United Parcel Services (UPS), one of the 20 logistic carrier partners that Amazon uses to fulfil deliveries in Australia, saw its share price nosedive as it confirmed that it would reduce the scale of its business with its biggest customer.
Its share price fell more than 13% on Thursday to trade at the U$114.9 (A$185.02) mark as it projected a decline in revenue for the current year, with one of the main reasons being its plans to phase out more than half of the business it does with Amazon over the next 18 months.
UPS said it has reached a deal in principle with Amazon to cut its shipping volume by more than 50% by June 2026.
“Amazon is our largest customer, but it’s not our most profitable customer,” said Chief Executive Carol Tome, according to the Wall Street Journal.
Amazon’s business accounted for nearly 12% of UPS’s total revenue last year, or about A$1.72 billion.
Amazon spokesperson Kelly Nantel has reportedly said it was UPS that requested the reduction in volume to address their own operational needs. “We certainly respect their decision,” Nantel said. “We’ll continue to partner with them and many other carriers to serve our customers.”
For the current year, UPS expects total revenue of U$89 billion (A$143.31 billion), a 2.3% decrease from 2024.
The company’s 2025 guidance includes an operating-margin target of about 10.8%, an increase from the 9.3% it reached in 2024.
UPS revenue rose 1.5%, to $25.3 billion (A$40.74 billion), in the fourth quarter, just missing analyst forecasts for $25.41 billion (A$40.92 billion).
Earnings came in at U$1.72 billion (A$2.77 billion), up from $1.61 billion (A$2.59 billion).
The UPS decision to slash its business with Amazon is expected to have a limited impact on Australian deliveries as UPS is one of 20 logistic carrier partners for Amazon in the country.
One of Amazon’s major partners here is Australia Post, which between November and December 2024, delivered almost 103 million parcels, beating the previous year by 3.1%.
Approximately 2,800 parcels were delivered to Australian households every minute in November and December, with 7.6 million households making at least one purchase online during this period.
