Oops -shares tank after weak guidance, plan to cut Amazon -Verances

Shares of United Parcel Service dropped more than 17% Thursday after the company issued weak income guidance for the year and said it planned to cut deliveries to AmazonIts greatest customer, by more than half.

The shipping giant said in Its revenue report for the fourth quarter That it “reached an agreement with its largest customer to lower its volume by more than 50% in the second half of 2026.”

At the same time, UPS said it reconfiguring its US network and launching perennial efficiency initiatives, as it expects, will result in savings of about $ 1 billion.

UPS CEO Carol Tome said on a call with investors that Amazon is UPS’s largest customer, but it’s not the company’s most profitable customer. “Its margin is very diluting to the American domestic business,” she added.

“We are making business and operational changes that, along with the fundamental changes we have already made, will set us further down the road to become a more profitable, supple and differentiated ups that are growing in the best parts of the market,” Tome said in a statement.

Amazon spokesman Kelly Nantel told CNBC in a statement that UPS had requested a reduction in volume “because of their operational needs.”

“We certainly respect their decision,” Nantel said in a statement. “We continue to work with them and many other carriers to serve our customers.”

Amazon said before the UPS message that it had offered to increase ups’ quantities.

UPS expected 2025 revenue of $ 89 billion, down from a $ 91.1 billion revenue in 2024. That’s good under consensus estimates for 2025 revenue of $ 94.88 billion, according to analysts held by LSEG.

For the fourth quarter, UPS missed revenue and reported $ 25.30 billion against $ 25.42 billion analysts expected in a survey of LSEG.

Amazon has long been dependent on a mixture of larger carriers for deliveries, including ups, FedEx and the US postal service. But it has reduced the number of packages sent through UPS and other carriers in recent years as it appears to have more control over deliveries.

Amazon has quickly built up his own logistics empire since a 2013 holidayfiasco left his packages stranded in the hands of external airlines. The company is now overseeing thousands of delivery companies in the last kilometers that only supply packages to Amazon, as well as a budding internal network of aircraft, trucks and ships. After some estimates, Amazon’s internal logistics operations have grown to compete or exceeding the size of larger carriers.

UPS, for its part, has taken more aggressive cost control measures, including catering for more profitable delivery customers. In recent quarters, UPS has benefited from a influx of volume from negotiating dealers TEMU and Shein, which has quickly gained popularity in the United States

Last January, UPS dismissed 12,000 employees as part of a bid to realize $ 1 billion in cost savings.