UPS shift away from Amazon shows bigger payoff
United Parcel Service parcel volumes fell during the second quarter as it completed the phase out of low-margin Amazon business, but revenue per piece and profits increased behind a focus on premium shipments, efficiency gains, and strong pricing amid ongoing economic volatility.
UPS has worked with Amazon over 18 months to eliminate unprofitable shipments from its network, which accounted for half the volume tendered by the retail marketplace — its largest customer. In total, UPS eliminated 2 million pieces per day of Amazon volume and $4.5 billion in related expenses. The drawdown, along with slower overall parcel demand, led UPS to initiate a network reconfiguration aimed at aligning capacity with market demand. The initiative involved closing 150 parcel sort facilities, eliminating 30,000 positions and 50 million labor hours, and adding technology to improve the throughput of existing distribution stations.
UPS shift away from Amazon shows bigger payoff – FreightWaves