This ranking evaluates how Fortune 500 companies are deploying AI, and how technology leaders value those investments relative to industry peers.

Fortune AIQ 75

The companies on the Global 500 employ 70.2 million people, and their revenue represents more than one-third of the world’s GDP.

Fortune Global 500

With a combined revenue of $21 trillion and $2.1 trillion in profits, the 2026 Fortune 500 is the definitive list of America's largest companies.

Fortune 500

The 300 companies on this year’s list brought in over $12.5 trillion in revenue for the latest 12 months, with the median revenue figure at $24 billion.

America's Most Innovative Companies

AI is a major force shaping this year’s list—but it’s far from the only story.

World's Most Admired Companies

The corporations on our annual list of the world's 500 largest companies combined to generate $41.7 trillion in revenue over the past year.

Almost $20 trillion in revenue—and a record-breaking $1.87 trillion in profits. Introducing the 2025 Fortune 500, the definitive list of the biggest companies in America.

The 300 companies on this year’s list brought in over $12.6 trillion in revenue for the latest 12 months, with the median revenue figure at $22 billion.

Leaders in all industries rely more than ever on Big Tech—and appreciate the giants that deliver, at scale, without drama.

The corporations on our annual list posted aggregate revenues of $41 trillion for the second year in a row.

Industries included in the sector are airlines, transportation equipment, logistics, mail and freight delivery, railroads, shipping, and trucking.

Fortune Sector Leaders: Transportation

The Fortune 500, in its 70th year in 2024, ranks the biggest U.S. companies by revenue.

The 26th edition of the list shows how much esteem Big Tech giants command among other business leaders.

WMA-2024-UPS

The 25th Fortune World’s Most Admired Companies list suggests that tech giants’ peers respect them as much as ever.

WMA-2023-UPS

The corporations on our annual list of the world’s largest companies delivered a record $41 trillion in aggregate revenues.

The 300 companies on this list are transforming industries from the inside out.

The Fortune 500, in its 69th year in 2023, ranks the biggest U.S. companies by revenue.

F500-2023-037-United-Parcel-Service

In 2022 the largest package delivery company in the U.S. saw $100.3 billion in revenue, up 3.1% from the year before. But profits fell 10.4% to $11.5 billion, presaging a difficult 2023. The company has already told investors it expects revenues to be $97 billion for the year, the lower end of its initial guidance, as the pandemic-era e-commerce surge wanes and as inflation inhibits retail spending. 
<ul> 
 	<li>UPS is racing against the clock to negotiate a new labor agreement with the Teamsters union, which represents 340,000 of its workers; its current contract is slated to expire on July 31, 2023.</li> 
 	<li>In 2022 UPS acquired Italian health care logistics firm Bomi and software company Delivery Service, which makes specialized software for same-day deliveries, as it looks to expand its offerings in both areas.</li> 
</ul>

Just as it dominates our economy, Big Tech now dominates Fortune’s annual ranking of corporate reputation.

WMAC-2022-31-UPS

Aggregate sales hit $37.8 trillion last year—an increase of 19%, the highest annual growth rate in the list’s history.

This year’s Fortune 500 marks the 68th running of the list.

F500 2022 UPS

UPS increased its revenue 15% in 2021, while profits leaped 860%—despite competition with Amazon, supply-chain setbacks, high consumer expectations, inflation, and a tight labor market all putting pressure on the company. Along the way it sold UPS Freight, part of its trucking infrastructure, to TFI International for $800 million and acquired Roadie, a company that takes advantage of the growing gig economy by matching drivers with deliveries they can complete during other trips they’ve already planned out. UPS was also a central artery for vaccine dispersal in 2021, delivering more than 1.1 billion doses in more than 110 countries.

After a year in which humanity leaned more heavily than ever on tech giants, see which companies topped Fortune's ranking of corporate reputation.

WMAC 2021-28-UPS

Total revenue for the world’s biggest companies fell 4.8% to $31.7 trillion this year—the first decline in half a decade.

G500-2021-089-Sony

Big Brown continues its reign as the leading U.S. delivery business. Pandemic-fueled demand propelled United Parcel Service 40 spots higher, to No. 89, on this year’s Global 500. UPS’s revenues rose 14.2%, to $84.6 billion, in 2020, keeping it ahead of perennial rival FedEx. But the shift in emphasis to residential over commercial parcels took a 70% bite out of profits, which declined to $1.34 billion. A bigger threat looms, as well. Amazon—a major partner, and rising competitor—is doubling down on a delivery network of its own. How the shipper’s CEO, Carol Tomé, installed on June 1, 2020, confronts this “frenemy” may prove to be the defining mark of her tenure.

This year’s Fortune 500 marks the 67th running of the list.

F500-2021-35-UPS

Big Brown continues its reign as the leading U.S. delivery business. Pandemic-fueled demand propelled United Parcel Service eight spots higher, to No. 35, on this year’s list. UPS’s revenues rose 14.2%, to $84.6 billion, in 2020, keeping it ahead of perennial rival FedEx. But the shift in emphasis to residential over commercial parcels took a 70% bite out of profits, which declined to $1.34 billion. A bigger threat looms, as well. Amazon—a major partner, and rising competitor—is doubling down on a delivery network of its own. How the shipper’s CEO, Carol Tomé, installed on June 1, 2020, confronts this “frenemy” may prove to be the defining mark of her tenure.

For an astounding 13th straight year, Apple claims the top spot in Fortune’s annual ranking of corporate reputation, based on a survey of almost 3,800 executives, directors, and analysts.

This year's Fortune Global 500 generated $33.3 trillion in revenues and $2.1 trillion in profits.

G500-2020-129-UPS

Big Brown continued its reign as America’s leading delivery business. UPS's revenues rose 3.1%, to $74.1 billion, in 2019, keeping it ahead of perennial rival FedEx. But another threat looms. While FedEx cut ties with Amazon, UPS has hitched its signature brown wagons to the retailer-rocket ship, relying on it for growth. Still unclear is how that alliance will fare as Amazon doubles down on a delivery network of its own. Though UPS will benefit from increasing demand for store-to-door package service amid the coronavirus pandemic, the shipper's new CEO, Carol Tomé, will have to keep an eye on what may turn out to be a tricky coopetition arrangement with mighty Amazon.

This year's Fortune 500 marks the 66th running of the list.

F500-2020-043-UPS

Big Brown continued its reign as America’s leading delivery business even as it slipped two spots, to No. 43, on this year’s list. UPS's revenues rose 3.1%, to $74.1 billion, in 2019, keeping it ahead of perennial rival FedEx. But another threat looms. While FedEx cut ties with Amazon, UPS has hitched its signature brown wagons to the retailer-rocket ship, relying on it for growth. Still unclear is how that alliance will fare as Amazon doubles down on a delivery network of its own. Though UPS will benefit from increasing demand for store-to-door package service amid the coronavirus pandemic, the shipper's new CEO, Carol Tomé, will have to keep an eye on what may turn out to be a tricky coopetition arrangement with mighty Amazon.

As we face unprecedented collective challenges, cooperation has become a business superpower.

49.CTW20.UPS

The world’s package delivery leader is also a leader in the emerging, potentially high-margin delivery-drone field. UPS’s Flight Forward unit is partnering with health care systems and others in North Carolina, Virginia, and Utah to deliver patient samples to labs, prescriptions to patients, and supplies to hospitals. Delivery by drone is up to 10 times as fast as by van, as the unmanned aerial craft fly past traffic jams. And since they don’t choke roadways, drones help reduce CO2 emissions.

Change the World

Here are the World's Most Admired Companies for 2019 as ranked in their industries. See who made the list.

This year's Fortune Global 500 generated $27.7 trillion in revenues and $1.5 trillion in profits.

This year's Fortune 500 marks the 65th running of the list.

Here are the World's Most Admired Companies for 2018 as ranked in their industries. See who made the list.

This year's Fortune 500 marks the 64th running of the list.

Here are the World's Most Admired Companies for 2017 as ranked in their industries. See who made the list.

This year's Fortune 500 marks the 63rd running of the list.

Here are the World's Most Admired Companies for 2016 as ranked in their industries. See who made the list.

This year's Fortune Global 500 generated $27.6 trillion in revenues and $1.5 trillion in profits.

This year's Fortune 500 marks the 62nd running of the list.

Business insiders have spoken: Asked which companies they most admire, more than 4,100 executives, directors, and analysts chose these top 50 All-Stars.

The world's 500 largest companies generated $31.2 trillion in revenues and $1.7 trillion in profits in 2014. Together, this year's Fortune Global 500 employ 65 million people worldwide and are represented by 36 countries.

This year's Fortune 500 marks the 61st running of the list. Wal-Mart claims the top spot again. See who made the list.

Global business is back. After limping through a worldwide financial crisis and economic slowdown, the 500 largest companies ranked by revenues shattered all sorts of performance records in 2013: They racked up combined revenues of $31.1 trillion, up 2.5% from 2012, and profits soared 27% to nearly $2 trillion. China’s 95 companies (up from 89 last year) posted $5.8 trillion in revenues. The U.S. has four fewer companies on the list than last year but remains (for now) the country leader, with 128 corporations on the list—including No. 1 Wal-Mart Stores—reporting $8.6 trillion in revenues. 

Wal-Mart stayed on top as its sales crept closer to half-a-trillion dollars. Apple moved into the top five. And UnitedHealth Group continued its steady climb. 

Change The World

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United Parcel Service (UPS), founded in 1907, is a global giant in logistics, package delivery, and supply-chain management. Headquartered in Atlanta, UPS operates in more than 220 countries and territories, offering services ranging from shipping and freight to warehousing and distribution. The company is known for its distinctive brown delivery trucks and uniforms.

Q2 2026

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Q4 2024

UPS (UPS): Company Profile, Stock Price, News, Rankings

legacy

Good morning. My name is Matthew, and I'll be your facilitator today. I'd like to welcome everyone to the UPS second quarter two thousand twenty five earnings conference call. All lines have been placed on mute to prevent any background noise. And after the speakers' remarks, there will be a question and answer period.

It is now my pleasure to turn the floor over to your host, Mr. PJ Guido, Investor Relations Officer. Sir, the floor is yours.

Good morning, and welcome to the UPS second quarter twenty twenty five earnings call. Joining me today are Carol Tome, our CEO Brian Dykes, our CFO and a few additional members of our executive leadership team. Before we begin, I want to remind you that some of the comments we'll make today are forward looking statements and address our expectations for the future performance or operating results of our company. These statements are subject to risks and uncertainties, which are described in our 2024 Form 10 ks and other reports we file with or furnish to the Securities and Exchange Commission. These reports when filed are available on the UPS Investor Relations website and from the SEC.

Unless stated otherwise, our discussion refers to adjusted results. For the 2025, GAAP results include a net charge of $29,000,000 or $04 per diluted share comprised of after tax transformation strategy costs of $57,000,000 which were partially offset by a $15,000,000 gain from the divestiture of the business within Supply Chain Solutions and a $13,000,000 benefit from the partial reversal of an income tax valuation allowance. A reconciliation of non GAAP adjusted amounts to GAAP financial results is available in today's webcast materials. These materials are also available on the UPS Investor Relations website. Following our prepared remarks, we will take questions from those joining us via the teleconference.

If you wish to ask a question, press star and then one on your phone to enter the queue. Please ask only one question so that we may allow as many as possible to participate. You may rejoin the queue for the opportunity to ask an additional question. And now I'll turn the call over to Carol.

Thank you, PJ and good morning. To begin, I want to thank all UPSers for their hard work and efforts as we've made material progress against the strategic actions we laid out in January. Those actions include accelerating the glide down of Amazon volume, transitioning our Groundsaber product and generating savings through our efficiency reimagined initiative. During the quarter, our team of dedicated UPSers remained focused on execution, while keeping supply chains moving and delivering best in class service. Our second quarter 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.

Looking at our second quarter results, consolidated revenue was $21,200,000,000 consolidated operating profit was $1,900,000,000 and consolidated operating margin was 8.8%. As Brian will provide more detail regarding our financial results, I'd like to comment on what we are seeing from a business climate perspective and then spend my time talking about the progress we are making on our strategic action. So first, our thoughts on the business climate. Despite uncertainties around trade policies, in the second quarter, 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. A recent research report from Mackenzie showed that in the face of tariffs and other uncertainties, consumers are trading down, while at the same time splurging. For the first time in three years, consumer spending on discretionary categories like restaurants and automobiles outpaced growth in essential items. And on the commercial side of the economy, manufacturing activity in The U. S.

Remained soft. These macroeconomic dynamics impacted overall market demand as well as demand by customer segment and product. In the quarter, our overall U. S. Average daily volume declined by 7.3%, but due to our strategic actions, we saw a positive shift in the mix of business as revenue declined by just 0.8%.

Moving to the business climate outside of The U. S, trade follows policy and generally tariffs are not good for trade. 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 exceptions resulted in a year over year drop in average daily volume of 34.8% for the month 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. But it's important to remember that with policy changes, trade doesn't stop, it moves.

Given our global integrated network, we are well positioned to service these moves. As an example, in the second quarter, we saw volume in our China to the rest of the world trade lanes increased by 22.4% and we nearly doubled our capacity between India and Europe to meet the growing export demand on that trade lane. Further, with the investments we've made in brokerage capabilities, in the second quarter, nearly 90% of all cross border transactions were processed digitally. Given our proven trade expertise and vast global network, our customers are coming to us for solutions that will help them navigate tariff uncertainty. In fact, so far this year, we've engaged in over 600 supply chain mapping assessments to help customers visualize, evaluate and optimize their global supply chains, including looking at opportunities for nearshoring.

Speaking of nearshoring, last year we announced our plan to acquire Estafetta, a Mexican logistics company. Clearing regulatory and pre closing conditions is turning out to be a slow process, but we continue to be bullish on the opportunity here. Growing our international small package business remains a strategic priority for us and we see an opportunity for outpaced growth in this $99,000,000,000 addressable market. In our Supply Chain Solutions business, global freight forwarding was also impacted by changes in trade policies with revenue falling more than we expected. This softness was partially offset by solid growth in our digital and healthcare subsidiaries as we continue to build out those businesses.

Now to an update on our strategic actions. First, our Amazon glide down efforts are for the most part proceeding as planned. In concert with our network reconfiguration efforts, so far this year, we've closed 74 buildings. Each building had a closing checklist of over 1,000 steps and I'm happy to report that the closures went smoothly with minimal issues. From a staffing perspective, our attrition rate was lower than we anticipated, which resulted in higher expense than we planned.

From a part time hourly position perspective, we believe most of this will correct over time. Further, we've announced a voluntary separation program for all full time U. S. Drivers. We've seen a lot of interest in the program so far and participating drivers will leave UPS starting at the August.

Finally, while our plants are not completed, in concert with the Amazon volume decline, we will be closing more buildings and sorts during the back half of this year. As we told you last quarter, this year we expect to remove approximately $3,500,000,000 in expense from our base business. Part of this effort rests with our efficiency reimagined initiatives, which launched in the first quarter and accelerated in the second quarter. With Efficiency Reimagined, we are redesigning end to end processes to drive savings, like a new global payment strategy. Here, we've centralized how we make and receive payments under a digital first strategy, which will drive efficiency for UPS and improve the customer experience.

Second, during the quarter, we took a hard look at our economy product we call Groundsaver. For UPS, we believe Groundsaver should be a product that complements an array of products used by our customers and not be a product just by itself. During the quarter, we took deliberate pricing actions to manage our ground saver volume. And as a result, the volume in this product declined by 23% year over year. A small portion of the volume decline was directly related to our Amazon Glide Down plan and the rest was primarily related to volume declines from non U.

S.-based e commerce companies. As you will recall, at the end of last year, we in sourced from the USPS the last mile delivery of our Groundsaber product. This decision, while right for the customer experience, pressured our financial results as delivery expenses were somewhat higher than we anticipated. We are working on solutions to relieve this pressure in the back half of the year. Before I wrap up, I want to touch on a positive in our business and that's Healthcare Logistics.

Healthcare Logistics remains a key driver of growth for all three of our business segments. Complex Healthcare Logistics is an $82,000,000,000 addressable market and we are laser focused on becoming the number one complex healthcare logistics provider in the world. To that end, we are leading radio pharma logistics globally and in addition lead U. S. Integrators in terms of seed certified cold chain cross stock building.

Along with growing healthcare organically, we remain committed to inorganic growth too. Like with our previously announced planned acquisition of Ann Lauer Healthcare Group. Ann Lauer supports our focus on complex healthcare and will enhance our cold chain and pharmaceutical transportation capabilities in the Canadian and U. S. Markets.

We expect this acquisition to close before the end of the year. Now moving to our outlook. For our sector, this remains a very unsettling time. Changes in trade policy have not been cemented and the impact on customer demand and the overall economy is unknown. While our customers who have scale may be able to thwart the impact of rising costs due to tariffs, many of our SMB customers may not.

Further, peak plans have not yet been submitted by our customers, which is an indication that they too are having difficulty in forecasting demand for the holiday selling season. Given that, we are not providing any forward looking revenue or earnings guidance. But as Brian will detail, we are focusing on what is within our control, which is the Amazon volume glide down plan, the execution of our network reconfiguration and ongoing efforts to drive productivity. As I wrap up, I want to touch on our financial position. UPS is rock solid strong and so is our dividend.

The UPS dividend is backed by solid free cash flow and a strong investment grade balance sheet. We know how important the dividend is to our investors and you have our commitment to a stable and growing dividend. In closing, over the past five years, we've operated complex world. Today's world is the same, complex and dynamic. But we would argue that the dynamics impacting today's marketplace are very different than the dynamics caused by that pandemic or high inflation or labor disruptions or war.

Changes in trade policies are impacting global trade and demand. It will likely all settle down at some point, but for now it is a very volatile environment. But we're not letting this knock us off our strategic plan. At UPS, we are proactively taking action to put our company on a much stronger footing and position our company well for the future. We are focused on serving our customers, growing in a more complex and economically attractive parts of the market and creating value for our shareowners.

Our founder Jim Casey said, Our horizon is as distant as our mind's eye wishes it to be. We've got our eyes on the future. So with that, thank you for listening. And now I'll turn the call over to Brian.

Thank you, Carol, and good morning everyone. This morning I'll cover three areas, starting with our second quarter results, then I'll discuss progress with the Amazon volume glide down, our network reconfiguration efforts and our efficiency reimagine initiative. Lastly, I'll comment on our capital allocation priorities for the year. Moving to our results, starting with our consolidated performance, in the second quarter revenue was $21,200,000,000 and operating profit was $1,900,000,000 Consolidated operating margin was 8.8%. Diluted earnings per share were 1.55 Now moving to our segment performance and starting with U.

S. Domestic. Through our Amazon volume glide down strategy, we are shifting the mix of our U. S. Business.

We are laser focused on improving revenue quality and the changes we are making are beginning to show up in our results. For the quarter, total U. S. Average daily volume was down 7.3%, primarily driven by our planned glide down of Amazon volume and revenue quality efforts. Total Air average daily volume was down 11.6%.

When excluding Amazon, total Air ADV increased 1.4 driven by healthcare and high-tech customers. Ground average daily volume was down 6.6% year over year and within Ground, Groundsaber ADV declined 23.3% primarily due to the pricing actions we took on e commerce volume. In the second quarter, Groundsaber made up the smallest portion of our total Ground volume that we've seen in two years. This shift is a proof point showing positive product mix improvement. In terms of customer mix, ADV growth within our small and medium sized customers was lower than we anticipated.

Year over year, the SMB growth rate was flat. However, we saw some bright spots in SMB Healthcare, Manufacturing and Automotive. In the second quarter, SMBs made up 32% of total U. S. Volume, a two thirty basis point improvement compared to last year.

Looking at enterprise customers, excluding Amazon, average daily volume was down 10.4% versus last year due to a combination of our revenue quality actions and overall softness in the market. For the quarter, B2B average daily volume finished down 2.3% compared to last year due to softness in manufacturing activity. B2C average daily volume was down 10.9% year over year, primarily due to the actions we took to improve revenue quality. B2B represented 43.7% of our U. S.

Volume, which was a two twenty basis point improvement versus last year. Moving to revenue, for the second quarter U. S. Domestic generated revenue of $14,100,000,000 which was down slightly to last year, mainly due to the decline in Amazon revenue, which was partially offset by increases in air cargo and revenue per piece. In the second quarter, revenue per piece increased 5.5 year over year.

Breaking down the components of the 5.5% revenue per piece improvement, the net impact of base rates and package characteristics increased the revenue per piece growth rate by two fifty basis points. Customer and product mix improvements increased the revenue per piece growth rate by 200 basis points. Lastly, fuel drove a 100 basis point increase in the revenue per piece growth rate. Turning to costs, total expense in the second quarter was flat compared to last year, including an increase in air cargo. Looking at cost per piece, it increased 5.6%.

This was primarily due to the short term pressure we experienced from some of our Groundsaber volume as well as the timing of employee attrition associated with our network reconfiguration. S. Domestic segment delivered $982,000,000 in operating profit and operating margin was 7%. Moving to our international segment.

As Carol mentioned, the trade patterns we anticipated played out about as we expected, but the magnitudes were different, particularly in May when the tariff changes and the de minimis exclusion for products from China took effect. In the second quarter, total international ADV increased 3.9% with all regions growing average daily volume versus last year. International domestic average daily volume increased 1.5% compared to last year led by Canada. On the export side, average daily volume increased 6.1% year over year. U.

S. Trade policy changes during the quarter resulted in a 34.8% decline on our China to U. S. Lane in May and June, which was higher than we expected. Partially offsetting this decline in the second quarter, we saw growth of over 20% out of China to the rest of the world.

At UPS, we run our global network with agility. This allows us to pivot in the areas of opportunity and reduce costs in areas under pressure. With service in over 200 countries, we are where our customers need us to be. During the second quarter, we made over 100 adjustments to add or cancel flights in our Asia, Europe and U. S.

International lanes as our customers responded to changing tariffs and adjusted their supply chain. Turning to revenue, in the second quarter, International revenue was 4,500,000,000 up 2.6% from last year. Revenue per piece declined year over year due to geography mix and lower demand related surcharges. Operating profit in the International segment was $682,000,000 down $142,000,000 year over year, reflecting pressure from trade lane shifts, product trade down, lower demand related surcharges and the investments we are making to expand weekend services in Europe. International operating margin in the second quarter was 15.2%.

Moving to Supply Chain Solutions. In the second quarter, revenue was $2,700,000,000 lower than last year by $594,000,000 90% of the decrease in revenue was due to our divestiture of Coyote in the 2024. Within Supply Chain Solutions, Air and Ocean Forwarding revenue was down year over year. The decline in the Air and Ocean freight was driven by changes in tariffs resulting in demand softness and lower market rates. Healthcare Logistics grew revenue by 5.7% and UPS Digital including Roadie and Happy Returns grew revenue 26.4% year over year.

Lastly, the second quarter, we adjusted our process for how we handle volume in Mail Innovation, improving the profitability of this business. In the second quarter, Supply Chain Solutions generated operating profit of $212,000,000 operating margin was 8%. Turning to cash and share and returns, year to date we generated $2,700,000,000 in cash from operations and free cash flow was $742,000,000 In the second quarter, we made voluntary pension contributions, accelerated investments related to our network reconfiguration and experienced temporary working capital pressure primarily due to changes in tariff. We expect these will normalize in the second half of the year. We finished the quarter with strong liquidity and no outstanding commercial paper.

And so far this year, UPS has paid $2,700,000,000 in dividend. Now let me provide an update on our cost out and network reconfiguration efforts. Related to our Amazon volume reduction actions, we are removing approximately $3,500,000,000 in cost this year, while undertaking the largest network reconfiguration in our history. On our last earnings call, we shared a tracker to help you see our savings progress. Here, we've grouped the associated cost savings into three buckets: variable costs, which primarily captures operational hours semi variable costs, which reflects operational positions and fixed costs, which includes closing buildings and reducing expense from support functions through our efficiency reimagined initiative.

Amazon's average daily volume rate of decline in the second quarter was a little lower than we expected, which followed the first quarter where their ADV rate of decline was higher than we expected. When looking at the 2025, Amazon's ADV declined 13% compared to last year. Now that we are in the second half of the year, we expect to accelerate the pace of Amazon volume decline to approximately 30% year over year in each of the third and fourth quarters. Now let's look at the progress with our network reconfiguration and efforts to remove expense associated with the Amazon volume decline. Starting with variable costs, total operational hours paced down with volume in the first half of the year and we are on track to reach our reduction target of approximately 25,000,000 hours this year.

Moving to semi variable costs, year to date operational positions have been reduced by nearly 9,500. As Carol mentioned, our attrition rate was lower than we anticipated. In terms of part timers, we expect the attrition rate to synchronize over time. For full timers, we recently announced a voluntary separation program for all U. S.

Drivers and one week into the offer, we are seeing a level of interest that's in line with our expectations. And in our fixed cost bucket, year to date, we've completed the closure of 155 operations, including closing 74 buildings. We continue to evaluate the network and the impact of the Amazon volume decline and expect to close additional buildings and operations in the 2025. And while we've been rightsizing the network, we've also deployed additional automation to continue to drive efficiency. Lastly, as Carol mentioned, savings from our efficiency reimagined initiative accelerated in the second quarter.

Putting it all together, we remain on track to achieve our 2025 expense reduction target of about $3,500,000,000 Partially offsetting this reduction is the higher than expected Groundsaver delivery expense. Moving to the rest of 2025, there's a lot of uncertainty right now due to tariff and trade changes and the potential impacts on consumer behavior is unknown. Because of this, we see a risk for greater variability in SMB and enterprise volume. Additionally, in The U. S, while we are confident in the strategic changes we are making with our network reconfiguration and revenue quality focus, two impactful changes remain uncertain.

First, the timing with implementing Groundsaber solutions is pending and second is the full impact of the driver voluntary separation program and related take rate and departure dates. For all these reasons, we are not providing any forward looking revenue or operating profit guidance. Our expectation is that there will be more certainty at the end of the third quarter and we will have a better read on peak and the timing and scale of these initiatives. We are however confirming our 2025 capital allocation expectations. We expect capital expenditures to be approximately $3,500,000,000 We are planning to pay out around $5,500,000,000 in dividends subject to Board approval and we have completed the targeted repurchase of about $1,000,000,000 of our shares.

Lastly, we expect tax rate to be approximately 23.5% for the full year 2025. So with that, operator, please open the lines for questions.

Thank you. We will now conduct a question and answer session. Our first question comes from the line of David Vernon of Bernstein. Sir, please go ahead with your question.

Hi, everyone. Thanks for taking the question. This is Justine Weiss speaking on behalf of David Vernon. So I'm just wondering, is the lack of guidance in some ways a sign that things are worth? Or is this purely about things still being uncertain?

And also, how do you feel about progress on cost cuts being enough to exit with domestic margins at double digits?

Well, Dusty, thanks for your call and question. And I'll start with the rationalization for not providing guidance. First, we debated this a lot. But there's so much uncertainty out there. We are building scenarios and the range of the scenarios, well it's wide enough to drive one of our 18 wheelers through.

So we elected not to provide guidance. Let me tell you why. First, if I look at the volume in July, it's actually a bit better than what we've been seeing. But part of that in The United States anyway was influenced by Amazon Prime Day and other retailers who had similar like promotions. And And so we're not sure that the volume in July is an indicator of the volume for the rest of the quarter.

Further, the volume outside The United States was strong too, but we believe that's because companies were purchasing inventory ahead of the August 1 tariffs. So July while good, we don't think it's a predictor necessarily of the rest of the quarter. Why? Because of the uncertainty. As we look at the tariffs, there are a number of tariffs that are slated to go in on August 1.

We don't know if that's gonna happen or not. There only have been six trade deals that have been negotiated. So there's a lot of uncertainty regarding the tariffs as it relates to the China tariff. That agreement expires on August 12. Now it's rumored that that will be extended, but we don't know.

And so there's uncertainty around tariffs and then there means there's uncertainty around consumer demand. So consider this, at the end of the first quarter, our customers had inventory and they sold that inventory down in the second quarter. They're now at a point where they need to replenish their inventories. And if you're an SMB customer sourcing from China alone, you could see that your cost could increase by 55%. So as we reported, our SMB volume was flat year on year and we just think there might be some risk to SMBs in the third quarter.

We just don't know. Finally, we don't have peak plans yet. And so all these things make the range of revenue for the third quarter very wide. Now, on the expense side, I'm certainly pleased with the progress our team is making in terms of delivering the $3,500,000,000 in cost out that we laid out at beginning of the year. So I'm very pleased with that.

But there are a couple of things that we have to work on. First, the attrition related to our Amazon guideline guide down was not as high as we expected it to be. What we're seeing is that the longer a building is closed, the higher the attrition rate. Majority of the closures that occurred in the second quarter were back end weighted. So we expect the attrition to get higher as time progresses.

So this should take care of itself from a part time hourly perspective. And to address these full time driver roles, we've offered this voluntary buyout. We don't know the takeout yet. We don't know then the cost associated with that takeout or the benefit associated with that takeout, so that's to be seen. And finally on Groundsaver, while we're pleased with the customer experience that we have been providing with Groundsaver, the algorithm that we modeled for delivery density didn't hold true in the second quarter.

And as a result, we had more delivery stops than we had anticipated. We're working through that algorithm, but we have also reengaged with the USPS. There's new leadership there. You have excess capacity. So we're working through a number of different solutions on Groundsaver.

We don't know the outcome of that yet, but we expect to know that hopefully in the quarter. So at the end of all of this, by the end of the third quarter, we think we'll have more certainty on tariffs. We think we'll have more certainty on peak. We think we'll have more certainty on cost so that we can come back and give guidance for the fourth quarter. Now with all that being said, Brian, maybe you could kind of give some shaping for the third quarter just to help people with our model.

Yes. Thanks, Cheryl. And I think Carol hit on all the right points, right? So volume remains depressed right now, right? And there's a possibility, particularly with our retail and SMB customers that, look, it could get better, it could get a little bit worse as we go in.

And we're dealing with those higher the lower attrition and higher ground saver costs as we've got. So as you think about Q3 margins, they could be pressured a little more than we thought earlier in the year, even more than the kind of normal seasonality that we have from Q2 to Q3. International and FCS, I mean, you see in the performance, things are holding pretty well. We expect those to be about the same. And we're going to get clarity as we go through the quarter on this, right?

What we can say, look, is we've got a high degree of confidence and I think it's starting to show in the results that the actions that we're taking are setting ourselves up for the longer term, Right? The rep per piece is turning. The the growth in international is is positive. And this is gonna put us in a in a much more much better competitive position, not only to drive growth in the future, but expand margin.

All really helpful. So it sounds like basically exiting domestic margins at double digits is just a bit uncertain right now.

We'll have more certainty by the end of the third quarter. Yeah.

Thank you. Our next question comes from the line of Ariel Rosa of Citigroup. Please go ahead with your question.

Hi. Good morning. This is Ben Moore of Citi on for, Ari Rosa. Thanks for taking our question. At this rate of the China to US parcel lane shifts to the rest of Southeast Asia, like Vietnam or Thailand to The US, when do you expect to fully lap those costs on the trade lane shifts?

And with your total investments in infrastructure in the rest of Southeast Asia as it stands, is there enough excess capacity to handle these shifts, or will you need to make additional infrastructure investments into Southeast Asia in order to handle these shifts?

Well, we're really pleased with how our integrated network is meeting the demands of our customers. And, Kate, why don't you give some color?

Yeah. Absolutely. So I think you may recall we engaged with tens of thousands of customers to see how we could help them with supply chain shifts. Some of them were able to move faster than others. Some are waiting for the outcome of the tariffs.

But that said, we've unlocked the growth of rest of world to rest of world. Now, the China to US, as we indicated, was down and then the China rest of world is up. We have shown agility. And to the question on capacity, we are shifting our resources around and we do it very quickly so that we can capture that growth. In terms of investments, we actually were building out an Asia diversity strategy for the last few years.

With that, actually were seeing, call it 10% type growth that we're unlocking. So it's not a cost, it's actually alignment of resources now to the increased trade lane flow outside of The U. S. So we are capturing that. China again, rest of world over 20%.

You mentioned Southeast Asia, Malaysia, Vietnam, all growing over 20%. We've doubled India. So we are seeing that UPS' global integrated network is capturing that growth. Now, as we deal with the revenue per piece changes, so again, it's not the cost side as much as the revenue per piece.

We are unlocking that profitable growth and we will be harnessing more of it as the Indias get stronger. You'll see a heavier weighting and that too is profitable to offset a China.

And maybe just a couple of other comments about investments because to Kate's point, we got ahead of this. We are expanding our air hub in Hong Kong. We are building a brand new air hub in Philippines. And that positions us very well for these changing shifts in trade lanes. I think it's important to remember that of the 80 largest trade lanes in the world, 49 have an Asian country on one end of the trade lane, and 22 have an Asian country on both ends of the trade lane.

So the investments that we laid out several years ago now, we'll be able to capitalize on these shifting trade lanes.

Great. Thanks so much. And maybe if I can ask a follow-up more domestically. We've seen smaller parcel carriers taking share in the parcel market, names like LaserShip, SpeedX, some gig economy carriers that compete with your RoTE. Do you see them, as you work on, existing or prospective customers that put out RFPs to bid?

What's your view on their strategy? They seem to be com competing on price and less comprehensive service. What's your strategy to maintain your competitive moat?

Well, competition's good. I will say that our offering is very different than theirs because we do operate an end to end network. And I mean end to end from one coast to the other coast. And every aspect of the supply chain we can meet our customers' needs. From a market share perspective, we look at the addressable market and for us we define the addressable market as the market that excludes Amazon and excludes packages that are less than £1.

That market in the second quarter was soft, but we gained share. We're very proud of the fact that we gained share in that market even in this highly competitive environment.

And Carol, if I can just add one thing to that because I think it's really important that the rep per piece growth of 5.5% is starting to show that the strategy of dynamically changing the volume in the network is working, right? And if you look at the segments where it really matters for us, SMB, our penetration was up two thirty basis points. Commercial, penetration was up two twenty basis points. We actually saw our zone, which means people who are using our end to end network over long distances get longer for the third straight quarter, right? The pace of the weight decline, which has been an industry trend is slowing, right?

So we are shifting the volume and the characteristics in our network to customers that see value in our service offering.

And we can talk a lot about the capabilities that we offer that our competitors do not. Like on healthcare we have special labels that our competitors do not. Or we have RFID tagging on our packages that our customers do not. Or we have returns, box less, label less returns that our competitors do not. So from a capability perspective, we will continue to invest in the capabilities that set us apart from our competitors.

UPS (UPS) Q2 2025 Earnings Call Transcript

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