UPS Volume Plummets 8.3% to 4.4B as Dividend Yield Tops 6.5%
UPS volume plunged 8.3% to 4.4B parcels as it retreats from low-margin last-mile work in response to Amazon insourcing 6.7B deliveries in 2025. The company now yields 6.5% but carries a >100% payout ratio, has shed unprofitable contracts and seen its shares drop 18% this month.
1. Parcel Market Shift
Amazon processed 6.7B parcels in 2025, surpassing USPS’s 6.6B after a 9.8% increase, while UPS deliveries fell 8.3% to 4.4B as volumes from third-party contracts migrated to Amazon’s insourced network. Industry volume was flat at 23.9B, with alternative carriers growing 13% to 2.6B units.
2. UPS Strategic Retreat
UPS is consolidating ground hubs and reducing last-mile investments to focus on higher-value B2B and heavy cross-zone shipments, pulling back from low-margin consumer deliveries that represent 75% of the parcel market. This shift aims to leverage premium services where revenue per parcel is higher despite a smaller addressable base.
3. Financial Strain and Share Reaction
The company increased its dividend yield to 6.5% while pushing its payout ratio above 100%, reflecting limited free cash flow as unprofitable contracts are shed. Shares have fallen 18% over the past month amid concerns over volume declines and uncertain turnaround prospects.