The United Parcel Service Inc. (UPS) posted both U.S. and international revenue growth in its fiscal Q1, which ended March 31.
Consolidated revenue decreased less than 1% year over year, in line with UPS expectations, CEO Carol Tome told investors in the carrier’s quarterly earnings call.
She said that although UPS expected a decline as it reduces business with Amazon, the carrier’s drop in January “was less than expected, marked by positive average daily volume or ADV [average daily volume] growth in certain B2B, SMB, and health care customers.”
“Then, as we moved into February and March, uncertainty surrounding global trade policies and other matters led to a drop in consumer confidence and muted demand from some enterprise and SMB customers,” Tome said. “As a result, the decline in U.S. ADV for the months of February and March was higher than we expected.”
However, demand for U.S. inbound services “surged” as retailers sought to make their overseas inventory purchases before tariffs kicked in, she added.
UPS fulfills deliveries for online orders from more than 1,040 retailers in the Top 2000 Database. Those retailers combined for more than $806 billion in 2024 ecommerce sales, Digital Commerce 360 data shows. The database is Digital Commerce 360’s rankings and more of the largest online retailers in North America based on their annual ecommerce sales.
Reduced UPS business from Amazon
Among UPS’ plans to become more profitable, Tome said, is the decision to reduce how much volume the carrier receives from Amazon.
UPS reached an agreement with Amazon to reduce the retailer’s volume in its network by more than half before June 2026, Tome stated. She specified that UPS is transitioning out Amazon’s outbound fulfillment center volume.
“This volume is not profitable for us, nor a healthy fit for our network,” she said. “The Amazon volume we plan to keep is profitable and it is healthy volume. In other words, volume where we can add value like returns and seller fulfilled outbound volume. In the first quarter, Amazon’s ADV decline ran slightly ahead of plan but is expected to be on plan by the end of the first half of this year.”
UPS layoffs and operational changes
Tome said UPS is planning for 164 operational closures, including closing 73 buildings by the end of June.
“While our building footprint is changing, our pickup and delivery footprint is not,” she said.
For small and medium-sized business in areas where UPS is closing buildings, the carrier will still offer customer drop-offs and pickups at its stores, drop boxes and UPS access point locations. Tome said 90% of the U.S. population lives within 5 miles of UPS’ network of locations.
Small and medium-sized business made up 31.2% of total UPS U.S. volume in Q1, Tome said. That’s the highest concentration UPS has seen in 10 years, said chief financial officer Brian Dykes.
Dykes also said UPS intends to cut about 20,000 positions across its entire U.S. network. The changes are not connected to the buildings UPS is closing, he noted.
“Our planned reductions are in line with the total Amazon volume decline, and our semi-variable cost-out efforts were on track through the first quarter,” Dykes said.
How tariffs affect UPS
As far as tariff exposure goes, Tome explained, UPS import volume to the U.S. is about 400,000 pieces per day. In terms of volume, it represents less than 2% of total global average daily volume.
And China-to-U.S. trade lanes in 2024 represented 11% of total internal revenue. Meanwhile, revenue from other trade lanes to the U.S. represented about 17% of total UPS international revenue, she added.
Tome said UPS has spoken with its top 100 U.S. customers to understand how tariffs are impacting their businesses.
“These customers have told us that they are exploring various options to address the tariff, from absorbing the cost to pushing them into retail prices to asking suppliers to help defray the expense,” Tome said. “At this point, it remains an open question as to what path they will choose and what the potential impact could be on consumer demand and our business.”
For the rest of the world, UPS has interviewed nearly 45,000 international and freight-forwarding customers about their shipping plans, Tome said. 95% of small-package shippers told UPS they expect to maintain their current business models, according to Tome.
The rest are “considering several options, including trade shifts, transportation mode shifts, or exiting the business,” she said. “Most of these customers are also telling us that they are letting inventory levels sell-off, which will lead to lower shipping activity, at least for now. Freight forwarding customers are telling us that, where they can, they are looking to move from air freight to ocean freight.”
UPS is also offering “global checkout,” which informs customers what they will pay for duties, taxes and fees during online checkout. It has made it available in 43 countries.
UPS revenue in Q1
In Q1, UPS consolidated revenue decreased 0.7% year over year. That’s down to $21.5 billion in Q1 2025, from $21.7 billion in 2024.
That decline came from UPS’ supply chain solutions segment, which saw revenue drop to $2.71 billion in Q1 2025, from $3.18 billion in 2024. UPS attributed that 14.8% revenue decline to divesting from Coyote, a truckload brokerage business, deepening the drop it saw in Q4.
Both U.S. and international UPS segments’ revenues grew year over year in Q1.
UPS domestic revenue increased 1.4% to $14.46 billion in Q1 2025, from about $14.27 billion in 2024. The carrier attributed the growth to increases in air cargo and a 4.5% increase in revenue per piece, which it said partially offset a decline in volume.
Similarly, international UPS revenue improved year over year in Q1, to $4.37 billion from about $4.26 billion. UPS attributed international revenue growth to a 7.1% increase in average daily volume.
“Given the current macro-economic uncertainty, the company is not providing any updates to its previously issued consolidated full-year outlook,” UPS said in an earnings release.
B2B vs. B2C volume at UPS
UPS’ B2B average daily volume grew 1.5% year over year in Q1, Dykes said. He attributed that to returns, which increased 8.8% year over year, and “strength from health care and high-tech customers.”
Meanwhile, B2C average daily volume decreased 7% year over year in UPS’ Q1, he said. The Amazon volume decline drove that, as well as UPS’ focus on revenue quality and “some demand softness,” he added.
Percentage changes may not align due to rounding. Check back for more earnings reports. Here’s our last update on UPS revenue and package volume.
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