UPS Faces Challenges with Quarterly Performance Amid Changing Trade Policies

United Parcel Service (UPS), a global logistics leader, has reported a noticeable drop in its second-quarter results for 2025. The company continues to struggle against external economic shifts, including changing trade policies, consumer behavior fluctuations, and lower demand for international shipping.

As industries around the world adjust to tighter financial conditions and evolving government rules, UPS finds itself in a challenging position to maintain steady performance.

UPS Quarterly Results Reflect Global Economic Strain

UPS announced that its second-quarter consolidated revenue fell 10.9% year-over-year, coming in at $22.1 billion, compared to $24.9 billion in the same quarter last year. Operating profit dropped 20.2%, highlighting the deep impact of macro-level disruptions, such as reduced consumer spending, labor inflation, and weak export demand.

The company’s domestic segment, typically a stronghold due to U.S. e-commerce growth, also saw an 8.3% drop in revenue. International operations, more vulnerable to trade and supply chain shifts, recorded a 13.3% decline in revenue. Additionally, the Supply Chain Solutions segment plummeted by 23.4%, signaling broader issues beyond just parcel delivery.

Changing Trade Policies Hinder International Growth

Trade policies remain a critical influence on UPS’s performance. With ongoing geopolitical tensions, particularly between the U.S. and China, global shipping volume has slowed. New tariffs, customs procedures, and shifting import/export priorities have added complexity and cost to international operations.

According to the World Trade Organization (WTO), global merchandise trade volume is expected to grow by only 0.8% in 2025, compared to 1.7% in 2024. These projections point to a slow recovery in global trade, which directly affects companies like UPS that depend on international shipping lanes for a significant portion of their revenue.

The European market also poses hurdles. The uncertainty surrounding post-Brexit logistics, plus ongoing regulatory changes in cross-border commerce, continues to increase UPS’s operating costs and delivery times across the EU.

Labor Costs and Contractual Obligations Add to the Burden

In addition to external trade pressures, UPS is dealing with rising labor costs. After successfully negotiating a new contract with the International Brotherhood of Teamsters last year, the company saw an increase in employee wages and benefits. While this deal avoided a potentially damaging strike, it has also increased the financial burden on the company’s U.S. operations.

CEO Carol Tomé highlighted during the earnings call that while UPS remains committed to supporting its workforce, cost-efficiency and automation will be key strategies moving forward to manage this pressure.

UPS is continuing to invest in technological upgrades, such as AI-powered logistics, smart warehouses, and route optimization software. These advancements are expected to reduce long-term expenses, although their near-term return remains limited.

E-Commerce Trends Shift Post-Pandemic

The pandemic-era e-commerce boom provided a strong boost to UPS earnings in 2020 and 2021. However, as consumers return to brick-and-mortar retail, the pace of online orders has stabilized. Growth in this sector is now slower and more competitive.

Major clients like Amazon, Walmart, and Target are also expanding their own delivery capabilities, reducing dependence on third-party carriers like UPS. This shift weakens UPS’s volume, particularly during seasonal peaks.

Despite efforts to regain momentum through services like UPS Premier, which focuses on time-sensitive deliveries such as healthcare and pharmaceuticals, volume remains under pressure.

Supply Chain Disruptions and Capacity Glut

Global supply chains are still dealing with the aftershocks of the COVID-19 crisis. Port congestion, raw material shortages, and inflation have led to excess shipping capacity across the logistics industry. In many cases, there are simply more trucks and planes than there are parcels to move.

This capacity glut results in lower pricing power for UPS, which is being forced to offer more competitive rates, shrinking its profit margins. Although the company continues to optimize its network and reduce underperforming assets, the near-term profitability remains under strain.

Strategic Focus for the Future

UPS is not standing still. The company has rolled out a comprehensive transformation strategy under the banner of “Better, Not Bigger”, which focuses on customer-centric services, digital transformation, and disciplined capital allocation.

Some highlights of this strategy include:

• Targeting high-value customers, especially in healthcare logistics.
• Investing in sustainability to achieve carbon neutrality by 2050.
• Enhancing small business services with UPS Store and My Choice for Business platforms.

Still, the road ahead remains steep. For UPS to return to sustained growth, global economic conditions must stabilize, and trade policy friction must ease.

Final Thoughts 

UPS is at a critical crossroads. The company is navigating a post-pandemic world filled with economic uncertainty, rising labor costs, trade policy volatility, and shifting consumer behavior. While it remains a titan in global logistics, adapting to these structural shifts will be essential for future growth.

As we look forward, UPS’s focus on innovation, efficiency, and premium service offerings will determine how well it weathers the storm. For now, both investors and industry analysts will be watching carefully to see how the company responds in the next quarter.

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This content is made for learning only. It is not meant to give financial advice. Always check the facts yourself. Financial decisions need detailed research.