The company is deliberately shifting its business focus to higher-yielding volume, including healthcare and SMBs. This strategy has led to planned volume declines from its largest customer (over 50% by June 2026) and pricing actions on certain e-commerce volumes, partially offset by growth in SMB volume.

In January 2025, UPS acquired Frigo-Trans, a German cold-chain logistics provider, enhancing its international healthcare logistics capabilities. Additionally, an agreement to acquire Andlauer Healthcare Group (AHG), a North American supply chain management company, is expected to close in late 2025, further expanding specialized cold-chain solutions.

The company insourced its former SurePost product, replacing it with Ground Saver, a new domestic economy service. While this initially pressured operating results due to higher pickup and delivery costs, management is taking pricing actions to manage volume and reduce costs related to this new product.

Management is executing its Network Reconfiguration initiative, expanding automation and operational sort consolidation in the U.S. Domestic network. This includes closing daily operations at 74 leased and owned buildings (68 permanently closed) and an expected reduction of approximately 20,000 operational workforce positions to enhance efficiency.

The company incurred $811 million in costs for Transformation 2.0 and $444 million for Fit to Serve by June 30, 2025, with anticipated remaining costs of $75 million and $20 million, respectively, in 2025. Management has begun realizing expected benefits from these programs, including $1.0 billion in savings from Fit to Serve and an expected $3.5 billion from Network Reconfiguration and Efficiency Reimagined.

The Mail Innovations reporting unit experienced cost increases in Q1 2025 due to higher purchased transportation rates from an expired primary vendor contract. Management has since utilized alternative vendors and taken action to address revenue quality, with cost increases beginning to dissipate in Q2 2025.

Global trade policy changes, including enacted tariffs and de minimis exclusions, took effect in Q2 2025, leading to shifting trade lane volumes and reduced margins in the International segment. Specifically, volumes on the China-to-U.S. lane declined, although partially offset by growth on other trade lanes.

Approximately $1.2 billion of the consolidated goodwill balance ($4.8 billion total) is represented by Global Freight Forwarding, Roadie, and Global Logistics and Distribution units, which exhibit a limited excess of fair value above carrying value, reflecting a greater risk of impairment in future periods due to macroeconomic and geopolitical conditions.

A collective bargaining agreement covering approximately 11,000 employees in Canada expired July 31, 2025. Negotiations are ongoing, and a failed ratification vote could materially adversely affect business, financial position, results of operations, or liquidity, though the company is unable to provide assurances on timing or outcome.

Average daily package volume decreased 5.7% for the three months ended June 30, 2025, driven by the strategic execution of planned volume declines from the largest customer and pricing actions on certain e-commerce customers. This reflects a deliberate shift away from lower-yielding volume.

Average revenue per piece increased 5.5% to $14.34 for the three months ended June 30, 2025, compared to $13.68 in the prior year. This improvement was a result of favorable trends in customer and product mix and pricing actions, including a 5.9% net increase in base and accessorial rates implemented in December 2024.

While U.S. Domestic Package volume declined, International Package average daily volume increased 3.9% for the quarter (5.5% YTD), with growth in both domestic (1.5%) and export (6.1%) products across all regions. This demonstrates strength in international markets despite global trade policy changes.

Consolidated operating expenses decreased by $475 million, or 2.4%, to $19,399 million for the three months ended June 30, 2025, compared to $19,874 million in the prior year. This was primarily due to decreases in purchased transportation and fuel expenses, largely attributable to the 2024 divestiture of Coyote and the insourcing of the Ground Saver product.

Compensation and benefits expenses increased by $123 million, or 1.1%, for the three months ended June 30, 2025, to $11,626 million. This was primarily driven by increased stops associated with the insourcing of the Ground Saver product and the impact of health and welfare and wage rate increases for the union workforce, partially offset by reduced management incentive compensation.

Depreciation and amortization expense increased by $49 million, or 5.5%, for the three months ended June 30, 2025, to $936 million. This increase is partly due to capital asset additions and accelerated depreciation from building closures during Q2 2025 as part of the Network Reconfiguration initiative.

The company's Transformation 2.0 program, which incurred $811 million in costs by June 30, 2025, includes significant investments in technology initiatives such as financial reporting, schedule, time, and pay systems. These efforts aim to enhance reporting quality and enable migration to cloud-based tools and automation.

Revenue from 'other businesses' within Supply Chain Solutions, primarily digital businesses like Roadie and UPS Capital, increased by $59 million for the quarter (up $112 million year to date). This indicates successful leveraging of technology for on-demand services and high-value shipment insurance solutions.

For the six months ended June 30, 2025, the company recorded $33 million in impairment charges, primarily consisting of software impairment charges related to the divestiture of a business within UPS Digital. This suggests a strategic realignment of digital assets.

The company repurchased 8.6 million shares of Class B common stock for $1.0 billion under its stock repurchase program during the six months ended June 30, 2025. With $1.3 billion remaining under the $5.0 billion authorization, the company does not anticipate further share repurchases in 2025.

UPS increased its quarterly cash dividend to $1.64 per share in 2025, up from $1.63 per share in 2024. This consistent increase reflects management's confidence in future cash flow generation and commitment to returning capital to shareholders.

The company issued $4.2 billion in fixed-rate and floating-rate senior notes during the first half of 2025, while repaying $1.1 billion. Total capital expenditures increased slightly to $1,999 million (from $1,968 million in 2024), with approximately 80% allocated to network enhancement projects and technology initiatives, including new aircraft leases totaling $980 million.

As part of the 'Fit to Serve' and 'Network Reconfiguration and Efficiency Reimagined' initiatives, the company has undertaken workforce reductions, including approximately 14,000 positions under 'Fit to Serve' and an expected 20,000 operational positions under 'Network Reconfiguration'. A voluntary separation program was offered to non-union employees.

The 2025 investment program anticipates approximately $500 million of projects to support the company's environmental sustainability goals. This indicates ongoing efforts to reduce environmental impact through capital allocation.

The company continues to operate under collective bargaining agreements covering approximately 300,000 U.S. Teamsters employees (through July 2028), 11,000 Canadian Teamsters (expired July 2025, negotiating new agreement), 3,300 pilots (amendable September 2025), and airline/auto mechanics. This highlights the significant role of labor relations in its social responsibility.

The company's financial results reflect a 'complex macro environment' and 'challenging macroeconomic conditions,' leading to overall declines in average daily package volume. This was particularly evident in demand softness within the manufacturing and retail sectors.

New global trade policies, including tariffs and de minimis exclusions, which took effect in Q2 2025, resulted in a shift of trade lane volumes. This specifically led to a decline on the China-to-U.S. trade lane, impacting the International segment.

The 'One Big Beautiful Bill Act' was signed into law in July 2025, introducing changes to U.S. federal tax law. The company is currently assessing this legislation and its potential effect on its consolidated financial statements, with reflection expected to begin in Q3 2025.