UPS to Cut Amazon Deliveries, Focus on Healthcare

United Parcel Service (UPS) shares plummeted nearly 15% following the announcement of a significant reduction in its business with Amazon, its largest customer, cutting deliveries by over 50% by mid-2026. This strategic move aims to shift UPS's focus towards higher-margin sectors like healthcare and small businesses, despite Amazon accounting for around 11.8% of its revenue in 2024. UPS CEO Carol Tomé emphasized that while Amazon is influential, its low profit margin is dilutive, justifying the shift to more profitable partnerships. Despite a notable decrease in UPS stock value due to this announcement, analysts suggest that the long-term focus on profitability could benefit UPS financially. UPS's earnings surpassed expectations with a Q4 revenue of $25.3 billion and an increased operating profit, although its 2025 revenue projection of $89 billion falls short of consensus estimates. The decision to reduce Amazon business aligns with a broader trend of logistics companies reassessing their dependence on Amazon as it expands its delivery capabilities.