UPS Says Pullback From Amazon Is Leading To Cost Savings

Summary

Article Date: 28 January 2026 (source timestamp: 2026-01-28T11:41:00-05:00)

Article URL: https://www.supplychain247.com/article/ups-amazon-volume-reduction-2026

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UPS says it hit its initial target to reduce Amazon volume by roughly 1 million pieces per day by the end of 2025 and is preparing another major reduction in 2026. The company attributes roughly $3.5 billion in savings so far to network reconfiguration and its Efficiency Reimagined programme and is targeting a further c. $3 billion in savings as it continues to ‘glide down’ Amazon volume while reshaping its U.S. network.

Key Points

UPS cut about 1 million Amazon pieces per day by end-2025, delivering approximately $3.5bn in savings to date.
Savings arose from lower variable costs, fewer operational positions, and reduced fixed costs (including 195 operations and 93 buildings closed).
UPS plans to reduce another ~1 million pieces/day in 2026 and is targeting around $3bn more in savings tied to that glide down.
Company expects 2026 to be a transition year: domestic revenue flat, average daily volume down mid-single digits, but higher revenue per piece and improved back-half margins.
Workforce reductions (up to 30,000 operational positions cited) are expected to be achieved largely via attrition and slower hiring rather than mass immediate layoffs; automation deployment will continue.
Industry observers note risk: parcel market growth and Amazon’s expanding role could complicate UPS’s longer-term positioning despite near-term per-piece revenue improvements.

Content Summary

On its fourth-quarter earnings call UPS executives described progress on a planned pullback from Amazon business that began about a year earlier. CFO Brian Dykes outlined how network changes and Efficiency Reimagined have driven savings through lower variable costs, fewer staff in operations, and closures of facilities. The company intends further reductions in volume, labour hours and facilities in 2026, paired with more automation.

UPS expects the first half of 2026 to see margin pressure from transition costs, with a stronger, more agile cost structure and profitability in the second half of the year. Commentary from market analysts highlights that workforce reductions will mostly occur through attrition and not mass layoffs, while some academics caution that broader parcel-market trends — including projected growth and Amazon’s expansion — remain strategic challenges for UPS.

Context and Relevance

This story matters to logistics and supply-chain professionals because it signals a major carrier reshaping its network and cost base in response to a single large shipper changing its footprint. UPS’s actions — facility closures, automation rollouts and labour adjustments — will influence capacity, pricing, and service options in the U.S. parcel market. The move also illustrates how carriers balance short-term transition pain against medium-term efficiency gains.

Why should I read this?

Quick take: if you move parcels, move freight or plan networks, pay attention. UPS isn’t just trimming volume — it’s reconfiguring its whole U.S. operation and aiming for billions in savings. That will ripple through capacity, labour supply and pricing. We’ve read the detail so you don’t have to — it’s a neat snapshot of how major carriers respond when a giant customer shifts strategy.