Five Key Takeaways from the Q3 UPS Earnings Call

As discussed in a previous blog post, UPS is undergoing the largest transformation in its history, as it redesigns its U.S. ground and air delivery network. The reconfiguration aims to make UPS leaner, more automated, and less dependent on low-yield e-commerce, while positioning it for growth in higher-value logistics sectors like healthcare.  

That ongoing transformation was the focus of the UPS Q3 earnings call, which highlighted some continued growing pains from its restructuring. The carrier’s U.S. average daily volume (ADV) declined about 12.3% year-over-year (YoY), driven largely by the planned reduction of volume from Amazon and the targeted trimming of lower-yield e-commerce shipments. The carrier’s entry-level GroundSaver service ADV fell ~32.7% YoY, also reflecting the shift away from lower-yielding e-commerce. UPS has closed 195 operations year-to-date, including 93 entire buildings. 

Yet the carrier’s future business outlook seems positive, despite these growing pains. Q3 consolidated revenues were $21.4 billion, with about a 10% profit margin. Q4 projections include revenues of $24 billion and margins as high as 11.5%. UPS projects cost savings of $3.5 billion by the end of this year, resulting from a changing shipment mix, facility closures, and workforce reductions, as well as increased automation. In Q4, the carrier estimates that 66% of its packages will travel through an automated facility. 

All of this is great news for UPS. But what does it mean for your business? Redwood’s Parcel Advisory experts have created this list of five key takeaways for parcel shippers who rely on UPS. 

1. UPS prioritizes value over volume, meaning selective pricing and customer segmentation. 

UPS is deliberately exiting low-margin volume segments, including reducing its business with Amazon by 50%. CEO Carol Tomé has said, “We’re not chasing volume. We’re chasing value.” The carrier’s average U.S. revenue per piece has grown by 9.8% YoY despite double-digit volume declines. What’s the impact for shippers? You should expect continued rate pressure, especially for lower-margin, high-density e-commerce shipments. Any UPS contract renewals will likely feature higher base rates, stricter minimums, increased surcharges, and tightened dimensional weight rules. UPS will be more selective about customers it wants to serve—preferring healthcare businesses, small to medium-sized enterprises (SMEs), and business-to-business (B2B) clients that are willing to shop based on reliability and service, not just price.

2. Decreased volumes free up network capacity, but not necessarily for cheaper shipping.

With its Amazon and e-commerce volumes declining, and more facilities becoming automated, it’s clear that UPS is creating network capacity. But that doesn’t translate to lower rates. Instead, UPS has strategic plans to fill that capacity with higher-yield customers, not discount volume. Smaller and mid-sized shippers who meet UPS’s target profile—steady, profitable, not ultra price-sensitive—may get better access to capacity and service reliability, but not necessarily better prices. Large retailers that depended on low negotiated rates in the past could face stricter pricing or reduced flexibility. 

3. Automation improves efficiency but demands more discipline from shippers.

UPS continues to invest in automation, with 66% of volume automated in Q4 2025. It cut 34,000 operations positions and over 16 million hours in manual labor. It’s easy to see how this reduces costs. But, while service reliability should improve, a fully automated network means UPS will have less tolerance for sudden, unpredictable surges from large shippers. Expect UPS to demand more accurate forecasts and more disciplined shipping patterns to increase its own level of predictability and profitability. Shippers with stable, predictable volume will benefit, while late shipments and changing shipment patterns may result in penalties or degraded service windows.

4. High-value sectors will benefit from investment and pricing attention.

UPS is focusing on higher-margin, higher-value customers like healthcare, SMEs, and B2B shippers. If you fall into those categories, expect even more tailored solutions, including cold chain, compliance, and AI-driven brokerage services. These may come at premium rates, but with higher reliability. SMEs using digital channels to book services will enjoy easier onboarding, better visibility, bundled shipping discounts, and digital contract negotiation.

5. Cost savings won’t necessarily translate to lower rates.

While UPS is claiming cost savings of $2.2 billion so far this year, tracking toward $3.5 billion in 2025, this money is being reinvested in automation and network upgrades, not passed through as lower pricing. UPS’s priority is margin expansion, not market share growth. The company’s financial model depends on higher revenue per piece and lower cost per piece. So don’t expect price relief. Instead, UPS will likely keep increasing prices, even as its own costs fall.

What to Expect in 2026 and Beyond 

Based on the UPS Q3 2025 earnings call, the clear message is that UPS’s transformation is good for its profitability—but it will have mixed or even challenging effects for many shippers, depending on their size, industry, and shipping profile.

Based on UPS’s own statements and its past behavior, the outlook for 2026 does not favor shippers. UPS will likely announce its 2026 General Rate Increase (GRI) later in Q4 or early Q1 2026, after its next earnings call. Given the 9.8% revenue-per-piece growth trend, shippers should plan for another mid-to-high single-digit GRI—likely in the 6–7% range, similar to FedEx. Shippers can look forward to a continued emphasis on contract discipline and minimum spend thresholds, as UPS continues to “shape” its customer base.

You Have Options. Redwood Can Help Explore Them. 

If you do business with UPS, and you don’t fall into their preferred customer segments, you may be worried. But it’s essential to remember that you have options. Just as UPS can shape its customer base, you can also shape your carrier mix to achieve the right balance between cost and service.  

Redwood’s experienced Parcel Advisory team includes many former UPS employees. We can assess your shipping patterns, package sizes, destinations, and other parcel characteristics to arrive at optimized plans that include the right carriers, the right services, and the right rates. Our analysis, counseling, and negotiation services deliver big results. In fact, in 2024 Redwood saved its customers an average of 16% on their parcel spending, for an average annual cost savings of $1.1 million. 

Don’t wait. Start shaping your own destiny today by reaching out to Redwood.