United Parcel Service (UPS) is seeing results from its shift toward more profitable shipments and customers. The strategy helped the carrier grow revenue in its fiscal Q3 2026, even as package volume fell in the U.S. and internationally.

For the third quarter ended Sept. 30, UPS reported a 6.7% revenue increase. Executives pointed to higher revenue per package and increased shipments from small and mid-sized businesses (SMBs) and enterprise customers. Network efficiency improvements also contributed to the company’s performance.

The results come as UPS scales back lower-margin Amazon shipments while investing in automation and other higher-return opportunities.

“Our third-quarter results demonstrate the continued strengthening of our business fundamentals, driven by premium growth and greater network efficiency,” CEO Carol Tomé said in the company’s earnings release.

Following the stronger-than-expected quarter, UPS also raised its full-year financial outlook heading into the holiday shipping season.

UPS revenue in Q3 2026

In its fiscal Q3 2026, UPS reported consolidated revenue of $22.9 billion, up 6.7% from $21.4 billion a year earlier.

Its U.S. Domestic segment generated $14.87 billion in revenue, up from $14.22 billion a year earlier.

UPS’ International segment contributed $5.01 billion, compared with $4.67 billion a year ago. Supply Chain Solutions revenue reached $2.98 billion, up from $2.52 billion in Q3 2025.

Much of the increase came from higher revenue per package. Revenue per piece rose 6.1% in the U.S. and 15% internationally, reflecting higher fuel surcharges, pricing gains and a more favorable customer mix, chief financial officer Brian Dykes said.

The International segment also returned to year-over-year operating profit growth. It was the segment’s first such increase since U.S. trade-policy changes took effect in 2025, Tomé said.

Meanwhile, UPS’ GAAP operating margin declined to 7.6% from 8.4% a year earlier.

UPS’ Digital Access Program (DAP), which offers discounted shipping rates to SMBs through partner platforms, generated $1.4 billion in global revenue in Q3. That marked the fourth consecutive quarter in which DAP revenue reached at least $1 billion.

Healthcare revenue also exceeded $3 billion for the third straight quarter.

Within Supply Chain Solutions, UPS Digital reported nearly 50% revenue growth year over year. The business includes Roadie, which provides local delivery services, and Happy Returns, which allows shoppers to return online purchases without boxes or labels.

By the end of 2026, Happy Returns package volume is expected to more than triple from 2023 levels, when UPS acquired the business, Tomé said.

During Q3, UPS also completed the final phase of its voluntary Driver Choice buyout program, with roughly 1,500 employees leaving the company. Dykes said the carrier remains on track to achieve its broader $3 billion cost-savings target through network restructuring and efficiency initiatives.

Following the stronger-than-expected quarter, UPS raised its full-year revenue forecast to $92.6 billion. It also projects fourth-quarter revenue of about $25.7 billion.

UPS package volume in Q3

Despite higher revenue, UPS continued to handle fewer packages in the third quarter.

U.S. average daily package volume fell 3.3% year over year to 15.6 million packages, down from 16.2 million a year earlier, Dykes said. The decline largely reflected UPS’ ongoing reduction in Amazon shipments.

International average daily package volume also declined, falling 8.7% year over year. Dykes attributed the drop primarily to geopolitical tensions.

Tomé said the elimination of a European de minimis exemption for low-value imports in July led to a sharp drop in shipping volume. Conditions improved as the quarter progressed, however. U.S. inbound shipments returned to year-over-year growth in September, while volume from China to the U.S. and within Asia continued to increase.

Meanwhile, volume from other customers showed growth. Average daily package volume from SMB and enterprise customers increased 1.8% year over year, representing more than 200,000 additional packages per day. Ground volume from those customers rose 2.1%, while air volume held steady, according to Dykes.

SMB volume alone increased 3.7%, with gains across nearly every industry, including healthcare. SMBs, including volume generated through platforms, accounted for a record 35.1% of UPS’ total U.S. package volume, up about 2.4 percentage points from a year earlier.

UPS prepares for holiday shipping demand

UPS expects another busy holiday shipping season. Tomé cited industry forecasts projecting an average increase of roughly 9% in U.S. online holiday sales.

Based on forecasts from its largest U.S. customers, UPS expects average daily package volume to rise about 25% from Q3 to Q4, consistent with last year’s seasonal increase, Tomé said.

Year over year, however, fourth-quarter U.S. volume is expected to decline 1.3% as UPS continues reducing Amazon shipments, Dykes said.

To handle the holiday surge, UPS plans to lean more heavily on automation. Tomé said nearly 70% of packages will move through automated processes, allowing the carrier to rent fewer vehicles and lease fewer aircraft. Dykes added that the more efficient network will also reduce seasonal hiring and training needs.

UPS is also expanding its use of radio-frequency identification (RFID) technology, which tracks packages with fewer manual scans. According to Tomé, RFID improves package visibility and operational efficiency as UPS moves from a scanning-based network to what she described as a “sensing network.”

By the end of 2026, UPS expects to have delivered more than 4 billion RFID-enabled packages, Tomé said.

UPS targets higher-value B2B customers

UPS’ business-to-business (B2B) package volume declined year over year in Q3, although Tomé said 60% of the decrease stemmed from reduced Amazon shipments. The company did not disclose the overall percentage decline.

Even so, UPS is shifting toward higher-value B2B customers in healthcare, manufacturing, high tech and automotive. Those industries account for a growing share of its U.S. package volume, Dykes said.

“This is a deliberate shift we have been working toward,” Dykes said. “More premium volume from industries and customers that deliver better overall economics.”

DAP remains a key part of that strategy. Tomé said air services and commercial ground shipments represented nearly 30% of DAP volume for the first time in Q3, reflecting a shift toward higher-value shipping services.

The carrier also sees opportunities in the growing data-center market. Tomé estimated that data centers represent a $15 billion addressable logistics market opportunity. She noted that UPS’ U.S. high-tech small-package business grew 30% year over year in Q3, albeit from a small base.

UPS is also expanding its international logistics network to serve B2B customers.

In October, the carrier opened a new air hub at Clark International Airport in the Philippines. Tomé said the facility will improve transit times across more than 1,100 trade lanes.

In Europe, UPS added a 129,000-square-foot facility in Amsterdam that combines freight forwarding, customs brokerage and healthcare cold-chain capabilities under one roof, she said.

Check back for more earnings reports. Here’s last quarter’s update on UPS sales and revenue.

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