, parking aircraft and reducing headcount. For fiscal 2026, management expects to achieve $1 billion in transformation-related savings through initiatives such as DRIVE and Network 2.0.
UPS’ Price Performance, Valuation & Estimates
Shares of UPS have declined in excess of 15% in a year, underperforming its industry.
Image Source: Zacks Investment Research
From a valuation standpoint, UPS trades at a 12-month forward price-to-sales ratio of 1.03X, below industrial levels.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for UPS’ fourth-quarter, full-year 2025 and first-quarter 2026 have been revised moderately upward over the past 60 days, while the same for full-year 2026 earnings has been revised downward over the same timeframe.
Image: Bigstock
UPS' Revenue Struggles Persist: Is a Recovery Possible in 2026?
Key Takeaways
United Parcel Service’s (UPS - Free Report) revenue weakness is well-documented. The company’s top line has been pressured by soft demand amid tariff-related uncertainty, elevated inflation and other geopolitical challenges. In the September quarter, revenues decreased 3.7% year over year. Revenues were down 2.4% in the first nine months of 2025. Lower package volumes, due to these headwinds, are weighing on revenue performance. Consolidated volumes fell 9.8% in the third quarter of 2025 and 6.4% in the first nine months of 2025.
This revenue pressure is expected to continue in the final quarter of 2025 as well. UPS is scheduled to report results on Jan. 27. We forecast total operating revenues to decline 5.4% year over year in the December quarter, with consolidated volumes likely to drop 10.6%.
UPS’ decision earlier this year to scale back business with Amazon (AMZN - Free Report) is also expected to keep near-term volumes muted. Management reached an agreement in principle with Amazon to reduce the e-commerce giant’s volume by more than 50% by June 2026. CEO Carol Tome noted that Amazon was not the company’s most profitable customer.
Trade-related economic uncertainty is further worsening UPS’ situation. U.S. stock market volatility is expected to persist due to uncertainty surrounding the timing of the next interest rate cut, potential new tariffs and ongoing geopolitical tensions. These factors are likely to keep UPS’ top line under pressure in 2026 as well, despite its cost-cutting measures. We project 2026 revenues to decrease 1.6% year over year.
Package volumes are also expected to remain under strain in 2026 due to these headwinds. We anticipate consolidated volumes to decline 4.9% year over year in 2026. UPS competitor FedEx (FDX - Free Report) is facing similar revenue pressure stemming from weakness in U.S. domestic shipping. FedEx is implementing cost-cutting measures to address the soft demand environment and improving operations through its Network 2.0 initiative.
In the second quarter of 2023, FedEx introduced DRIVE, a broad program aimed at enhancing long-term profitability. DRIVE generated $1.8 billion in permanent savings in fiscal 2024 and delivered an additional $2.2 billion in cost savings in fiscal 2025. These efforts include lowering flight frequencies, parking aircraft and reducing headcount. For fiscal 2026, management expects to achieve $1 billion in transformation-related savings through initiatives such as DRIVE and Network 2.0.
UPS’ Price Performance, Valuation & Estimates
Shares of UPS have declined in excess of 15% in a year, underperforming its industry.
From a valuation standpoint, UPS trades at a 12-month forward price-to-sales ratio of 1.03X, below industrial levels.
The Zacks Consensus Estimate for UPS’ fourth-quarter, full-year 2025 and first-quarter 2026 have been revised moderately upward over the past 60 days, while the same for full-year 2026 earnings has been revised downward over the same timeframe.
UPS’ Zacks Rank
UPS currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.