In a challenging global economic environment, UPS reported disappointing second-quarter earnings for 2025 on Thursday, with revenue continuing to decline across most business segments. The shipping giant's results fell short of Wall Street expectations, reflecting broader macroeconomic pressures and shifting trade policies.
The company reported total revenue of $21.2 billion for the quarter, down 2.7% year-over-year. Basic earnings per share came in at $1.55, missing analyst expectations of $1.57 and representing a 13.4% decline from the same period last year. Operating profit totaled $1.8 billion, a 6.3% decrease.
Diverging Performance Across Business Units
UPS's various business segments showed markedly different performance:
- U.S. Domestic Package: Revenue of $14.08 billion (down 0.8%) with average daily volume falling 7.3% to 16.55 million pieces. However, revenue per piece increased 5.5% to $13.03.
- International Package: Revenue grew 2.7% to $4.37 billion with daily volume up 7.1%, though revenue per piece declined 2.6%.
- Supply Chain Solutions: Revenue dropped 18.3% to $2.65 billion, primarily due to the divestiture of Coyote Logistics.
"We've made substantial progress on the strategic actions we outlined in January," said UPS CEO Carol Tomé during the earnings call. "Our team remained focused on executing with efficiency, ensuring supply chain fluidity, and delivering the industry's best service."
Economic Headwinds and Consumer Shifts
Ms. Tomé highlighted several macroeconomic challenges affecting performance. While the U.S. economy showed resilience, small package volumes suffered from near-historic lows in consumer confidence. She cited McKinsey research showing changing spending patterns, with consumers increasing discretionary spending on categories like dining and automobiles while pulling back on essentials.
"For the first time in three years, consumer spending growth on non-essentials has outpaced essentials," Tomé noted. "Meanwhile, U.S. manufacturing activity remains soft. These dynamics are affecting demand across our customer segments."
Trade Policy Impacts
The CEO specifically called out trade policy challenges, stating that U.S. tariffs and trade policies "are not trade-friendly." She pointed to the China-U.S. trade lane as particularly affected, where daily package volumes plunged 34.8% year-over-year in May and June following tariff increases and elimination of exemptions.
UPS continues to execute its strategy of reducing reliance on Amazon, with plans to cut Amazon package volume by more than 50% in its network by June 2026 under their mutual agreement. The company is transitioning to new ground delivery products and implementing efficiency initiatives to offset these volume reductions.
Looking ahead, UPS maintained its full-year 2025 financial targets but acknowledged ongoing uncertainty in the global trade environment. The company expects to complete its $2 billion efficiency program by year-end, which it says will strengthen its competitive position.