Will UPS' Move to Reduce Amazon Deliveries Backfire?

By David Jagielski, CPA – Mar 23, 2026 at 6:00PM ESTKey PointsUPS will shed billions from its top line as the company cuts back on Amazon shipments.The company has been slashing thousands of jobs in an effort to get leaner and more efficient.Last year, United Parcel Service (UPS +1.97%) announced that it would be slashing the business it does with Amazon by more than 50%. The reduction is set to be complete by the latter half of this year, and the result will be a smaller and leaner operation for UPS. The company has made the controversial move in order to improve its margins, so that its financial results will be stronger. But at the same time, it's taking away a big growth opportunity for its business. Could this move end up backfiring for UPS and its investors? Image source: Getty Images. What does this mean for UPS? Cutting a big chunk of business from a major customer is never an easy move, but the benefit for UPS is that it will be able to get leaner and cut a lot of overhead and staff related to Amazon deliveries. Meanwhile, it can reallocate existing efforts to shipments with better margins, thereby improving overall profitability. The company is cutting 30,000 jobs this year as a result of the reduced deliveries. Last year, it eliminated 48,000 jobs. In terms of dollars, this amounts to around $5 billion less in revenue for UPS. That represents approximately 6% of the $88.7 billion in revenue that UPS generated last year. By being leaner and more efficient, that can result in greater margins and improved profitability. But it can also make it more difficult for the company to grow, at least in the short term. ExpandNYSE: UPSUnited Parcel ServiceToday's Change(1.97%) $1.89Current Price$97.75Key Data PointsMarket Cap$81BDay's Range$96.94 - $99.3552wk Range$82.00 - $122.41Volume160KAvg Vol6.5MGross Margin18.53%Dividend Yield6.84% Why this can be a net win for UPS in the long run In the past few years, UPS' profit margins have been in single digits, around 6% to 7%. That's not terribly high, and if the company is able to improve upon that, it may be able to significantly offset a decline in revenue from doing less business with Amazon. The silver lining may be that by having a more profitable overall business with better margins, UPS' earnings may not necessarily deteriorate despite shedding billions from its top line. CEO Carol Tomé says that, "2026 will be an inflection point in the execution of our strategy to deliver growth and sustained margin expansion." I don't think cutting down on Amazon volumes will backfire for UPS. While the company may experience a setback in its growth, that's likely to be temporary given how vast e-commerce has grown over the years and all the companies involved. While it might still be a challenging road ahead for UPS, the stock looks like it could be a good one to buy and hold for the long haul, as focusing on profit margins should pay off for the business.Read NextMar 20, 2026 •By Reuben Gregg BrewerCould Amazon and USPS' Failing Contract Negotiations Help UPS and FedEx?Mar 17, 2026 •By Justin Pope1 Magnificent Industrial Stock Down 58% to Buy and Hold ForeverMar 17, 2026 •By Reuben Gregg Brewer2 Dividend Stocks to Double Up on Right NowMar 16, 2026 •By Reuben Gregg BrewerShould You Buy United Parcel Service While It's Below $120?Mar 14, 2026 •By Lee Samaha5 Things Every UPS Investor Needs to KnowMar 14, 2026 •By Reuben Gregg BrewerFedEx Just Took UPS's Spot as the Biggest U.S. Parcel Firm. Which Stock is a Smarter Buy in 2026?About the AuthorDavid Jagielski, CPA, has been a contributing Motley Fool stock market analyst covering healthcare, consumer staples, consumer discretionary, and technology stocks since 2017. David has more than 10 years of experience in finance roles across businesses of different sizes and sectors. He holds a Certified Public Accountant designation in Canada.TMFdjagielskiStocks MentionedUnited Parcel ServiceNYSE: UPS$97.75(+1.97%)+$1.89AmazonNASDAQ: AMZN$210.15(+2.33%)+$4.78*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.