In November, the Federal Aviation Administration ordered an indefinite grounding of UPS’s MD-11 freighter fleet—representing roughly 9% of its total aircraft—after a fatal crash in Louisville. Investigators are examining a jet component with a history of failures on McDonnell Douglas airframes. The grounding occurred during peak holiday season, forcing UPS to reroute cargo onto alternative aircraft types, heavy‐duty trucks and partner carriers. Executives warn that the operational disruption and potential regulatory fines could compress fourth‐quarter margins by several hundred basis points and strain network reliability through early 2026.

Since the pandemic peak in 2021, UPS’s average daily package volume has dropped from 25.25 million to 19.97 million in the first nine months of 2025. Total revenue slid from $97.29 billion in 2021 to $64.18 billion over the same period in 2025, while adjusted operating margin compressed from 13.5% to 6.8%. Diluted EPS tumbled from $14.68 to $4.46. The company has partially offset volume losses by raising average revenue per piece—up from $10.87 to $14.46—but elevated fuel, labor and pension costs from its new Teamsters contract have eroded profitability. A threatened strike last year prompted some shippers to shift business to alternative couriers.

Management has targeted $3.5 billion in cost reductions in 2025 and is refocusing volumes toward higher‐margin healthcare, small‐to‐medium business and business‐to‐business segments. It plans further automation and facility consolidations to boost productivity. Analysts forecast roughly flat full‐year revenue for 2026 and a 7% increase in EPS as these initiatives take hold. However, persistent weakness in U.S. manufacturing, trade-tariff pressures on SMB customers and the lingering effects of the MD-11 grounding introduce uncertainty around margin recovery and cash flow generation in the near term.