United Parcel Service has faced a sustained downturn in package volumes and revenue since 2022. After peaking at an average daily volume of 25.25 million packages in 2021, volumes fell to 24.29 million in 2022, 22.29 million in 2023 and 22.42 million in 2024. In the first nine months of 2025, average daily volume slid further to 19.97 million. Correspondingly, total revenue declined from $100.34 billion in 2022 to $90.96 billion in 2023, recovered slightly to $91.07 billion in 2024 and reached $64.18 billion over the first three quarters of 2025. Average revenue per package rose from $12.32 in 2021 to $14.46 in the first nine months of 2025, reflecting UPS’s strategy of reducing low-margin Amazon shipments while raising overall fees. Diluted earnings per share plunged from $14.68 in 2021 to $4.46 through September 2025, and adjusted operating margin contracted from 13.5% in 2021 to 6.8% over the same period.

In response to volume declines and margin compression, UPS announced over $3.5 billion in expense reductions in 2025, driven by headcount trimming, route optimization and greater automation at key sorting facilities. A new Teamsters contract signed in 2024 increased guaranteed labor and pension expenses, but UPS offset some of that burden by exiting its Coyote Logistics unit and redeploying capacity toward higher-margin healthcare and business-to-business deliveries. Fuel-surcharge adjustments and peak-season surcharges contributed to margin preservation, yet digital investments and a string of regulatory fines and impairment charges weighed on full-year profitability. As a result, adjusted operating margin fell to an estimated 6.8% in the first nine months of 2025, compared with management’s initial annual target of 10.8%.

Analysts project revenue for full-year 2025 to decline roughly 3% versus 2024, with diluted EPS set to mirror that drop. For 2026, consensus forecasts call for flat revenue growth and a 7% rise in earnings per share, assuming cost-cutting measures begin to offset headwinds. However, the indefinite grounding of UPS’s MD-11 freighter aircraft—representing about 9% of its air network—after a fatal accident in late 2025 has strained holiday operations and could further compress margins into the first half of 2026. Additional risks include continued soft consumer and industrial demand, potential tariff-driven cost increases for small-business customers and competitive pressure from other integrators. Investors will be watching UPS’s January 27 earnings release for evidence that volume trends are stabilizing and that higher-margin segments can scale sufficiently to improve overall profitability.