The United Parcel Service (UPS) revenue slipped in Q2, with its international segment mitigating the decrease.
Part of that decrease came from reducing the volume of parcels UPS processes from Amazon. Director and CEO Carol Tome told investors on the carrier’s Q2 earnings call that its financial results “reflect the impact of a complex macro environment, driven by ever-evolving trade policies, as well as the significant actions we are taking to strengthen UPS’ competitive and financial positioning.”
She cited data from consultancy firm McKinsey & Company that indicated consumer spending on discretionary categories, including restaurants and automobiles, outpaced growth in essential items for the first time in three years. Additionally, she said, manufacturing activity in the U.S. “remains soft.” In turn, those macroeconomic factors impacted market demand.
“The overall U.S. economy demonstrated continued resilience, but our sector, specifically the U.S. small package market, was unfavorably impacted by U.S. consumer sentiment that was near historic lows,” Tome told investors.
In an effort to increase efficiency, UPS has redesigned end-to-end processes, including its global payment strategy, Tome said. It has centralized how it makes and receives payments under a digital-first strategy, “which will drive efficiency for UPS and improve the customer experience,” she said.
UPS Digital — which refers to various initiatives and programs the carrier uses to enhance its services and offerings, such as Roadie and Happy Returns — grew revenue 26.4% year over year.
UPS fulfills deliveries for online orders from more than 1,020 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.
UPS revenue in Q2
In Q2 2025, UPS consolidated revenue reached $21.2 billion. That’s a 2.75% year-over-year decrease from $21.8 billion in Q2 2024. Similarly, UPS revenue in Q2 2024 had decreased year over year (down 1.35% from $22.1 billion).
However, revenue per piece increased 5.5% year over year.
In the U.S., UPS revenue in Q2 reached $14.08 billion. That’s down 0.85% from $14.20 billion the prior year. UPS international revenue grew in Q2, though, to $4.49 billion. That’s 2.75% growth from $4.37 billion the year before.
Overall U.S. average daily volume declined 7.3% in Q2, Tome said. Additionally, UPS suffered from the implementation of tariffs, she said.
“Trade follows policy, and generally, tariffs are not good for trade,” Tome said. “With the announcement of certain changes to trade policies in the second quarter, we saw that play out. For example, looking at our China to U.S. trade lane, an increased tariff and the elimination of de minimis exception resulted in a year-over-year drop in average daily volume of 34.8% for the months of May and June. Our China to U.S. trade lane is our most profitable trade lane, and the volume decline here pressured our international operating margin.”
She noted that policy changes don’t stop trade; rather, trade moves as a result. As a result, UPS volume from China to the rest of its world trade lanes increased 22.4%. UPS also nearly doubled its capacity between India and Europe to meet the growing export demand on that trade lane, Tome said.
Meanwhile, UPS revenue from its supply chain solutions decreased in Q2, to $2.65 billion. That marked an 18.29% decrease from $3.25 billion in Q2 2024.
Tome noted that health care logistics have benefited UPS and “remains a key driver of growth for all three of our business segments.”
UPS package volume in Q2
Breaking down UPS’ decline in average daily volume in the U.S., ground volume fell 6.6% year over year and air volume decreased 11.6%. However, air volume increased 1.4% when excluding Amazon, chief financial officer Brian Dykes noted. And small and medium businesses (SMBs) made up 32% of total U.S. volume, up 2.3% year over year.
Additionally, Ground Saver’s average daily volume declined 23.3%. Ground Saver is what UPS refers to as its economy product. Dykes said in Q2, Ground Saver made up the smallest portion of its total ground volume in two years. In Q2, UPS “took deliberate pricing actions” to manage its Ground Saver volume,” Tome said.
“For UPS, we believe Ground Saver should be a product that complements an array of products used by our customers and not be a product just by itself,” Tome said.
As a result, Tome said, product volume declined 23.3% year over year. Some of that decline was “directly related” to UPS’ plan to reduce Amazon package volume. The rest was primarily related to volume declines from non-U.S.-based ecommerce companies, Tome said.
UPS in-sourced from the U.S. Postal Service last year the last-mile delivery of its Ground Saver offering.
“This decision, while right for the customer experience, pressured our financial results as delivery expenses were somewhat higher than we anticipated,” Tome said. “We are working on solutions to relieve this pressure in the back half of the year.”
B2B vs. B2C at UPS
Average daily volume from B2B companies decreased 2.3% year over year in UPS’ Q2. B2B represented 43.7% of U.S. volume, which is 2.2% more than the prior year’s Q2.
B2C average daily volume decreased 10.9% in Q2, which Dykes attributed to actions UPS took to improve revenue quality.
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