UPS is slashing the amount of Amazon packages it delivers by 50%.
Transcript:
Conway Gittens: One day after the Federal Reserve held interest rates steady, data released on Thursday shows the economy ended the year without any sign of recession. The U.S. economy grew 2.8 percent for all of 2024, compared to 2.9 percent the year before. Meanwhile, applications for new jobless benefits saw a bigger-than-expected drop last week.
Looking at the calendar, the Fed’s preferred inflation gauge, known as the PCE, is released on Friday. ExxonMobil and Chevron post their quarterly results, as well.
In corporate headlines, UPS is at the point of its relationship with Amazon, where it’s ready for that awkward conversation that ends with the phrase: I think we should see other people. UPS announced that it will slash Amazon package deliveries by 50% by the latter half of 2026.
The turn in the relationship between UPS, the world’s biggest package shipper, and Amazon, the world’s largest e-commerce company, comes as UPS feels the heat from the sheer number of packages it ships for Amazon. Because of a large-volume pricing structure put in place, UPS doesn’t make as much money on each Amazon package shipped compared to what it makes on other deliveries. UPS CEO Carol Tomé put it bluntly on a call with investors, “Amazon is our largest customer, but it’s not our most profitable customer.”
You may not know this when you sit-down to make a purchase on Amazon – or any other website for that matter – but for UPS, there’s a high cost to free or low-cost shipping offered to you. In 2024, the company took in $92 billion in shipping fees. Even with the Amazon changes, UPS predicts that number will drop in 2025.
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