United Parcel Service (UPS) revenue and average daily volume (ADV) declined in its fiscal Q3 2025, which ended Sept. 30, as tariffs challenged the carrier.
CEO Carol Tomé said while UPS navigated the “complexities” with “resilience,” it has continued advancing its network reconfiguration. That’s a critical step in shaping the future of UPS’ business in the U.S., she said.
Tomé said the largest drivers of U.S. volume decline were the planned paring of its Amazon volume and “a targeted reduction in lower-yielding ecommerce volume.” At the same time, UPS’ focus on revenue quality led to revenue per piece growing by 9.8% in its fiscal Q3.
“Due to the changes in trade policy, export volume fell in our higher-margin lanes and grew in our lower-margin lanes,” Tomé told investors on the carrier’s quarterly earnings call. “This volume mix change pressured our international operating margin and also pressured our forwarding business.”
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 Q3
In its fiscal Q3, UPS revenue decreased 3.6% year over year. It fell to $21.4 billion from $22.2 billion in the year-ago period.
In the U.S., revenue declined 2.6% to $14.2 billion. Meanwhile, internationally, revenue increased 5.9% to $4.7 billion.
Revenue from UPS’ supply chain solutions division declined 22.1% year over year. The carrier attributed that decrease primarily to its divestiture of Coyote, a truckload brokerage business. Supply chain solutions brought in $2.5 billion in Q3 revenue for UPS.
“In recent years, the spotlight on international commerce and the intricacies of supply chains has intensified,” Tomé said. “And in 2025, we’re witnessing the most profound shift in trade policy in a century.”
She added that this is UPS’ “domain.” Tomé said UPS’ successes come from its expertise in “ensuring goods move seamlessly across borders” for more than 200 countries and territories.
UPS has more than 8 million small and medium-sized businesses in its digital access program (DAP), Tomé told investors. Through the first nine months of 2025, UPS has increased its global DAP revenue by 20%, to $2.8 billion. She said DAP continues to be an important growth engine for UPS in terms of SMBs. For the full year, UPS anticipates more than $3.5 billion in global digital revenue through the program.
UPS volume decline in Q3
In Q3, UPS’ average daily volume (ADV) in the U.S. dropped to about 16.2 million from about 18.4 million the year before. At the same time, the cost per package increased 12.3%, to $12.92 from $11.50.
Internationally, UPS’s total ADV grew 4.8%.
“During the quarter, we ran our international network with agility, rerouting capacity to where our customers needed it,” Tomé said.
Compared to the prior Q3, UPS’ Amazon volume declined 21.2%. That’s steeper than the first half of 2025, when it declined 13%. Tomé noted that UPS has closed an additional 19 buildings in the quarter, bringing its total so far in 2025 to 93 buildings — a change made “in tandem with” the decline in Amazon volume.
ADV from UPS’ “ground saver” program declined 32.7% year over year, which Tomé said was primarily due to the reduction in volume from Amazon, as well as trimming “lower-yielding ecommerce volume.”
Additionally, UPS has “reached a preliminary understanding on revenue and rates with the United States Postal Service to support last-mile delivery” for ground saver, Tomé stated.
Also in Q3, B2B average daily volume decreased 4.8% year over year for UPS. Chief financial officer Brian Dykes attributed the decline to “softness in retail and in manufacturing activity.”
B2B represented 45.2% of U.S. volume for UPS in Q3, he said. Meanwhile, B2C volume was down 17.6% year over year for UPS in Q3.
How UPS is using agentic AI
UPS has been harnessing artificial intelligence (AI) to digitally process more than 90% of its cross-border transactions, according to Tomé. That helps it deliver speed, accuracy and reliability at a global scale, she said.
“Following the elimination of the de minimis exemption for U.S. imports, UPS experienced a tenfold surge in daily customs entries,” Tomé said. “We responded swiftly, upgrading our shipping systems to capture the expanded data requirements mandated by U.S. Customs and Border Protection.”
She added that UPS turned to agentic AI to manage the increased volume and complexity. Agentic AI refers to various levels of autonomous tools that can proactively address tasks for users.
How UPS is planning for the holidays in 2025
UPS’ top 100 customers drive about 80% of its peak-period surge each year, according to Tomé. And UPS expects that to be the case in 2025, she said.
“Early forecasts from these customers suggest they are planning for a good peak that will result in a considerable surge in volume from our current volume levels,” Tomé told investors. “But remember that given the Amazon glide-down plan, we expect total peak average daily volume in the U.S. to be down year-over-year.”
From an operational standpoint, UPS anticipates it will “deliver a strong peak season,” she added.
Specifically, she noted UPS is reducing reliance on seasonal hires and will “significantly cut back on leased trailers, vehicles and aircraft compared to previous years. Much of this efficiency is powered by automation.”
In the past year, she said, UPS has deployed new automated systems in 35 facilities.
Tomé said that in Q4 2025, UPS anticipates it will move 66% of its volume through automated processes. If that’s the case, it would be up compared to 63% in Q4 2024. These advancements position UPS to “run the most efficient peak in our history,” she added.
“With the uncertainty around tariffs now somewhat resolved and clear peak forecast from our largest customers, we’re in a stronger position to offer guidance than we were at the end of the second quarter,” Tomé stated.
Check back for more earnings reports. Here’s last quarter’s update on UPS sales and revenue.
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