UPS shares tumbled after its outlook for volume and profit margins underwhelmed investors looking for stronger signs of improvement as the courier unwinds its relationship with Amazon.com Inc. UPS CEO Carol Tomé says the Amazon glide down “is behind us.” In place of the low-margin e-commerce packages that Tomé has said were “dilutive” to profits, UPS is focusing now on fewer parcels that yield higher margins. She speaks to host Romaine Bostick.
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What Carol Tome said
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UPS CEO Carol Tomé said the company's strategic transformation, launched 18 months ago to reduce Amazon volume and reconfigure its network, has returned the company to profit and revenue growth, setting up a strong 2027. She defended domestic margins, noting second-quarter margin was up 400 basis points sequentially and 100 basis points year over year, with continued expansion expected in the back half. Tomé attributed volume declines to the Amazon glide-down and said revenue per piece growth will moderate due to fuel volatility and tough comparisons. She said the Amazon glide-down is behind them and the company is focused on growth in other segments. Tomé highlighted complex healthcare logistics as a major growth area, with the market growing around 6% and UPS growing faster. She cited automation investments, with 68.5% of US volume through automated buildings, lowering cost per piece by 28%. On the economy, she said China-to-US trade lanes grew 22% in Q2 and Asia-to-Asia volumes rose 14%, with a resilient US consumer. She said protecting the dividend is job one, and full-year cash flow will exceed dividend obligations.
Key takeaways
UPS will continue growing profit and earnings in the back half of 2026, with runway for a really good 2027.
Second-quarter domestic margin was up 400 basis points sequentially and 100 basis points year over year.
68.5% of US volume flowed through automated buildings at end of Q2, with cost per piece 28% lower in automated facilities.
China-to-US trade lane grew 22% in Q2; Asia-to-Asia volumes rose 14%.
Full-year cash flow will exceed dividend obligations; a $1 billion driver buyout program hit Q2 cash flow.
1:32Is that a reflection of what you've lost from the Amazon business or is that more related to tariffs and other economic issues?
5:00Is there some sort of floor either that you want or a contractual floor that maybe you have to abide by?
5:40Is that the growth story that investors should be focusing on?
6:49How much does that help your cost structure going forward particularly in the context of meeting some of the guidance that you've given?
7:49Is the economy healthy, the global economy right now healthy enough?
8:53When does that kind of rightsize itself to maybe give investors a little bit more comfort that they are going to get at least what they think they're deserved?
Shares of UPS down about 6% after the company reported earnings this morning. The company did actually beat on most of the main metrics. Adjusted EPS above analyst estimates. Revenue in the quarter above analyst estimates. And the company boosting its full-year sales forecast as well as providing an adjusted earnings forecast ahead of analyst estimates. A testament here to a lot of changes that the CEO has made over the last few months to wean themselves off some of the lower margin business and move deeper into some of the higher margin products and services. Pleased to say that the CEO of UPS, Carol Tome, she joins us right now on the heels of that earnings report. And Carol, I do want to start off with the guidance for the rest of the year. It looks relatively strong and I know you've talked in the past that not only 2026 would be a good year for this company, but you alluded last quarter that 2027 could potentially be even better. Are we still on track to see that?
Well, Roma, it's good to be with you and you know, I'm delighted to say that we launched a strategic transformation of our company 18 months ago to glide down Amazon volume and reconfigure our network. And we did that and then we returned to profit and revenue growth. And as you looked at the guidance for the balance of the year, we will continue to grow our profit and earnings, which gives us runway for a really good 2027.
Talk to me a little bit about the domestic business. And I mean, when I was looking at the share drop today and we spoke to some analysts, some people seem to raise some concerns here about the margins on the domestic business, why they weren't as strong as some folks were looking for, as well as the guidance going forward. Is that a reflection of what you've lost from the Amazon business or is that more related to tariffs and other economic issues?
Well, we were quite pleased with our margin performance in the domestic business in the second quarter. It was up 400 basis points from what we reported in the first quarter and up 100 basis points year over year. If you look at the back half of the year, we guided to continued margin expansion year-over-year in both the third and fourth quarter because we've added new productivity into our business to help lower the cost per piece while leaning into the segments of the market that really value our end-to-end capabilities like complex healthcare logistics and SMB and B2B. And when you think about those segments, we saw good growth in the second quarter. Healthcare reported its second $3 billion quarter in a row. SMB volume in the United States was up over 4% year over year and we're gaining share in industrial and automotive. So I'm super pleased about the progress that we're making and the results that we'll deliver.
I do want to talk about healthcare in a bit, but I'm just curious though on the domestic business because I mean there is a disparity between what we saw on the adjusted numbers and on the GAAP basis which seems to suggest that some of the positive that we saw is coming from cost cuttings. But as we get into that second half of the year and you could correct me if I'm wrong, you're saying US revenue per piece growth is going to be about four to four and a half percent in the second half. That would be down sequentially from 9 plus percent that we saw in Q2. Average daily volume is also supposed to decrease although I think either you or the CFO alluded that that was more seasonal factors. Just kind of square the circle as to why there seems to be some deceleration with regards to the US business.
Yeah, happy to do so. So first of all on the volume side, while volume will be down year over year, that's a reflection of the Amazon glide down dynamic because while the third and fourth quarter of last year we glided down volume in the first and second quarter of this year. So the year-over-year comparison makes the volume look negative. But if you ignore Amazon, we'll actually grow volume in our US business just like we did in the second quarter if you ignore Amazon. On the RPP differences, in the second quarter we had strong RPP growth driven by solid base rates, customer mix improvements as well as fuel. And fuel was about half of that RPP growth in the second quarter. There's a lot of volatility in the fuel market as you know. We think some of the strength in fuel will carry but not all of it. So we are expecting not to see the kind of benefits in the back half of the year as we did in the second quarter. We're also up against a couple of tough comparisons year over year because we made some price adjustments last year that aren't repeating this year. So all in all, as long as we have our RPP growing faster than our cost per piece, we're going to expand our margin.
With regards to the relationship with Amazon, you said on the call you're basically about 9% of your revenues now from Amazon. That's significantly lower than the 13, 14% that we saw a few years ago. Are you planning to sort of get that share down even further? Is there some sort of floor either that you want or a contractual floor that maybe you have to abide by?
Our glide down is behind us. We're all about focusing on growth, optimizing Amazon volume in our network. It's an important customer for us, but we're going to grow in other areas. So where the percentage of Amazon volume lands up will be a function of growth in other segments and we'll report on that as we go.
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Tome, C. (2026, July 28). UPS CEO Carol Tomé Talks Outlook After Scaling Back Amazon Ties | Bloomberg Talks [Interview transcript]. Bloomberg Podcasts. CEOInterviews.AI. https://ceointerviews.ai/interview/1139802/
MLA
Carol Tome. "UPS CEO Carol Tomé Talks Outlook After Scaling Back Amazon Ties | Bloomberg Talks." Bloomberg Podcasts, 28 Jul. 2026. Transcript, CEOInterviews.AI, https://ceointerviews.ai/interview/1139802/.
BibTeX
@misc{tome2026_1139802,
author = {Carol Tome},
title = {UPS CEO Carol Tomé Talks Outlook After Scaling Back Amazon Ties | Bloomberg Talks},
howpublished = {Interview transcript, Bloomberg Podcasts. CEOInterviews.AI},
year = {2026},
month = {jul},
url = {https://ceointerviews.ai/interview/1139802/},
note = {Speaker-attributed transcript with timestamps}
}
