UPS Volume Is Still Falling. Does Better Pricing Make Up For It?

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Shares of United Parcel Service (UPS) trade at 18.3 times earnings, compared with 23.0 for the S&P 500. Investors paying that price need to understand what they are buying, and the company’s priorities have changed. During the fiscal Q2 2025 earnings call in July 2025, management reported a 7.3% drop in the number of packages UPS handled each day in the U.S. Executives reported an 8% decline on the April 2026 call. On the July 2026 call, management said the decline had narrowed to 3.3% as the planned cut in Amazon volume ended. So what else is management stressing?

UPS Now Talks Up Its Revenue Per Package

Management now emphasizes revenue per piece, which measures the amount UPS earns on each package. During the fiscal Q2 2026 call in July, executives said this metric rose 9.3% from a year earlier. Base rates and a better customer mix drove more than half of that increase, management said, with fuel making up the rest.

Daily package counts mattered while UPS reshaped its network. Management said on the fiscal Q1 2025 call that the company was executing the largest network reconfiguration in its history. By the fiscal Q2 2026 call, executives said UPS had eliminated about 2 million pieces per day of lower-quality Amazon volume.

In fiscal Q2 2026, higher revenue per package came with higher overall sales. That did not happen in fiscal Q1 2026, when revenue fell 1.6% even as revenue per package rose 6.5%. UPS generated $22.8 billion in revenue during fiscal Q2 2026, up 7.6% from a year earlier. Over the past twelve months, however, revenue was 0.4% lower than in the twelve months before, so one strong quarter is not yet a trend.

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How Much Of UPS Do Premium Customers Make Up?

Smaller business customers generated 34.5% of U.S. volume for UPS in fiscal Q2 2026, an increase of 250 basis points from a year earlier. Daily volume for this group grew 4.3%. On the earnings call, management said UPS is fully focused on capturing premium volume from smaller businesses, healthcare and business-to-business customers.

Business-to-business customers represent a larger share, accounting for 43.8% of U.S. volume. Daily volume for these shippers fell 3.2% from a year earlier, a decline 190 basis points smaller than in fiscal Q1 2026. All of these customers operate within a U.S. package business that still forms the bulk of UPS, making up 67.1% of company revenue in fiscal 2025. Revenue for this unit fell 1.4% from fiscal 2024.

UPS brought in over $3 billion of healthcare revenue in fiscal Q2 2026, representing more than 13% of the company’s total for the quarter. In September, UPS reached an agreement through Happy Returns to handle label-free returns for TikTok Shop sellers. Reuters said that this specialized service is more profitable than typical e-commerce deliveries. So the move to premium customers is working for smaller businesses, but not yet for business-to-business shipments, which make up more of U.S. volume than smaller businesses do.

Has Better Pricing Lifted UPS’s Operating Margin?

Better pricing has not yet lifted UPS’s reported operating margin. UPS posted an operating margin of 7.3% over the twelve months to June 2026, down from 9.3% a year earlier. Reported operating profit for fiscal Q2 2026 was $930 million, compared with $2.1 billion on management’s adjusted measure. These reported results included $891 million in after-tax transformation charges, stemming mostly from employee separation costs tied to the Driver Choice program.

Management also expects the gap between growth in revenue per piece and growth in cost per piece to narrow a bit in fiscal Q3 2026, because the year-earlier quarter already included some of UPS’s pricing actions. For an investor, this makes the shift reassuring on pricing and still unproven on profit. If the pricing gains fade before premium volume grows, investors own a smaller U.S. network without the higher revenue per package that management has made its case on.

Revenue per package is holding up so far and smaller-business volume is growing, but business-to-business volume continues to fall. Daily volume for business-to-business customers is the number to watch when UPS reports fiscal Q3 2026 results, expected on or around October 27, 2026.

Is Too Much Of Your Wealth Riding On One Stock?

What United Parcel Service’s management talks about has changed, and holders are left to work out why. When one position grows into a large part of your wealth, a sharp fall can hurt your whole plan, and selling to spread the money out can bring a large tax bill. Our partner advisory firm offers a free strategy review of ways to protect a concentrated position and unwind it with less tax.

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